'Survivor' winner takes case to Supreme Court

[Mr. Mephistopheles]

'Survivor' winner takes case to Supreme Court

AP

"Survivor" winner Richard Hatch has appealed his tax evasion conviction to the U.S. Supreme Court, his attorney said Tuesday.

Hatch was convicted two years ago of failing to pay taxes on the $1 million prize he won on the debut season of the hit CBS reality series. The Newport man was sentenced to more than four years in prison.

Hatch's lawyer, Michael Minns, has said his client confronted producers about cheating during taping of the show, and a producer promised his taxes would be paid if he kept quiet and went on to win the competition. CBS has said Hatch's claims have no merit.

In a brief filed with the Supreme Court last week, Minns argued the judge improperly prevented Hatch from testifying about the conversation.

Minns also argued the judge unfairly limited his cross-examination of the tax accountant who prepared Hatch's tax returns and who was a key witness for the government.

"He's extremely optimistic about his appeal," Minns said. "He still believes the system should work."

The U.S. Supreme Court takes up only a small number of the appeals it receives.

Minns also said Hatch was writing a book about "his experiences with the legal system and his disappointment not just with the problems that he suffered but with the problems other people have

[Mr. Mephistopheles]

Geez, female Pomeranian dogs whine less than Richard Hatch.......

I guess he's never heard the phrase, "get it in writing". Of course that rests upon the assumption that he's telling the truth.

Hatch's lawyer, Michael Minns, has said his client confronted producers about cheating during taping of the show, and a producer promised his taxes would be paid if he kept quiet and went on to win the competition.

Here's my question: IF this were the situation and CBS "paid" his taxes, wouldn't these "paid taxes" also be taxable income?

[jcolvin2]

Mr. Mephistopheles wrote:

Here's my question: IF this were the situation and CBS "paid" his taxes, wouldn't these "paid taxes" also be taxable income?

Yes. Tax practitioners sometimes refer to this as "the tax on the tax."

However, evidence that Hatch thought that CBS was responsible for paying his tax conceivably could have been used to challenge the "willfulness" element of the tax offense.

[Demosthenes]

Hatch's lawyer, Michael Minns, has said his client confronted producers about cheating during taping of the show, and a producer promised his taxes would be paid if he kept quiet and went on to win the competition. CBS has said Hatch's claims have no merit.

In a brief filed with the Supreme Court last week, Minns argued the judge improperly prevented Hatch from testifying about the conversation.

Not only did the judge not prevent such testimony, the judge invited it.

From Hatch's appellate case:

b. Hatch's Argument on Appeal

Hatch argues that the limits placed by the district court on discussion of the rules of "Survivor" wrongly impaired his ability to introduce evidence that he had 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. Cheek v. United States, 498 U.S. 192 (1991); United States v. Bonneau, 970 F.2d 929, 931-34 (1st Cir. 1992). He argues that the district court "repeatedly set up roadblocks, withdrew invitations previously extended, and closed doors." According to the appellant, "The message was clear: Hatch could testify that he believed his taxes would be or had been paid, but he could not testify why."

We find little merit in this contention. Neither defense counsel's proffers nor Hatch's courtroom testimony ever described conversations with SEG's representatives in which they made offers or promises to pay Hatch's taxes if he won the prize. Yet Hatch's argument in his appellate brief is now apparently premised on the assumption that either such a "deal" was shown at trial or had been the subject of an offer of proof declined by the court. According to the brief, if Hatch had been allowed to testify to what happened behind the scenes on the "Survivor" show, "his testimony would have shown the context for testimony that Burnett proposed a quid pro quo deal: if Hatch remained silent about the fact that the show's outcome was being staged, the cheating would stop, and CBS/SEG would pay Hatch's taxes if he won" (Appellant's brief, p. 17). But Hatch, a principal witness to whatever, if anything, took place, never testified at trial to the events and words by Burnett or others that might constitute such a supposed "quid pro quo deal" with the producers of the show, although specifically invited to do so by the court on several occasions. To quote the judge's words on one of these occasions, Hatch could testify "that the individuals who were running the show had told him something or led him to believe that they would be paying the taxes on any earnings." Hatch was thus put on clear notice that testimony to such a "deal" was allowed and was indeed invited--no offer of proof was even needed as a predicate to his so testifying, if he would. But, notwithstanding the invitations, Hatch, for whatever reason, evaded the giving of any direct testimony--and no proffer was made--to the very deal which his counsel, on appeal, now alludes to as if firmly planted in the trial record. And nowhere else in the record, including in Burnett's own testimony, is there evidence of the making of such a deal. As the government points out in its brief, any wound stemming from this fatal gap in the record is entirely "self-inflicted."

[Mr. Mephistopheles]

Mr. Mephistopheles wrote:

Here's my question: IF this were the situation and CBS "paid" his taxes, wouldn't these "paid taxes" also be taxable income?

Yes. Tax practitioners sometimes refer to this as "the tax on the tax."

However, evidence that Hatch thought that CBS was responsible for paying his tax conceivably could have been used to challenge the "willfulness" element of the tax offense.

Thanks for the clarification. I see from Demo's recent post that Hatch had the opportunity and for some unknown reason didn't use that in his defense.

[Mr. Mephistopheles]

Demo, Once again you've come up with all the juicy morsels of information!

[webhick]

Out of curiosity, didn't he also fail to report the million on his tax return as income?

[Mr. Mephistopheles]

Out of curiosity, didn't he also fail to report the million on his tax return as income?

That sounds right.

[jg]

Mr. Mephistopheles wrote:

Here's my question: IF this were the situation and CBS "paid" his taxes, wouldn't these "paid taxes" also be taxable income?

Yes. Tax practitioners sometimes refer to this as "the tax on the tax."

However, evidence that Hatch thought that CBS was responsible for paying his tax conceivably could have been used to challenge the "willfulness" element of the tax offense.

As I recall, there were several other items of income omitted by Hatch (radio show or appearance fees, IIRC) so I must wonder who told him they would pay the income tax on those items of income?

[Quixote]

Out of curiosity, didn't he also fail to report the million on his tax return as income?

Yep. Even if we assume that CBS promised to pay his taxes, that doesn't help Hatch. Assuming, again, that Hatch, as he was having his taxes prepared, believed that CBS had made an estimated tax payment on his behalf, despite CBS having not even told him they had done so, much less provided written confirmation, he should have informed his preparer so the preparer could claim the payment on the return, on which, of course, Hatch would have included the $1 million in income. But that didn't happen.

Maybe Hatch thought CBS was waiting on a copy of his tax return so they could determine the amount of his tax attributable to the $1 million. If so, Hatch would have had his return prepared with the $1 million included in income. Now, that did happen. But Hatch never filed that return. No doubt , Hatch showed the return to CBS and asked for a check. The CBS producers, whose drug addled brains could hardly remember last week, much less last year, denied making any promise to pay. Hatch, betrayed, swore then and there to return the $1 million and cleanse himself of the stench of Hollywood. Convinced that such an act would wipe out his tax liability, rather than simply give rise to a claim of right adjustment on his taxes for the current year, Hatch had a new return prepared without the offending $1 million. It was only after filing that return that Haych remembered, through his own booze induced haze, that he had contributed the $1 million to the Save the Cute Kittens and Puppies Fund, a sort of PETA lite. He returned to his CPA to seek advice, but the CPA found out Hatch was broke and laughed in his face.

[Dezcad]

The full Court of Appeals opinion is here.

It lays out all the facts in addition to the Survivor income.

[jg]

Thanks for the link.
The facts were as I thought.

As she prepared Hatch's 2001 individual tax return and the 2001 S-corporation tax return for Tri-Whale, Wallis made clear to Hatch he was individually liable for any income of Tri-Whale and that such income also needed to be reported on the S-corporation return. Hatch told Wallis about the January-March wage income from Entercom of $70,232, which Wallis included on his individual return, but he failed to disclose the April-December payments of $321,139 Entercom had made to Tri-Whale--the largest source of income Hatch had received that year. Hatch responds that he never received a 1099 or W-2 showing the Entercom income and states, without record citation, that "Wallis was aware that the income from Entercom, like all other income, went into Hatch's personal account" and thus that she could have discovered the $321,139 by examining the records of Hatch's personal checking account. Hatch's assertion ignores the fact that Wallis testified that Hatch gave her check stubs for which Tri-Whale was the payee, that those stubs did not include anything from Entercom, and that Hatch told her there were no other sources of income for Tri-Whale for that year. When Wallis asked Hatch whether he had opened a bank account for Tri-Whale, suggesting she might want to look at the bank statements, Hatch told her incorrectly that he had not done so.
Hatch disputes this fact on the grounds that Wallis testified she asked him about a checking account for Tri-Whale, not a general bank account, but her testimony also refers to her having asked him about the existence of a "business account." Further, it is clear from the testimony that Hatch provided her with information aboutTri-Whale's income but omitted information about the relevant sums of money at issue in the indictment and also omitted any information about the existence of a bank account for Tri-Whale,which he did have.

Hatch also failed to tell Wallis about the income from the car, the rental property, and the diverted donations. When Wallis inquired about the car (which she knew Hatch had won), Hatch lied and said he had not yet received it. As he had done the year before, Hatch told Wallis that the rental property had earned no income because it was still being renovated.

Based on what Hatch had told her, Wallis prepared a 2001 individual tax return for Hatch which omitted those four sources of income (the second portion of the Entercom payment, the car, the rental property, and the diverted donations, totaling $374,510) and which incorrectly stated that his income was $228,077 and that he was owed a substantial refund. Wallis also prepared a 2001 S-Corporation tax return for Tri-Whale which did not include the $321,139 in Entercom payments and which accordingly wrongly stated, based on check stubs provided to Wallis by Hatch, that Tri-Whale had received only $68,173 in income. Hatch filed the Tri-Whale return on October 1, 2002 and the individual return on October 9, 2002. As a result, Hatch paid no taxes and received a $44,874 refund. If Hatch had filed returns disclosing his true income, he would have paid $99,319 in taxes.

So, if the case gets remanded can he be sentenced to more time then he was on the original conviction(s)?