Tom Emerson of Aiken has years of paperwork documenting his struggle with the IRS over money he invested in Walter Hoyt's cattle scheme. He has been ordered to pay back taxes, penalties and interest on money he thought was going to a legitimate retirement fund. CHRIS THELEN/STAFF

Just to be sure, Mr. Adams hired a certified public accountant to review the details. When the CPA approved, Mr. Adams began to invest.

Turns out the ranch operation was bogus and the number of cattle vastly overstated.

The cattleman, Walter Hoyt, claimed he was raising large herds as part of an elaborate tax-shelter scheme. Today, the Internal Revenue Service is assessing the 55-year-old Mr. Adams an estimated $300,000 in back taxes, interest and penalties for his misguided investment.

Mr. Hoyt has since been sentenced to 20 years in a federal prison for defrauding about 4,000 investors nationwide - and about 60 in the Augusta area - out of more than $100 million.

Despite the con man's conviction on 52 counts of mail fraud and money laundering, his victims are the ones who must pay the IRS.

''Hoyt is going to jail for stealing our money, and the IRS is coming after us?'' Mr. Adams said. ''Does that sound right to you?''

It didn't sound right to Ann Murphy, a former IRS attorney assigned to the Hoyt case in Portland, Ore. She resigned her position last year because she believed the agency has a vendetta against the Hoyt investors.

''One arm of the government says these people were defrauded, and the IRS says they weren't,'' said Ms. Murphy, now an associate professor at Gonzaga University in Spokane, Wash.

''After Hoyt was convicted, I told my boss what we're doing doesn't make sense. He told me flat out, and this is a quote, 'We are going to show them we mean business.' I got the feeling the attitude was, 'Let's hit them with everything - because we can.'''

Hoyt Timeline The IRS suspected Walter Hoyt of fraud for years, yet allowed him to continue his scams against unsuspecting investors. Here's how it happened: 1971: Mr. Hoyt forms his first cattle partnerships in California. 1978: Mr. Hoyt passes test to become an enrolled agent of the IRS, a special status for non-employees. 1980: Audit shows Mr. Hoyt has 1,000 fewer cattle than he claimed to have sold to investors. IRS, suspecting fraud, begins annual audits of his partnerships. 1982: Mr. Hoyt appoints himself tax-matters partner for all 24 of his partnerships. 1984: IRS agents refer Mr. Hoyt's case to Criminal Investigation Division. 1988: IRS notifies Mr. Hoyt that he is under investigation for preparing fraudulent tax returns but drops threat of penalty in return for his cooperation in audits of the now 72 partnerships. 1992: IRS makes settlement offer to all of Mr. Hoyt's investors. This letter is the first indication to most investors that the tax shelter is a scam. Mr. Hoyt's sales efforts continue unabated by the IRS. 1993: U.S. postal inspector and FBI get word that Mr. Hoyt might be operating a fraud. 1994: IRS begins seizing bank accounts and putting liens on houses of Mr. Hoyt's investors. 1997: Mr. Hoyt's status as an IRS-enrolled agent is revoked, but he remains tax-matters partner for all partnerships. 1998: Grand jury indicts Mr. Hoyt and others on charges of conspiracy, mail fraud and money laundering. 2001: Mr. Hoyt and two co-defendants are found guilty on 52 counts of fraud, money laundering and conspiracy. To date, Mr. Hoyt has not been arrested for any tax-related criminal charges. Hundreds of investors face huge tax bills they have no hope of being able to pay. 2001: Mr. Hoyt and accomplices are sentenced. The 65-year-old Mr. Hoyt gets 20 years in a federal prison. SOURCE: CSRA Partnership Group

Ms. Murphy resigned after 15 years with the IRS - largely, she said, because of the agency's policy of targeting Hoyt investors.

''I felt my ethics were at stake,'' she said. ''I told my boss, and he went through the roof. By saying I couldn't ethically continue with the case, I guess he thought I was implying something about his ethics. At that point I knew I should find something else to do.''

Things began deteriorating when the IRS national office started micro-managing the Hoyt case, she said. Ms. Murphy said she couldn't even post a letter without consulting Washington, where a hard-line stance had been taken on the affair.

''I think the IRS didn't want to treat these people different from anyone else,'' Ms. Murphy said. ''But these were not your typical, slicked-back tax-shelter investors looking to slip one by the government. These were mostly blue-collar workers trying to turn a legitimate profit.''

''If anyone should have wanted to go hard on these people, it would be me - I was trying the case,'' she added. ''But most of us who were actually involved - field agents, attorneys - I'd say about 80 percent of us wanted to go easy on the investors. We saw them as victims.''

The IRS has refused to comment on the Hoyt case. The agency has been tight-lipped on the issue since 1999, when then-spokesman Bill Steiner was quoted in the Willamette Week newspaper in Willamette, Ore.:

''It's easier to go after people who have been duped than to go after the promoters of the scheme.''

A master criminal

Walter ''Jay'' Hoyt was not just a cattleman. He was also an experienced accountant and spellbinding salesman, combining an outstanding knowledge of the tax code with a knack for exuding credibility.

His tax-shelter scheme involved selling imaginary cattle that were used to earn huge refunds by claiming the money-losing ranch operations as a write-off.

The people he persuaded to invest in the bogus ranch operations were placed in dozens of partnerships, each consisting of 20 to 30 investors. He appointed himself tax-matters partner of all of them, giving him total control over tax issues.

Investors were required to give 75 percent of their refunds back to the partnership. Most gave more and invested extra cash in exchange for big returns that were promised in 10 to 15 years, when the herds were to be sold.

Investors did not suspect that the herds were largely phantom or that the expenses were fictional. Mr. Hoyt staged elaborate tours, inviting people to witness the bustling ranch operations in northern Oregon.

Despite his clever subterfuge, the IRS suspected Mr. Hoyt of foul play as early as 1980, when an audit showed he had 1,000 fewer cattle than he had documented. The IRS began annual audits of Mr. Hoyt's partnerships.

Yet Mr. Hoyt continued to gather investors, and the IRS did nothing to stop him. The number of partnerships grew from 24 in 1982 to 72 in 1988. Mr. Hoyt's status as an IRS-enrolled agent - a top certification for non-employees who pass IRS tax tests - was never suspended or revoked, and it gave him credibility.

The U.S. Tax Court decision in October 1989 on Bales v. Commissioner furthered Mr. Hoyt's claims of legitimacy. The judge ruled that his partnerships were not abusive tax shelters, and investors continued to sign on.

With his enrolled-agent status intact, and the Tax Court decision in his corner, Mr. Hoyt's operation appeared to be government stamped and approved. The partnerships continued to grow.

To this date, the IRS has yet to bring any criminal charges against Mr. Hoyt, and an agency spokeswoman in Washington would not say whether it ever would.

Battling the IRS

Aiken resident Tom Emerson got involved with the Hoyt partnerships in 1985. He has lost count of how much the IRS says he owes in back taxes, penalties and interest. It could be close to $400,000 by now, he said.

However much, it's a sum he can never hope to repay, so he's fighting the agency all the way.

He donates to the Partnership Defense Fund Trust, which helps Hoyt victims pay for attorneys to represent them in Tax Court against the IRS.

Partners want the IRS to abate interest and penalties, which is the bulk of what they owe, and are willing to compromise by paying back taxes on the money that was stolen from them.

Partners are also trying to get the IRS to grant them theft-loss deductions, which the agency has so far refused to consider.

A Tax Court hearing on the cattle partnerships has yet to be scheduled. But attorneys for the victims hope that a positive ruling on an upcoming case involving Mr. Hoyt's bogus sheep operation - a much smaller scheme than the cattle ranch - will set a precedent. The first hearing is scheduled for Monday in an Oregon federal court.

''In the criminal trial, these investors were found to be innocent dupes of Hoyt,'' said Monty Cobb, a Portland attorney representing the partnerships. ''Based on that result, the government can't come back now and say they weren't innocent and they were trying to cheat on their taxes.''

Mr. Hoyt was convicted in February on 52 counts of fraud, money laundering and conspiracy. U.S. District Court Judge Robert Jones, who sentenced Mr. Hoyt in the criminal trial, had harsh words for the IRS after the sentencing.

''The victims in this case were not people that got into this as a matter of personal greed,'' he said, adding that Hoyt investors were ''victimized by a person who was capable of the greatest deceit.''

Judge Jones recommended that the Hoyt victims pay the back taxes and the IRS ''eliminate any penalties or any interests that may have accumulated.''

Though it's good to see someone of power and authority side with the partnerships, the scolding will do little good in Tax Court, Mr. Cobb said.

He added that he's not very optimistic about the investors' chances. The IRS has limitless resources, while the Partnership Defense Fund Trust is buoyed by a small group of impoverished investors, only about 10 percent of whom bother to contribute.

Still, the odds of victory don't matter, he said.

''When someone has their boot on your throat, you have to keep fighting for breath,'' Mr. Cobb said. ''It's not that we think we'll win. It's that we don't have a choice but to do everything we can.''

Reach John Bankston at (706) 823-3352 or jbanks15@hotmail.com.