John M. Mekulsia - Page 5

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          months of imprisonment and ordered to pay restitution to the                
          victims of his crimes.                                                      
          B.  Criminal Tax Investigations of Jay Hoyt                                 
               After the initial IRS examinations of the many cattle                  
          partnerships, several criminal investigations relating to Jay               
          Hoyt’s activities were commenced by the IRS’s Criminal                      
          Investigation Division (CID).                                               
               From April 23, 1984, until April 21, 1986, CID conducted an            
          investigation of Jay Hoyt for allegedly backdating documents to             
          enable 12 investor-partners to claim improper deductions and                
          credits.  On April 21, 1986, CID referred the case to IRS                   
          District Counsel, recommending prosecution.  On July 31, 1986,              
          the IRS District Counsel’s Office in Sacramento, California,                
          referred the matter to the Department of Justice (DOJ) for                  
          prosecution.  The DOJ then forwarded the matter to the U.S.                 
          Attorney’s Office in Sacramento for review and consideration.  On           
          August 12, 1987, the U.S. Attorney’s Office declined to prosecute           
          Jay Hoyt.                                                                   
               On or about July 28, 1989, a member of the IRS Examination             
          Division team examining Hoyt partnership returns for the 1983               
          through 1986 taxable years recommended that the CID investigate             
          Jay Hoyt for allegedly making and/or assisting in fraudulent or             
          false tax return statements in connection with his promotion and            
          operation of the cattle partnerships.  On October 13, 1989, the             






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