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indicated that Boylan & Evans relied on the statements of the
general partner and “other statements of fact and opinion
furnished to us by persons familiar with the transaction
described in the Memorandum.” Boylan & Evans clearly based its
conclusion about the fair market value of the recyclers on the
assumption that the parties to the transactions had negotiated
prices at arm’s length. In light of the close relationships
existing among the parties to the SAB transactions and the
enormous price paid for the recyclers (largely with nonrecourse
notes exchanged in a plainly circular transaction), petitioner
should have questioned whether the prices were in fact negotiated
at arm’s length. Under these circumstances, petitioner’s claim
that he reasonably and in good faith relied on the tax opinion is
unconvincing. A sophisticated, experienced, and intelligent
lawyer like petitioner would know, or at least should know,
better than to rely blindly upon a document with the warnings and
defects of the memorandum.
Petitioner’s contention that he reasonably relied on the
expert opinions of Ulanoff and Burstein is unjustified. He
testified that he had reviewed the memorandum, had discussed the
valuation of the recyclers with Becker, Miller, Cohen, and Lewin,
and had “no suspicion” that the opinions by Ulanoff and Burstein
“could not be relied upon.” According to petitioner and his
partners, Becker gave all indications that the valuations were
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