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not represent the sheep purportedly owned by each partnership.
Further, the total purchase price that each partnership agreed to
pay for its sheep was many times the fair market value of similar
quality sheep. Additionally, it was determined that none of the
promissory notes that the sheep partnerships issued for their
sheep were bona fide recourse debt. The notes had no economic
effect to the partnerships and were not valid indebtedness.
Moreover, Barnes Ranch did not even provide the partnerships with
the management services required under the agreements.
The cattle and sheep partnerships were organized and
operated in essentially the same manner. In addition, all of the
Hoyt organization investor partnerships were marketed and
promoted in an identical fashion. Jay Hoyt even used the
promotional literature prepared for the cattle partnerships to
promote the sheep partnerships. Some of the investors placed in
the sheep partnerships believed they had invested in cattle
partnerships.
In the early 1980s with the formation of many more investor
partnerships, the documents, records, and tax returns the Hoyt
organization prepared relating to its transactions with the
cattle partnerships were inaccurate, unreliable, and in many
instances falsified. Likewise, the Hoyt organization prepared
and maintained the sheep partnerships’ documents, records, and
tax returns in an inaccurate and unreliable manner. These
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