PROVIDENCE -- Survivor star Richard Hatch's strategy didn't quite pay off today, as a jury found him guilty of two tax-evasion counts and one count of filing a false return.
It cleared him of seven other counts, including a bank-fraud charge carrying the most severe penalty. But he was ordered held as a flight risk and led out of court in handcuffs. He faces sentencing on April 28.
Hatch reacted somewhat stoically to the verdict, nodding his head as each finding was read. As a court officer went to put on the cuffs, he calmly held out his hands, motioning with them to ask whether they should be in front or back.
Hatch had contended with relentless heat, hunger and physical exhaustion to avoid being voted off the island by his fellow "tribe" members and win the first season of the popular reality TV series Survivor six years ago. But the burly Newport resident couldn't outlast a dogged effort by the U.S. government to go after taxes on Hatch's $1 million prize and other income.
The jury returned its mixed verdict early this afternoon after about six hours of deliberations and a two-week trial that once again exposed the 44-year-old self-described "fat, naked guy" to national attention.
Chief U.S. District Judge Ernest C. Torres then revoked Hatch's bail, based on the prosecution's contention that Hatch was a flight risk because he owns property in Canada, has a domestic partner who is an Argentinian national and because all of the money he won cannot be accounted for.
One of Hatch's lawyers, John MacDonald, said they were disappointed with the verdict and will file an appeal immediately.
Journal photo / Andrew Dickerman
Richard Hatch whistles outside federal court in Providence yesterday when the jury began deliberating his fate.
Douglas Bricker, special agent in charge of criminal investigation in the IRS's Boston field office, called the trial "an example of the IRS's commitment to enforce tax laws."
U.S. Attorney Robert Clark Corrente said in a statement, "We are gratified by the jury's verdict. Paying taxes is an ordeal but it is every citizen's obligation to pay them honestly and fully. That is an important message as we head into another tax season."
The 10-count indictment last Sept. 8 had alleged Hatch failed to pay taxes on that money, as well as income from a radio program, rental income and charitable donations he allegedly used for himself.
Prosecutors showed that Hatch neglected to file two tax returns prepared by different accountants, reporting his Survivor winnings and showing that he owed several hundred thousand dollars in taxes.
Instead, Hatch filed a third return that didn't include his income from Survivor, a return Hatch asked an accountant to prepare for comparison purposes.
Prosecutor Andrew Reich charged in his closing argument that "greed" was Hatch's motivation for avoiding his tax responsibility, but Hatch's attorney, Christopher Minns, argued that Hatch is an honest man who made a mistake.
Testifying last week, Hatch claimed that he always intended to pay taxes on his Survivor winnings, but he thought that at least some of the taxes had been paid by CBS, its corporate parent of the show's producer.
He said he tried repeatedly without success to get an answer to that question.
"I just didn't want to pay them if they had already been paid," Hatch testified.
"Has it ever been your intention to violate the tax laws of the United States," his attorney asked.
"It has not," Hatch answered.
The jury apparently didn't buy it.
Hatch, the son of a Newport lobsterman, gained notoriety for winning the first Survivor by "outwitting," "outlasting" and "outplaying" his 15 fellow contestants on the Borneo island of Pulau Tiga and winning the $1 million prize in front of more than 50 million viewers on CBS.
Hatch, who asked jurors to call him "Rich," was shrewd and ruthless in his approach to Survivor. Hatch, who is openly gay, often competed naked, a strategy that helped him gain fame and seemed part of a strategy to psyche out his fellow competitors.
But Hatch and his attorney Christopher Minns tried portraying a more sensitive, naive Rhode Islander to the jurors.
Minns blamed his client's tax problems on his bad bookkeeping skills. He pointed out his mother, sister and committed partner to the jurors. Hatch testified about his troubled childhood and the important role his adoptive son plays in his life.
On the witness stand, Hatch claimed that he had put $350,000 of his Survivor winnings to cover taxes, but that an investment firm had embezzled the money. He said he didn't sue the firm because "I didn't care. It wasn't a priority."
Shown a copy of his statement from the investment firm, Hatch said it was difficult for him to determine what the statement showed as his balance.
Hatch said that he didn't report his Survivor income because he thought somebody from CBS, Viacom or producer Mark Burnett's Survivor Entertainment Group might have paid it. He said he repeatedly tried without luck to get an answer, but Burnett would not return his calls.
Start of tax troubles
Hatch's tax troubles began in November 2002 when he filed a 2000 tax return that didn't include Survivor income, although his accountant had told him not to file that return.
The accountant, Jodi Rodrigues Wallis, had completed a return for Hatch that included the Survivor income and determining that Hatch owed $234,800, but Hatch approached her later and asked her to fill out a return without the Survivor income for comparison purposes. Rodrigues Wallis testified that she complied with Hatch's request, but stressed to him that he could not file the return.
"It was just for analysis," said Rodrigues Wallis. She said she took her name off the sample return and had Hatch sign a letter from her stating, "This return is not intended to be filed and is simply for your information."
Months later, Rodrigues Wallis learned from Hatch that he had filed that comparison return. It resulted in him claiming a refund of $4,483 instead of the $234,800 she had determined he owed. It also prompted an audit notice from the IRS.
Hatch had apparently shopped around for the best tax return that he could get for the year 2000. Even before approaching Rodrigues Wallis, he asked a Newport accountant, Richard Plotkin, to complete his 2000 tax return. In November 2001, Plotkin produced a return for Hatch that included the $1,010,000 he received for Survivor, and concluded that Hatch owed $374,831 in taxes, along with $66,670 in interest and penalties.
Prosecutors claimed that Hatch never filed that return.
History of the charges
Hatch's tax problems became public knowledge back in January of 2005 when the U.S. Attorney's Office in Providence announced that Hatch had been charged via criminal information with two counts of filing a false tax return.
Hatch signed an agreement before that announcement indicating he would plead guilty. Each of the two counts carried a maximum penalty of five years in federal prison and a $250,000 fine. As part of the deal, the U.S. Attorney's Office said it would recommend a sentence that is in the minimum range under federal sentencing guidelines.
But in March of 2005, Hatch walked away from the agreement, the U.S. Attorney's Office withdrew the charges and U.S. Attorney Robert Clark Corrente announced that prosecutors would bring Hatch's case before a grand jury seeking an indictment on "all possible charges."
Hatch later said that he walked away from the deal because he wasn't guilty. He said that, as part of the deal, the U.S. Attorney's Office wanted him to serve two years in prison.
Hatch claimed that the case had become personal for the U.S. Attorney's Office when he walked away from the plea agreement, a claim that Corrente denied, saying, "It's not about personality. This is about evidence."
The grand jury returned an indictment six months later, charging Hatch with 10 counts: two counts of tax evasion, one count of filing a false S-Corporation income tax return, two counts of wire fraud, four counts of mail fraud and one count of bank fraud.
The grand jury alleged that Hatch failed to report about $1,037,000 from Survivor in 2000 and 2001, including a Pontiac Aztec valued at $27,074 that was given to him as part of his prize.
It also alleged that Hatch failed to report $326,540 that Entercom, Boston, LLC paid him in 2001 for appearances on The Wilde Show, a radio program on WQSX-FM; $28,104 in rental income in 2000 and 2001 from his property at 21 Annandale Rd., Newport; and $36,500 in charitable donations to Horizon Bound.
Prosecutors claimed that Hatch used for personal expenses the donations to Horizon Bound, a charity Hatch set up to help troubled teenagers. The indictment alleged that Hatch committed a scheme to defraud in connection with those contributions, charging him with the two counts of wire fraud, four counts of mail fraud and one count of bank fraud in trying to carry out that scheme.
While the jury cleared Hatch of the fraud charges, the payments to Horizon Bound were included in the income tax evasion charges that resulted in convictions, the U.S. Attorney's Office noted in a press release.
The penalties
The maximum penalties for the charges on which he was convicted are five years in prison and a $250,000 fine for each of the two counts of tax evasion, plus a $100,000 fine for filing a false S-Corporation income tax return related to the radio program income.
He had faced three years in prison on each of the two counts of wire fraud and the four counts of mail fraud he was cleared of, as well as a maximum 30 years in prison and a $1-million fine for the bank fraud count.
If Hatch had gone through with his plea agreement, he would have faced a maximum penalty of five years in prison and a $250,000 fine on each of the two tax-evasion counts -- somewhat less than he now faces.
In addition to the criminal penalties, Hatch will ultimately have to pay his taxes, according to the U.S. Attorney's Office.
Hatch is being held at the Wyatt Detention Facility in Central Falls, pending sentencing. His sentence will likely fall between 33 and 41 months under federal sentencing guidelines, according to MacDonald.
Escorted out of court today by authorities, Hatch was unavailable for comment after the verdict. But his quote upon winning the Survivor prize more than five years ago still rings true: "It's life changing, it's literally life changing for me."
-- With reports from Journal staff writers Richard Salit and Mark Arsenault
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