The Survivor winner testifies that he believed taxes on his prize were settled, adding that he did not read a contract that said contestants are responsible for them.

01:00 AM EST on Tuesday, January 24, 2006

BY RICHARD SALIT
Journal Staff Writer

PROVIDENCE -- On his last day on the witness stand yesterday, Richard Hatch continued to butt heads with a federal prosecutor who pressed the Survivor star to explain why he didn't pay taxes on all his income, including his $1-million Survivor winnings and $320,000 in earnings from cohosting a Boston radio show.

The prosecutor, Assistant U.S. Attorney Lee Vilker, also confronted Hatch on why he used charitable contributions for personal expenses.

Hatch readily acknowledged that he didn't pay the taxes that were due, but insisted his actions were not willful. He firmly and calmly cited the various reasons why the taxes were not paid.

He said he thought that CBS or the reality show's producers may have paid the taxes due on his winnings. He thought that he had turned over to his accountant the documents showing all his radio earnings. And he thought it was acceptable to transfer the contributions for Horizon Bound into his personal checking account because he had spent far greater sums of money out of his own pocket trying to get the outdoor teen program started.

And then it was over. Hatch's return to the limelight -- his most pivotal and public performance since winning Survivor six years ago on prime-time TV -- ended when he stepped down from the witness stand.

Today, lawyers for both sides will give their closing arguments. Then Chief U.S. District Judge Ernest C. Torres will instruct the jury on how to determine whether the TV celebrity from Newport broke any of the 10 criminal charges for which he was indicted, including tax evasion, filing false tax returns, mail fraud, bank fraud and wire fraud. By this afternoon, the case is expected to be in the jury hands.

Vilker, who began cross-examining Hatch last Friday, continued to confront the 44-year-old corporate trainer yesterday morning about his 2000 and 2001 tax returns.

During the trial, Hatch admitted that he did not file the first 2000 tax return prepared for him, which listed the $1 million in Survivor winnings and indicated that he owed $374,000. Nor did he file a return prepared by a second accountant, Jodi Rodrigues Wallis, who testified that Hatch did not provide her with the income sources he gave to the first accountant. Her return showed he owed $234,000 for 2000.

Instead, Hatch filed a return that Wallis said she prepared for him for informational purposes only. It did not reflect his Survivor winnings, and showed a refund of nearly $4,500. Hatch requested the analysis, she testified, and signed a document saying he understood it was not to be filed.

Vilker asked if Hatch read the letter drafted by the accountant. Hatch said he did not. He said he knew she felt "she could not be associated with" the mock return, which is why "I was happy to take responsibility for filing" it.

Hatch said he thought he had provided Wallis all tax forms showing his earnings, just as he had his first accountant.

"I've given every document I've had to every accountant," he said.

Vilker suggested that Hatch was merely trying to exploit what he perceived as the government's ignorance of his Survivor winnings. The prosecutor referred to two IRS notices Hatch received that listed his income, but not the $1-million prize.

"You thought you might be able to get away with filing a return that did not include it?" said Vilker.

Hatch replied, "I was thrilled to file a return with the government's numbers and would have responded to the government" if it had provided figures it deemed were correct.

Hatch has repeatedly stated during the trial that he is willing to pay what he owes but that the government won't provide him figures. When Vilker suggested that Hatch's 2001 return did not include $320,000 the radio station paid him through a newly established corporation, Hatch replied, "And I owe taxes on it."

In addition to the accountant's letter, Hatch testified that he didn't read another key document he signed: his Survivor contract. The contract states that contestants are responsible for taxes on their winnings. Hatch, answering questions posed by his lawyer, Michael Minns, said that none of the contestants were given any time to consult with lawyers before the show began filming on a Malaysian island.

The prosecution called two rebuttal witnesses at the end of the day to challenge Hatch's testimony about a $25,000 check made out to Horizon Bound that he deposited. Earlier in the day, Hatch testified that NewportFed refused to deposit it into his personal account because it was made out only to the charity.

Hatch said he then went to People's Credit Union, where he had done business for years, and explained that he was awaiting incorporation papers that would allow him to open an account. The check was deposited and someone at the bank typed in his name next to Horizon Bound's, he said.

But Julie Henderson, the teller, testified that she recognized Hatch when he drove up to her drive-through window the day the check was deposited. When he handed the check to her, she testified, it was already made out to Horizon Bound and Hatch. That allowed the bank to deposit it for him, she said.

rsalit@projo.com / (401) 277-7467