Deemed a flight risk, Richard Hatch, the first winner on the reality TV show, is being held at the Wyatt Detention Facility in Central Falls pending sentencing April 28.

08:57 AM EST on Thursday, January 26, 2006

BY RICHARD SALIT
Journal Staff Writer

PROVIDENCE -- When he won $1 million on Survivor six years ago, Richard Hatch's hands flew to the top of his head and his mouth dropped open in shock. Yesterday, he just nodded stoically in a federal courtroom as three guilty verdicts were read aloud against him, including one for evading taxes on those prize winnings.

Then the hands that so enthusiastically clutched the $1-million check in front of millions of TV viewers were placed in cuffs and Hatch was taken directly to jail.

Prosecutors persuaded Chief U.S. District Judge Ernest C. Torres to revoke bail for Rhode Island's reality TV star. They argued that Hatch, the openly gay contestant who competed in the nude on Survivor, has the wealth and incentive to flee the country with the Argentinean hotelier he married in a Canadian same-sex ceremony. In addition, they said, one of Hatch's passports is missing, he has experience traveling abroad, and his ownership of property in Canada only recently came to light.

The judge agreed and ordered Hatch, 44, held at the Wyatt Detention Facility in Central Falls until his sentencing April 28.

The 12-member jury listened to Hatch testify in his own defense for more than a day. The jury deliberated for less than seven hours before finding Hatch guilty of two counts of tax evasion and one count of filing a false tax return. The maximum penalty he faces is five years in prison and a $250,000 fine.

Hatch's likely sentence will be in the range of 33 to 41 months in prison, Torres said. But, he said, the sentence could be longer if the prosecution proves, as it suggested in court yesterday, that the Newport corporate trainer "blatantly perjured" himself during his eight-day trial.

Journal photo / Andrew Dickerman

Richard Hatch, entering federal court in Providence on Tuesday, is likely to receive a prison sentence ranging from 33 to 41 months.

Hatch earned a reputation on Survivor as an arrogant schemer who took risks. Yesterday, however, one of his real-life gambles seemed to backfire. Hatch had the opportunity a year ago to plead guilty to just two counts of filing false tax returns, but opted instead to take his chances with a jury. Had he accepted the plea deal, prosecutors were prepared to recommend a sentence "at the lowest range" of sentencing guidelines.

But the jury concluded that Hatch intentionally evaded paying taxes from 2000-2001. He not only filed tax returns that did not include the Pontiac Aztec and $1 million he won on Survivor, but many other sources of income, including $320,000 from cohosting a Boston radio program, $27,000 in rental income and $35,000 in charitable contributions that he used for personal expenses.

"Obviously, no one likes paying taxes, but we all have to pay our fair share," Assistant U.S. Attorney Andrew Reich said on the steps of federal court after the guilty verdicts were returned. He was surrounded by representatives from the Internal Revenue Service.

John MacDonald, one of the defense lawyers, said Hatch will appeal.

"We were extremely disappointed," said MacDonald. But, he said, Hatch had "prepared himself mentally and emotionally for this date. . . . I think he's handled it very well and will continue to do so."

Not only was Hatch prepared for a guilty verdict, he was also ready for the possibility that he might be ordered jailed until his sentencing, said MacDonald.

MacDonald was pleased that the jury acquitted Hatch on the seven other counts. These fraud charges were all related to Horizon Bound, the outdoor teen program that Hatch talked about reviving during appearances he made on TV and around the country after winning Survivor.

In his testimony, Hatch talked about how the Rhode Island-based Horizon Bound had been a "life-altering experience" in his troubled youth. He explained that winning Survivor had provided him the opportunity to bring Horizon Bound back.

But witnesses for the prosecution testified that Hatch used their names on Horizon Bound documents without asking and that they had nothing to do with the organization.

Prosecutors presented evidence that Hatch committed bank fraud by taking a check made out to Horizon Bound, adding his name to it and depositing it into a personal account. The bank fraud charge carried the most severe penalty of the seven counts -- a maximum of 30 years and a $1-million fine. It's also the charge that prompted Hatch to allegedly perjure himself by denying he typed his name onto the check and telling jurors that a bank employee did. A bank teller later testified that the check already had Hatch's name on it when he presented it to her.

Prosecutors also detailed how Hatch took contributions he received for Horizon Bound, transferred them to personal accounts and spent the money on himself, including extensive improvements to two houses he owned on Aquidneck Island. Hatch testified that the addition of an office and a garage to his Middletown house, as well as other renovations, were intended to make it a headquarters for Horizon Bound.

In his closing arguments, MacDonald portrayed Hatch as someone who was sincere about realizing his lifelong dream of helping teens through Horizon Bound.

Yesterday, he said, the jurors apparently understood that Hatch's heart was in the right place.

"I think the jury saw right through those fraud counts," he said.

The jury, however, apparently didn't buy Hatch's explanations for why he didn't include the Survivor income on his 2000 tax return. Even though he signed a contract obligating him to pay the taxes on his winnings, Hatch maintained that he thought CBS or Survivor producers or advertisers had possibly paid the taxes for him.

The 2000 return he filed was the third one that was prepared for him. The first return indicated he owed $374,000 in taxes. The one he did submit -- which an accountant testified she prepared for him only for informational purposes and which she said Hatch agreed in writing not to file -- resulted in Hatch receiving a refund of nearly $4,500.

When the jurors entered the courtroom after 1:30 p.m., Hatch, dressed as casually as he was throughout the trial, this time in a dark sweater, sat calmly at a table with MacDonald. Missing was Michael Minns, the Houston tax law specialist who defended Hatch at trial. When a clerk read aloud each verdict, Hatch nodded slightly, but showed no expression. His mother, Margaret, his sister Kristen, and his Argentinean partner, Emiliano Cabral, sat in the front row and remained silent.

Then Assistant U.S. Attorney Lee Vilker requested that Hatch be held without bail. Vilker said that Hatch no longer owned any houses in Rhode Island, having transferred the last one, in Newport, to a sister. Hatch also failed to inform probation officials that he owns 30 properties in Nova Scotia. In addition, said Vilker, the American visa held by Cabral expires Feb. 14 and Cabral also owns three properties in Canada.

Vilker said that soon after his passport was returned to him by the government in connection with the tax evasion case, Hatch claimed he lost it and acquired another. "We don't know what happened to the last one," he said. "This is a real concern."

MacDonald said that Hatch's Canadian properties were vacant lots bought at tax sale and that Hatch already returned once from Argentina to sign the defunct plea agreement. As for the passport, he said the first one is still missing.

"He is not a risk of flight," he said.

Torres, however, disagreed.

"Marshal," he said, "would you take Mr. Hatch?"

Projo.com writer Jack Perry contributed to this report.

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