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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.
The Assistant U.S. Attorney assigned to consider the possible
criminal tax prosecution concluded that: (1) The total tax loss
to the Government from the backdating was relatively small,
probably less than $30,000; and (2) it would be difficult to
obtain a conviction of Jay Hoyt in a jury trial.
In July 1989, a member of the IRS Examination Division team
(which had been examining the returns of many of the cattle and
sheep partnerships 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. In his referral report to the CID, this
team member concluded that Jay Hoyt was selling cattle to some
partnerships that had already been sold to other partnerships and
that he was depreciating cattle that did not exist. The CID then
conducted an investigation of the alleged nonexistent cattle and
Jay Hoyt’s represented value for them. CID’s investigation was
completed no later than October 1, 1990.
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