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CID assigned a special agent to the investigation on April
24, 1984, and by June 3, 1985, the agent had deposed over 60
partners of various Hoyt-managed partnerships.5
On April 21, 1986, CID recommended that Mr. Hoyt be
prosecuted under section 7206(2) for aiding and assisting in the
preparation of false and fraudulent individual income tax returns
for 12 individuals and referred the matter to the Sacramento IRS
District Counsel. On July 31, 1986, District Counsel referred
the matter to the United States Department of Justice (Justice
Department) for criminal prosecution. The Justice Department
declined prosecution on August 12, 1987.6
In addition to the earlier referral, the Examination
Division referred a criminal fraud case involving Mr. Hoyt to CID
on July 28, 1989. The criminal fraud referral was unrelated to
the earlier criminal tax investigation for which the Justice
Department had already declined criminal prosecution. CID
accepted the criminal fraud referral and began a fraud
investigation of Mr. Hoyt on October 17, 1989.
On October 13, 1989, the U.S. Attorney's Office asked CID to
join an ongoing grand jury investigation of Mr. Hoyt. CID joined
5 In turn, these partners apparently learned of the IRS
criminal tax investigation of Mr. Hoyt because of the depositions
requested by the special agent.
6 From the record, it is clear that the latest that Mr. Hoyt
knew that the Justice Department had declined prosecution was on
or about Nov. 6, 1987.
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