Richard Hatch, who won $1 million on TV's first Survivor show, faces a 10-count federal indictment that includes not paying taxes on that prize.

09:19 AM EDT on Tuesday, September 20, 2005

BY JACK PERRY
projo.com Staff Writer

PROVIDENCE -- Rhode Island's most famous reality TV star proclaimed he was innocent of tax evasion and fraud even before his arraignment on the federal charges yesterday morning.

Journal photo / Gretchen Ertl

Talking to the media outside federal court in Providence yesterday, Richard Hatch, 44, of Newport, says, "I've always, always, always paid my taxes and always will.''

Richard Hatch, 44, of Newport, the self-described "fat, naked guy" from Survivor, held court for the media outside the courtroom before his formal appearance in front of U.S. Magistrate Judge Lincoln B. Almond.

"This is absurd," Hatch said. "I'm not guilty."

Hatch, who gained fame for winning the first Survivor challenge, was named in a 10-count indictment Sept. 8 charging him with failing to pay taxes on the more than $1 million he won on the popular TV series, as well as income from a radio program, rental income and charitable donations he allegedly used for himself.

Hatch's case was brought to a grand jury after he walked away from an agreement with the U.S. Attorney's Office in March in which Hatch had agreed to plead guilty to two counts of tax evasion. He said he didn't go through with it because he isn't guilty.

"I've always, always, always paid my taxes and always will," he said.

The indictment includes additional charges against Hatch and the potential for a longer sentence, if convicted.

Hatch, who has hired new lawyers, is charged with two counts of tax evasion, one count of filing a false income tax return, two counts of wire fraud, four counts of mail fraud and one count of bank fraud.

One of his attorneys, John MacDonald of Providence, formally entered a not-guilty plea to all counts yesterday. Almond released Hatch on a $50,000 secured bond with several conditions.

Hatch, who often competed naked on Survivor, was dressed casually yesterday in a light-blue shirt and dark-blue pants. He had a thin beard.

Before the arraignment, he claimed that the case became personal for the U.S. Attorney's Office when he walked away from the plea agreement. He said that they wanted him to serve two years in prison.

U.S. Attorney Robert Clark Corrente, in court for Hatch's arraignment, later said, "It's not about personality. This is about evidence."

The grand jury alleges 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 Survivor prize.

It also alleges 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.

Hatch allegedly set up Horizon Bound as a charity to help troubled teenagers and accepted those donations, but the indictment said he used the money for his personal expenses. The indictment charges Hatch with a scheme to defraud in connection with those contributions, allegations that he did not face when the U.S. Attorney's Office charged him in January.

Hatch apparently shopped around for the best tax return that he could get for the year 2000. According to the indictment, a Newport accounting firm prepared a 2000 tax return for Hatch, including $1,010,000 he received in August 2000 for Survivor, and concluded that Hatch owed $441,501 in taxes.

The grand jury alleges that Hatch never filed that return. The indictment goes on to say that, in December 2001, Hatch hired a Middletown accountant to prepare another 2000 return for him. That return, which also included the Survivor income, concluded that Hatch owed $234,807.

The grand jury alleges that Hatch did not file that return either. In the fall of 2002, according to the indictment, Hatch asked the Middletown accountant to prepare a 2000 return that did not reflect the Survivor income. The accountant did that, but cautioned Hatch that the return, calling for a $4,483 refund, was for "informational" purposes only and was not to be filed.

The indictment alleges that Hatch did not heed the accountant's warning and filed that return with the IRS.

The maximum penalties for the charges Hatch faces are five years in prison and a $250,000 fine for each of the two counts of tax evasion, the two counts of wire fraud and the four counts of mail fraud; three years in prison and a $100,000 fine for filing a false S-Corporation income tax return; and 30 years in prison and a $1-million fine for bank fraud.

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 counts.

In court yesterday, Almond ordered Hatch to turn in his passport and restricted his travel to Rhode Island, but said he could go to Houston to consult with his attorneys.

Nationally known tax attorney Michael L. Minns and another Houston attorney are asking the court's permission to join MacDonald in representing Hatch. Almond said Chief U.S. District Judge Ernest C. Torres, scheduled to handle the case at trial, will decide whether to let in the out-of-state attorneys.

In March, Hatch appeared on NBC's Today show with Minns, who is author of How to Survive the IRS: My Battles Against Goliath. During that TV appearance, Hatch told host Katie Couric that CBS should have withheld his taxes on the Survivor prize. Minns said Hatch's contract with CBS indicated that the grand prize would be "less all applicable withholdings, deductions and taxes."

Almond said Hatch could also travel to New York or Los Angeles for work, but he must first receive permission from the government and file detailed information about the job and his itinerary.

Almond scheduled a pretrial conference Oct. 24 and said the trial would start on or after Nov. 1.

Hatch says his legal problems have already hurt his show business career.

"I've been dropped from all kinds of things that had already been scheduled," he said, declining to be specific.

Hatch has recently been a featured member of the cast of Battle of the Network Reality Stars, a six-part TV series that began in mid-August on Bravo. Hatch says the taping for that show has concluded.

Hatch yesterday claimed that the government was "using my notoriety" in its case against him, but he added later, "I don't regret Survivor. I enjoyed myself. I think I played it well."