Ore. Cattle Rancher To Go on Trial

PORTLAND, Ore. (AP) â€” Walter Hoyt and his family began raising cattle in the 1950s, and by the '80s he ran one of Oregon's most respected ranches. <br><br>What thousands of investors across the

Tuesday, January 9th 2001, 12:00 am

By: News On 6

PORTLAND, Ore. (AP) â€” Walter Hoyt and his family began raising cattle in the 1950s, and by the '80s he ran one of Oregon's most respected ranches.

What thousands of investors across the country didn't know, federal authorities say, was that most of the livestock Hoyt was selling didn't exist.

Prosecutors say Hoyt, nicknamed the ``Paper Cowboy'' by angry investors, bilked people in 41 states out of $100 million.

``I don't think the guy can ever make it up to the people he has hurt,'' said Ed Van Scoten, a 66-year-old retiree from suburban Portland who with his wife lost $100,000 in the alleged scheme.

The 61-year-old Hoyt could be sentenced to 200 years in prison and fined $20 million if convicted of all 54 counts, ranging from conspiracy and mail fraud to money laundering. His trial was to begin with jury selection Tuesday and could last three months.

Hoyt has refused to comment on the charges. His attorney, Kelly R. Beckley, has also declined comment.

Essentially, Hoyt is accused of selling tax shelters, starting in the early 1970s, involving ranch lands and cows. In return, investors got tax write-offs and were promised big returns when the herds were to be sold 10 to 15 years later.

Investigators say Hoyt never had more than 5,000 cattle, although he sold 38,000 to investors dating to the early 1980s.

The operation peaked in the late '80s, when the Hoyt siblings divided millions in proceeds from investors. The company filed for bankruptcy in 1997 and was shut down the next year.

In a plea agreement, David Barnes, a partner, said he knew the investments were phony as early as 1986. He also admitted concealing assets from the bankruptcy court and knowingly submitting false documents to cover up the fraud.

Along with Hoyt, the IRS has targeted many investors for back taxes, alleging they should have known the deal was too good to be true.

The investors disagree and say the government, which suspected Hoyt's dealings for years, should have stepped in sooner.

The IRS has refused to comment, citing the ongoing litigation.

A $100 million lawsuit filed by investors against Hoyt and the IRS was dismissed in October by a federal judge who said government workers are immune from personal liability. The ruling has been appealed.

About half of the victims have settled with the IRS, which has made a new settlement offer to the rest. But investors say it doesn't promise them much relief.

``If you look at the offer, it doesn't really offer anything,'' said Gary Blackburn of Orvada, Nev., whose total bill could exceed $1 million. ``I couldn't pay that off in four lifetimes.''

Van Scoten is one of the luckier ones. He has other investments, and his portfolio isn't devastated by the $100,000 he lost in the alleged scheme. But if the IRS succeeds in forcing him to pay $350,000 in added fees, he said he faces financial ruin.

``We've been able to hold our heads above water, but slowly our savings have been depleted,'' he said. ``There's no way my wife or I could ever pay those liabilities.''