Taxable Talk

Richard Hatch has appealed his guilty verdict to the US Supreme Court. Hatch’s attorney told the Associated Press, “He’s extremely optimistic about his appeal…He still believes the system should work.” Hatch is appealing alleging that the judge improperly limited his testimony and that the judge unfairly limited his cross-examination of the accountant who prepared his tax returns.

The Court of Appeals rejected Hatch’s appeal earlier this year. Indeed, the Court of Appeals summarily rejected each argument that Hatch is now making, noting, “Here, the district court’s limitations on cross-examination in this nine-day trial were thoughtful and far from being excessive” and

The court thus opened the door for defense counsel to ask Hatch whether Burnett or someone else at SEG had promised to pay the taxes on the money he won. Hatch’s counsel, however, did not follow up with questions of this sort.

Like Mr. Hatch and his attorney, I believe that the system should work. Unlike Mr. Hatch and his attorney, I think it has.

Richard Hatch, the Survivor winner who thought that 300 million witnesses were wrong to him winning $1 million, had his appeal denied today by the First Circuit Court of Appeals. Mr. Hatch will likely have to complete his sentence of 51 months at ClubFed.

Hatch appealed his conviction on various grounds:

“Hatch argues that the district court violated his Sixth Amendment rights by precluding Hatch’s testimony about his alleged discovery during the taping of “Survivor” that the production company, SEG, was “cheating” by giving food to other contestants and otherwise violating its own rules for how the contest would be run. Hatch’s discovery of these irregularities, he now says in his appellate briefs and argument, led the show’s producer, Mark Burnett, to promise Hatch, in exchange for his silence, that SEG would pay his taxes if he were to win the prize.”

There’s a problem with this line, though; the Court gave Hatch several opportunities to elicit such testimony. “The court thus opened the door for defense counsel to ask Hatch whether Burnett or someone else at SEG had promised to pay the taxes on the money he won. Hatch’s counsel, however, did not follow up with questions of this sort.”

Hatch also argued that the Court prevented him from introducing evidence, “…[of] a subjective belief he had no legal duty to pay his taxes, an argument which would negate the element of willfulness required to prove his guilt.” The Appellate Court found no evidence of that.

“But without evidence that the producers had agreed to pay Hatch’s taxes, the evidence that Hatch had caught those running the show cheating was of no contextual materiality to the revenue violations with which Hatch was charged. The court was well within its discretion to reject further testimony of Hatch’s complaints about ‘cheating’ during the show until the defense furnished evidence of a tax payment promise that made such contextual evidence relevant.”

Hatch also argued that the District Court limited his arguments on cross-examination. But that argument held no water; “Here, the district court’s limitations on cross-examination in this nine-day trial were thoughtful and far from being excessive.”

Hatch also argued that the expert witnesses called (generally, accountants that Hatch had used and IRS agents) should not have been admitted. Here to, though, the Appellate Court disagreed. “Taking each witness in turn, we find no error.”

And the final claim made by Hatch on appeal was also turned down: “Lastly, Hatch challenges in the briefest of language his sentence on the grounds that the court erred in the loss finding and in applying a perjury enhancement. Both claims are undeveloped and fail in any event.” You may remember that the District Court judge felt that Hatch had lied during his testimony (thus, the perjury enhancement). The Appellate Court has told Hatch that he did indeed lie,

“…the court catalogued many instances in which Hatch had committed perjury, noting that the list was ‘a pretty long one’ and included lying on the stand about his failure to disclose the income which formed the bases for the charges on which he was convicted and about his alleged failure to read the letter drafted by Wallis regarding the hypothetical Exhibit One which he then submitted for his tax return.”

So for the next 27 months or so Hatch will complete his sentence at ClubFed. Hopefully he’ll learn from this experience that usually 300 million witnesses are right.

Full Appellate Court Ruling Here
AP Story Here
Link to previous Taxable Talk posts on Richard Hatch

Hat Tip: How Appealing

Survivor winner, but court loser, Richard Hatch had his appeal heard in Boston last Thursday. Hatch, convicted on multiple counts of tax evasion, is now serving his four-plus year prison term.

Hatch is arguing that he should have been able to present the argument that he had a deal with CBS and the producers of Survivor—a don’t ask don’t tell deal. They would pay his taxes and he wouldn’t tell about “deals” and cheating that happened on the television show. Hatch and his attorneys are asking for a new trial. CBS denies Hatch’s claims. The government counters that Hatch’s attorney could have asked this question during the trial but they didn’t.

The appeals court ruling will probably come out this summer.

News Story: Fox News

The U.S. Attorney’s Office replied to Richard Hatch’s appeal on Friday. Hatch, the former Survivor winner who didn’t pay his taxes on his $1 million prize, recently filed an appeal of his conviction. Hatch, in his appeal, alleged that he caught the producers cheating, and that’s why they reneged on paying his taxes; further, he never got a chance to testify about that at his trial. Hatch is currently serving his prison sentence in Morgantown, West Virginia.

The U.S. Attorney’s Office, though, has a different view. According to the Associated Press, Hatch had plenty of opportunity to bring the issue up during his trial. Hatch and his attorney were told that they could present evidence that CBS and the Survivor producers agreed to pay his taxes. CBS, by the way, denies Hatch’s claims.

The AP quotes the prosecution brief, “What the court was unwilling to tolerate was a sideshow concerning whether the producers helped other contestants cheat, divorced from the key defense predicate: that this had all led to the alleged promise…Counsel’s failure [to present evidence] cannot be transformed into an abuse of discretion by the court….”

For bloggers like me, I do hope that the Hatch case lasts as long as his sentence. It sure is amusing, but there is a salient point that can be gleemed from this case. No matter what others may promise to do, you are responsible for the paying of your taxes.

Richard Hatch, the Survivor winner who is now a convicted tax offender, has formally appealed his conviction from earlier this year. The Associated Press reports that Hatch caught the producers of Survivor cheating (they allegedly gave food to other contestants); CBS denies the charges.

In any case, Hatch is now at the Morgantown, West Virginia Federal Correctional Institute, serving a four-year term. Hatch’s appeal was filed with the 1st District Court of Appeals in Boston.

Perhaps Hatch is jealous of Wesley Snipes stealing the tax offender spotlight.

Earlier this year I speculated that Richard Hatch, Survivor winner and now convicted tax cheat, might spend some of his 51 months in prison in beautiful Victorville (where it was 115 F yesterday). Well, Hatch has just been moved from Plymouth, MA to Oklahoma City’s Federal Transfer Facility. Inmates rarely remain there, so perhaps Mr. Hatch will get to visit the wonderful California high desert after all.

Hat Tip: TaxGuru & Roth Tax Updates

Last night I drove home from Las Vegas and the CSEA’s SuperSeminar (well worth it, as usual; I’ll have more on the seminars later). As you head out of the high desert from Barstow on Interstate 15, you pass a sign that says, “Victorville Federal Correctional Complex.” There’s a chance that our favorite Survivor contestant may soon be taking up residence there (or a Club Fed location near you).

Richard Hatch, who will be a charter member of the Bozo Tax Offender Hall of Fame, was sentenced to 51 months in prison. That was more time than expected. Although Hatch told the court before sentencing, “I believe I’ve been completely truthful and completely forthcoming throughout the entire process,” Judge Ernest Torres didn’t see it that way. “There’s no nice way to say it: Mr. Hatch lied,” Judge Torres remarked. And that led directly to his sentencing.

So, finally, the Richard Hatch story is over. The moral? If you win a prize with 300 million witnesses, you had better declare it on your tax return.

But it wouldn’t take much for that to be true.

Danni Boatwright, the most recent Survivor champion, paid her taxes on the $1 million she won. “I paid them right away,” she told AP Radio. “(CBS) recommends that you pay your taxes first off. Come on, you don’t need anyone to tell you that. It’s ridiculous. Poor Richard.”

News Story: AP

…Next Stop: Prison

Richard Hatch, the first Survivor winner, was convicted today of failing to report $1,037,000 on his tax return. He was found not guilty of related fraud charges.

Mr. Hatch has cemented a place in the Bozo Tax Criminals Hall of Fame (a website I’ll create one day). Let’s look at his stupid not so good actions.

1. Hatch goes to accountant #1, find out that he owes over $300,000 in taxes. He goes to accountant #2, and the tax bill is around $240,000. (At his level of income, some differences in taxes owed is normal.) He then asks accountant #2 what his return would be if he didn’t declare the $1 million in Survivor winnings. Accountant #2 makes Hatch sign a statement that he won’t file that return (it showed Hatch getting a $4300 refund). He filed that return.

2. The IRS amazingly discovers his tax evasion. (With perhaps 300 million witnesses, even the most inept attorney could prove he won $1 million.) He’s offered a plea bargain: pay your taxes, and we’ll let you off fairly easily on the jail time. He accepts the plea initially, then changes his mind.

3. The case goes to trial. Hatch claims that CBS should have withheld taxes. His attorney might want to ask any seasoned accountant about what you should do if taxes aren’t withheld but should have been. (Answer: you pay the taxes.)

4. Hatch’s attorney can’t find the OJ Simpson jury. (Hat tip: Roth Tax Updates)

5. Hatch is found guilty. Roth Tax Updates speculates that his sentence will be around 3 years in jail. Oh, he’ll also have to pay those taxes, and interest and penalties. The maximum possible sentence is 13 years in prison and a fine of $600,000.

News Story: CBC
US Government Press Release
Roth Tax Updates post on Hatch’s Sentence