Malcolm I. Lewin and Trina Lewin - Page 32

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          the allocation of royalty payments and PI’s record-keeping system           
          in general.  In Provizer v. Commissioner, supra, though, this               
          Court found that “PI had no cost accounting system or records.”             
               Becker confirmed in his testimony that he relied on the                
          memorandum and discussions with PI personnel to establish the               
          value and purported uniqueness of the recyclers.  Becker                    
          testified that he relied upon the reports of Ulanoff and Burstein           
          contained in the offering materials, despite the fact that:  (1)            
          Ulanoff’s report did not contain any hard data to support his               
          opinion; (2) Ulanoff was not an economics or plastics expert; (3)           
          Becker did not know whether Burstein was an engineer; and (4)               
          Burstein was a client of Miller’s and was not an independent                
          expert.                                                                     
               Becker further explained in his testimony that in the course           
          of his practice when evaluating prospective investments for                 
          clients, he focuses on the economics of the transaction and                 
          investigates whether there is a need or market for the product or           
          service.  The records indicate, though, that Becker overlooked              
          several red flags regarding the economic viability of and market            
          for the recyclers.  The memorandum warned that there was no                 
          established market for the recyclers.  Becker never saw any                 
          marketing plans for selling the pellets (the product of the                 
          recyclers) or leasing the recyclers.  He accepted representations           
          by PI personnel that they would be marketing the recyclers to               






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