'Survivor' winner Richard Hatch to plead guilty to tax evasion charges
By Wade Paulsen, 01/18/2005
After gangland kingpin Al "Scarface" Capone was sentenced to federal prison after being foung guilty of income tax evasion in 1931, most Americans realized that "death and taxes" were the two certainties in life.
But somebody forgot to tell many other rich people over the years -- a list that now includes corporate consultant and Survivor: Pulau Tiga winner Richard Hatch.
In an court filing posted online by The Smoking Gun, "Tagi 4" mastermind Hatch was charged today with two counts of federal income tax evasion for failing to report his million-dollar prize from his victory in Survivor: Pulau Tiga and the $10,000 he was paid to appear on the reunion show on his 2000 imcome tax return and for failing to report $321,139 that he was paid as a radio talk-show host on both his 2001 income tax return and on a corporate income tax information return.
The filing of these charges by the U.S. Attorney's office as an "information" instead of an "indictment" generally means that a plea bargain has been reached with the malefactor, and that seems to be the case with Richard Hatch as well. The Associated Press reports that a plea agreement was filed with U.S. District Court for the District of Rhode Island at the same time and that, under the agreement, Hatch has agreed to plead guilty to both counts.
According to the information filing, Richard was paid the $1 million dollars for winning the first Survivor on August 18, five days before the finale aired, as well as a $10,000 appearance fee for the post-finale reunion show hosted by Bryant Gumbel. He deposited the checks into his personal bank account later that month, but, when he filed his 2000 personal income tax return in November 2002 (the delay in filing is not explained), he failed to list either amount in his income.
Subsequent to his Survivor triumph, in January 2001 Richard was hired by Entercom Broadcasting as a morning-drive co-host of "The Wilde Show," at a salary of $500,000 per year. In March, Richard incorporated a Delaware corporation named Tri-Whale Enterprises, Inc., which made a federal election to be treated as an S corporation. Under federal tax law, an S corporation is treated similarly to a pass-through entity, with its income and expenses being "passed through" to its sole shareholder Richard. Entercom agreed in April to re-draft the contract so that it would hire Tri-Whale, and then Tri-Whale would provide Richard's services to the show.
Unfortunately for Richard, his morning drive gig didn't work out, and he was terminated in early December 2001. At that time, Entercom had paid $70, 232 directly to Richard through April and then $321,139 to Tri-Whale for Richard's services from April to December.
When Richard filed tax returns for 2001 for both Tri-Whale and himself in October 2002, he omitted the $321,139 from both returns -- despite the fact that not only were the funds his personal income under federal tax law, but also that he had transferred most of the funds from Tri-Whale's bank account into his personal account.
Richard is scheduled to appear in U.S. District Court on Monday, January 24. The penalty for each charge is up to five years in federal prison and a $250,000 fine, but prosecutors have agreed to recommend a lesser sentence in return for his guilty plea. Nevertheless, as of next Monday, Richard may get to add a couple of new hyphenates to his business name card: corporate consultant -- Survivor winner -- radio show host -- convicted felon -- jailbird.
Still potentially to come are Rhode Island state income tax evasion charges against Richard. We would love to know what he was thinking when he failed to report something as widely-known as his Survivor winnings. Perhaps, like hotel mogul Leona Helmsley, he thought that "only the little people pay taxes" ... or perhaps he thought that taxes were as antiquated as wearing clothes around members of the opposite sex.