Sunday, September 23, 2007
Walter J. Hoyt III, serving a 20-year sentence for tax fraud in connection with over 100 syndicated cattle limited partnership tax shelters, died in federal prison on September 6. From Darryll K. Jones, The "Hoyt Fiasco," 112 Tax Notes 83 (July 3, 2006):
Hoyt used plain old limited partnerships, right out in the wide open spaces, to generate and sell $103 million worth of illegitimate deductions to about 5,000 limited partners, most of whom had no idea what was happening. Hoyt's scheme was simple to a fault: He owned between 4,000 and 5,000 cows that were "contributed" to more than 100 syndicated limited partnerships. The only catch was that the same inflated-value cows were contributed to many different partnerships -- unbeknownst to the limited partners -- and each partnership, the returns of which were prepared by Hoyt himself, would claim and then allocate the expenses pertaining to the cows among its partners. If Hoyt needed more deductible expenses to make good on his promises to investors, he simply invented more cows on paper and then attributed and allocated associated expenses. By the time of his conviction and 20-year sentence on 52 counts of fraud and conspiracy, Hoyt had created some 38,000 cows from thin air, each of which generated millions in deductible expenses allocated to limited partners coast to coast.
For more details, see Monday's Tax Notes Today. (Hat Tip: Jeremiah Coder.)