Opinion ID: 167170
Heading Depth: 2
Heading Rank: 5

Heading: The Van Scotens' Investment Monitoring Efforts

Text: 68 The Van Scotens argue that they were not negligent because they actively monitored their investment. They maintain that Mr. Van Scoten closely reviewed the various business reports, independent newspaper articles, news letters, and other correspondence they received from the Hoyt organization. Mr. Van Scoten also had regular phone conversations with Edward regarding what transpired at the partnership meetings Edward attended. In addition, the Van Scotens consistently paid the promissory notes throughout the period of their investment. Relying on Heasley, 902 F.2d at 383, they contend that ordinary care does not require more. 69 The Van Scotens read Heasley too broadly. To be sure, in rejecting the tax court's far too-stringent standard for determining negligence, the Heasley court found that the taxpayers exercised due care in part because they took reasonable measures to monitor their investment. See id. at 383-84. However, the Heasley court addressed the taxpayers monitoring efforts only after it determined that they reasonably relied upon the advice of their financial advisor concerning the merits of the investment and their independent CPA regarding its proper reporting on their tax return. See id. Such steps were not taken here. And the Van Scotens investment monitoring efforts, which mostly consisted of reviewing information provided by the Hoyt organization, did not cure this failure.