Hoyt Fiasco: Amicus Brief, Part 1

PDFT QUICK UPDATE

In part 2, we cover the Issues and Facts.
In part 3, we cover the Legal Arguments.

The partnerships filed this brief with the Tax Court on March 17, 1999.

This is an AMICUS brief (friend of the court) that supports the Motion to Vacate the Memorandum of Understanding (MOU) filed by participating partner attorneys (MOVANTS) a few months ago. The MOU is the basis for the 1980 (with carry backs) to 1986 IRS bills being sent to the partners.

I hope you can appreciate the tedious research, thought, and effort put into this document. I believe Monty Cobb and his staff have done an excellent job of laying out the facts in this brief.

Your support of the PDFT makes this and the administrative support of the partnership possible. Thank you again for your continued support of the
PDFT and Monty Cobb.

-- Gary Blackburn

Exhibits are not attached.

Please note: Counsel presented this AMICUS brief to tax court on March 16, 1999 in support of motions to vacate the Memorandum of Understanding (MOU) for the tax years prior to 1987. The Tax Court could not accept this brief because no briefing schedule has been set for the motion to vacate the MOU. However, the Court advised we can file this brief when a briefing schedule is set. This brief outlines the facts and supporting documents surrounding the MOU.

*************************************************************
                     UNITED STATES TAX COURT

SHORTHORN GENETIC ENGINEERING, 1982-2, LTD.,
SHORTHORN GENETIC ENGINEERING 1982-4, LTD.,
SHORTHORN GENETIC ENGINEERING 1982-5, LTD.,

Walter J. Hoyt, III,
Tax Matters Partner, et al.,

               Petitioners,

          v.
COMMISSIONER OF INTERNAL REVENUE,

               Respondent.,

     Docket Nos.

         22003-89 29295-89
         22008-89 29854-89
         22069-89 29855-89
         22070-89 29856-89
         24514-89 30478-89
         27641-89 30479-89
         27675-89 20224-90
         28383-89 21463-90
         28384-89 21954-90
         28491-89 23531-90
         28492-89 28577-90
         29260-89

     BR - HOYT FARMS
     Judge Goldberg

AMICUS BRIEF IN SUPPORT OF MOVANTS' MOTION FOR LEAVE TO FILE MOTION TO VACATE PRELIMINARY STATEMENT

Amici are the 43 Hoyt Investor Partnerships on the list attached as Exhibit 1. Petitioners and Movants in these Tax Court proceedings are partners in Amici. Amici are parties in the Bankruptcy proceedings pending in Portland, Oregon in which all assets of the Hoyt entities have been liquidated, and in which all claims against nearly all Hoyt entities will be resolved. Amici have a significant stake in these Tax Court proceedings because the outcome will affect all partners in these Investor Partnerships. Each partner who has not reached a settlement with the IRS has received bills from the IRS for taxes, penalties and interest for these tax years in amounts which are financially devastating (See Exhibit 3). Those bills are the result of the Memorandum of
Understanding (MOU) entered into between Respondent and Walter J. Hoyt III.

Amici support the motion of participating partners (Movants) for leave to file motion to vacate decision out of time. Amici emphasize the need to abate the orders and allow discovery and an evidentiary hearing in this Court to determine whether improprieties in the negotiation and signing of the Memorandum of Understanding justify setting aside the MOU and this Court's orders based on the MOU.

Discovery in the bankruptcy proceedings, although more focused on years after 1991, suggests that the Hoyt business was more solid in the early and mid-80s than after 1992. In other words, there was less reason to compromise on deductions for the MOU years than for later years. The MOU, however, was negotiated long after the tax years it controls. By 1993, when the MOU was negotiated and signed, Hoyt's businesses were in trouble, Hoyt was in trouble, and he was feeling the governmental heat. He negotiated strong years at a weak time.

In November, 1996, this Court entered its orders approving the May 20, 1993, Memorandum of Understanding between Respondent and Walter J. Hoyt III (Hoyt or Jay Hoyt) and ruling on its import.

Evidence subsequently produced in the bankruptcy cases involving Hoyt entities strongly suggests that when Hoyt signed the MOU his conflicts of interest had terminated his authority to bind the investor partnerships, and that by acting with knowledge of Hoyt's conflict of interest, both Hoyt and the Respondent perpetrated a fraud on this Court. Additional discovery is necessary, however, before the Parties will be prepared to participate in a full evidentiary hearing on the matter.

The adverse effect of Hoyt's failure to adequately represent the partners' interests and his failure to have legal counsel is demonstrated by one glaring omission: "THE MOU FAILS TO ADDRESS PENALTIES AND INTEREST." The result has been erroneous assessments of tax motivated
transaction interest and penalties against individual partners.

In part 2, we cover the Issues and Facts.
In part 3, we cover the Legal Arguments.

The Hoyt Fiasco: A Miscarriage of Justice Victim information, evidence, rules of law, IRS viewpoints, contact information, and more.
*Why did the IRS lead prosecuting attorney in the Hoyt case quit in disgust?*
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Why the unethical treatment of the Hoyt Victims? And where's the "missing" $103 million?

The Hoyt Fiasco: Amicus Brief, Part 1 of 3