Durham Farms #1 - Page 67




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          evidence establishing those notes and other subsequent notes                
          various cattle-breeding partnerships issued were valid recourse             
          indebtedness.  In a number of instances, the Hoyt organization              
          set highly inflated values on the cattle the partnerships                   
          “transferred back” to it in “note payments”.  For instance, a               
          Hoyt organization note payment summary and a payment receipt                
          reflect that, in late 1987, SGE 82-1 transferred to the Hoyt                
          organization 82 registered Shorthorns having a stated total value           
          of $697,750 (which works out to an average stated value per cow             
          of approximately $8,508) and that the Hoyt organization credited            
          this $697,750 “payment” against SGE 82-1's promissory note,                 
          allocating $232,122 to interest and $465,528 to principal.  The             
          Hoyt organization further, over the years, contrived other                  
          transactions pursuant to which small numbers of breeding cattle             
          (possibly “belonging” to some of the cattle-breeding                        
          partnerships) were purportedly sold for allegedly high prices at            
          public cattle sales.  See supra note 34.                                    
               This highly unusual conduct by the Hoyt organization with              
          respect to these alleged recourse partnership debts casts                   
          considerable doubt upon the bona fides of the “recourse                     
          promissory notes” the partnerships issued to the Hoyt                       
          organization.  In the subsequent note payment “transactions”, Jay           
          Hoyt and the Hoyt organization placed grossly inflated “values”             
          on certain alleged cattle a partnership “transferred back” to the           






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