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promissory note debt. In his testimony, Jay Hoyt maintained that
he and the Hoyt organization had concluded it was not practical
to bring collection actions against a large number of defaulting
investors. He further stated that as a “general principle” the
Hoyt organization assumed that the “cattle” securing a defaulting
investor’s “note liability” had a value equal to 110 percent of
that “note liability”. However, the Court does not believe Jay
Hoyt’s explanation as to why the Hoyt organization never sought
to enforce the “note liability” against these defaulting
investors.38
In his testimony, Jay Hoyt also noted that certain of the
cattle-breeding partnerships had almost “fully paid off” their
“promissory note liabilities” with respect to some earlier cattle
purchase transactions that they and the Hoyt organization had
entered into. He further indicated that, in substantial part,
these notes had been “paid off” through these partnerships’
“transferring back” cattle to the Hoyt organization. However,
the Court does not consider such “payments” to be convincing
38Among other things, the record contains standard letters a
large group of disgruntled investors (who were allowed to
withdraw from their cattle-breeding partnerships) issued to the
Hoyt organization in 1994 and 1995. In the letters, these
investors noted that the Hoyt organization had represented that
the investors would owe no further money because their respective
cattle partnership’s assets had a value sufficient to cover an
investor’s “note liability”. If not, the letters advised, these
investors requested a full accounting by the Hoyt organization
with respect to all cattle that had been owned by their
partnerships.
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