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States v. Barnes, No. CR 98-529-JO-04 (D. Or. Feb. 12, 2001),
affd. sub nom. United States v. Hoyt, 47 Fed. Appx. 834 (9th Cir.
2002).
B. Petitioner’s Backgound and Hoyt Investment
Petitioner holds a bachelor’s degree in nuclear engineering
and a master’s degree in business administration (MBA). As part
of his MBA curriculum, petitioner took accounting and law-related
classes. He has been employed as a mechanical design engineer
for over 25 years and was so employed during 1991.
Before 1989, petitioner invested exclusively in stocks and
mutual funds. He had no experience in cattle, ranching, or
farming, and he had never been a partner in a partnership.
In or around October 1989, petitioner was “making a lot of
money” and “looking for a way to defer taxes”, so he discussed
investing in a Hoyt partnership with a coworker, Gary Parker (Mr.
Parker). In November 1989, petitioner contacted a Hoyt partner
representative for additional information about various Hoyt
partnership investment opportunities. The Hoyt partner
representative provided petitioner with promotional materials
assembled by Hoyt that included pamphlets,3 newspaper articles,
trade articles, and the Court’s opinion in Bales v. Commissioner,
3 For example, the promotional materials stated, in part,
that investors could “earn 11.3% tax free annually paid quarterly
in cash and 12.93% in tax savings” and that “income from
operations is projected to be sheltered from income tax.”
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