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its civil audits of the partnerships into criminal investigations
of the TMP's. The Court of Appeals reasoned that the conversion
of the civil audits into criminal investigations created a
powerful incentive on the part of the TMP's to ingratiate
themselves with the Government and to ignore their fiduciary
duties to the limited partners. See id.
We emphasize that in Transpac the TMP's executed the
extension agreements near the time the TMP's were cooperating
with the Government in anticipation of either grants of immunity
or sentencing agreements. See id. at 223-224. The TMP's in
Transpac became Government witnesses, owing to their cooperation
with Government investigators.15 The Court of Appeals
essentially found therefore that the TMP's had a disabling
conflict of interest that prevented them from faithfully
discharging their fiduciary duties to the limited partners.
Unlike Transpac, there is no evidence in this case that:
(1) The IRS approached limited partners to execute any extension
agreements or that they refused to sign such agreements; (2) the
promoter/TMP of the Hoyt partnerships was, before or during the
relevant period, indicted or convicted of a tax felony or
cooperating with the Government as a witness; or (3) the IRS
misled partners of the Hoyt partnerships about the existence of
15 Two of the TMP's were granted immunity from prosecution,
while the third entered into a plea bargain resulting in a
suspended sentence.
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