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tax refunds greatly diminished the amount of money the Hoyt
organization obtained from new and existing partners.
After the opinion in Bales was filed and appropriate
decisions were entered, settlement negotiations were conducted
between Jay Hoyt and the IRS, which culminated in the MOU.
Beginning in 1993, an increasing number of investor-partners
were becoming disgruntled with Jay Hoyt and the Hoyt
organization. Many partners stopped making their partnership
payments and withdrew from their partnerships, due in part to
respondent’s tax enforcement. Jay Hoyt urged the partners to
support and remain loyal to the organization in challenging the
IRS’s actions. The Hoyt organization warned that partners who
stopped making their partnership payments and withdrew from their
partnerships (1) would be reported to the IRS as having
substantial debt relief income and (2) would have to deal with
the IRS on their own.
On or about June 8, 1995, in the 32d Judicial District Court
for the Parish of Terrebonne, State of Louisiana, a group of
investors obtained an $11 million default judgment against Jay
Hoyt, Management, MLP, and several cattle breeding partnerships
for fraud and other violations. See Mabile, et al. v. Walter J.
Hoyt, III, et al., No. 95-112222. On February 24, 1997, the
plaintiffs in the Louisiana lawsuit filed involuntary bankruptcy
petitions in the U.S. Bankruptcy Court for the District of Oregon
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