Hoyt Fiasco: $103M Heist + Kevin Brown's Criminal Cover-up
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     Why did the IRS lead prosecuting attorney in the Hoyt case quit in disgust?

The Hoyt Fiasco: The sordid story, in a short narrative

by Gary Blackburn, August 24, 1999

In 1997, more than 120 "Hoyt" partnerships were "substantially consolidated" into one entity as the result of involuntary bankruptcy. The partner bankruptcy claims exceed ONE BILLION dollars. Since the US Trustee came on the scene, there is a clear picture of the facts in this very complex saga.


The July 28, 1999 "Willamette Week" news article on "The Great Cattle Caper" does a good job of boiling the complex "Hoyt story" that makes it easier for others to comprehend. This article and other evidence counters the "IRS story" that partners were out to scam the government. Most partners believed they were investing for their retirement.

Based on today’s facts and circumstances, the partners cannot claim they were supporting a legitimate business. However, the IRS handling of this debacle is a horror story even Steven King would envy. Dick Pooley, the former head of collections in the Sacramento IRS office said "What I saw on the part of the IRS was a great deal of incompetence and a reluctance to get into complexities." (Willamette Week - July 28, 1999)

In June 1998, the Department of Justice issued indictments charging investors were defrauded out of more than 100 MILLION dollars. The IRS agrees investors were duped but is out to collect on the defrauded investment. "It's easier to go after the people who have been duped than to go after the promoters of the scheme" (Bill Steiner, IRS spokesman - Willamette Week - July 28, 1999).

Over the last 15 years, there have been numerous audits and investigations conducted by organizations such as the Securities and Exchange Commission (SEC), IRS Criminal Investigation Division (CID), Justice Department, and civil suits, all alleging the promoter and others committed crimes and wrongdoings.

NOTHING HAPPENED as a result of this intense scrutiny. The business continued to operate for YEARS after their investigations began (some never finished). Through it all, the promoter maintained his enrolled agent status with the IRS. This "non-action" reinforced the credibility of the business and was interpreted by some to mean the investigations must have concluded the business to be lawful.

In 1989, the Tax Court handed down the BALES decision, which found the partnerships to be legitimate businesses engaged for profit. The IRS disagreed and ignored this decision and continued to treat all partnership transactions as shams. In the early 1990s, the IRS refocused their efforts and selectively targeted partners supporting the business. For many, the IRS pressure became intolerable so they opted to "walk-away" from their obligations.

The partners that remained ended up with a dying carcass and a big pile of dung to clean up. Many partners had too much to lose to simply "walk-away". Their only choice was to try and make the business work.

In the mid 1980s, the promoter and his family absconded with the majority of the partnerships’ assets. In 1995 the promoter voluntarily filed bankruptcy for one of the many tier partnerships which drained the partnerships of most of the remaining assets. These partnership assets could have been amassed for settlement negotiations with the IRS, if the partners had known the facts.

With the assistance of the US Trustee, the PARTNERSHIPS closed down the business in February 1998. It took the US Government over 3 years after a 1995 "raid" in Burns, Oregon to hand down formal indictments.

Partner options have essentially been boiled down to two.

OPTION 1 – "settle" with the IRS on their terms. The IRS will compute the tax they believe owed and add 120% penalties and up to 20 years of interest for a total of more than most could pay in several lifetimes. Most have settled just to get this out of their lives, simply didn’t care anymore, or they were enticed into an agreement based on the IRS presentation of the facts.

Now that the true facts are being revealed, many of the "settled" partners are trying to back out of their agreements. Settlement is a one way door with no backing out. However, due to personal situations, this option may be the best.

OPTION 2 - Keep working to get a realistic settlement based on the true facts and circumstances. This effort is being pursued on two fronts, one by the partnerships as a whole and the other by individual partners. We all are trying to get to the same "finish-line" which is a fair and realistic bottom line based on the true facts and circumstances. Some partners have retained the services of a lobbyist to help pass legislation for IRS interest abatement as well as other laws and regulations to help the defrauded partners.

At the request of the Taxpayers Advocate Office (TAO), collection against "Hoyt" partners is currently on a hold issued by the IRS Chief Operating Officer (COO). The COO is currently investigating the "Hoyt" matter.

Partners are between the proverbial rock and the hard place. There currently are no formal settlement discussions with the IRS, only a total disallowance of deductions and addition of income as a result of the fraudulent investment. There are no other options.

If partners are not successful in their efforts, several hundred lives will be physically and financially ruined more than they already have been to this point. There will be an increase in the welfare rolls, just for trying to make an investment in their future. Is this truly justice and the American way?


Last updated: Friday, October 09, 2020

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Disclaimer: The facts represented here are as accurate as a reasonable investigation can determine. Mindconnection hosts this site at no charge to the Hoyt victims, to expose this miscarriage of justice.