U.S. v. Hatch

• Decision Date: 01 February 2008
• Docket Number: No. 06-1902.,06-1902.
• Citation: 514 F.3d 145
• Parties: UNITED STATES, Appellee, v. Richard HATCH, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

514 F.3d 145

UNITED STATES, Appellee, v. Richard HATCH, Defendant, Appellant.

No. 06-1902.

United States Court of Appeals, First Circuit.

Heard March 8, 2007.

Decided February 1, 2008.

Michael Louis Minns with whom Enid M. Williams and the Law Office of Michael Louis Minns P.L.C. was on brief for appellant.

Donald C. Lockhart, Assistant United States Attorney, with whom Robert Clark Corrente, United States Attorney, Andrew J. Reich and Lee H. Vilker, Assistant United States Attorneys, were on brief for appellant.

Before Boudin, Chief Judge, Campbell, Senior Circuit Judge, Howard, Circuit Judge.

CAMPBELL, Senior Circuit Judge.

Appellant-defendant Richard Hatch, the first winner of the CBS reality tv show "Survivor," appeals from his convictions and sentence on three counts of filing false tax returns, in violation of 26 U.S.C. §§ 7201 and 7206(1), after a jury trial in the United States District Court for the District of Rhode Island.

Hatch makes four arguments on appeal: (1) that the district court violated his Sixth Amendment rights by curtailing Hatch's explanation of why he believed the show's producers had paid the taxes on his "Survivor" winnings; (2) that, in a variety of ways, the court improperly limited the defense's right to cross-examine; (3) that the court wrongly allowed the government to use what Hatch calls "unqualified experts" while excluding some of the testimony of Hatch's own expert; and (4) that his sentence was unreasonably harsh. After reviewing the record and the arguments, we affirm the convictions on all three counts and the sentence.

Background

On September 8, 2005, Hatch was indicted for related tax and fraud crimes.

Count 1 alleged that Hatch had filed a tax return for the year 2000 in which he falsely stated that he had negative income and was owed a $4,483 refund, and that he willfully failed to declare three sources of income: (a) the over one million dollars he won on "Survivor;" (b) $18,708 in rental income from property he owned in Newport, Rhode Island; and (c) $25,000 in charitable donations diverted to his own use.

Count 2 alleged that Hatch had filed a tax return for 2001 which falsely stated that his income was $228,077 and that he was owed a $43,296 refund, and that he willfully failed to declare four sources of income: (a) about $320,000 he received as co-host of a radio show;. (b) $9,396 in rent from the Newport property; (c) $27,074, the value of a car he won as part of his "Survivor" prize; awl (d) $11,500 in charitable donations which he diverted to his own use.

Count 3 alleged that Hatch had filed a tax return for 2001 for an S-corporation¹ called Tri-Whale Enterprises, created to receive his radio show income, and that he falsely stated that Tri-Whale's annual income was $68,173, omitting the $320,000 mentioned in Count 2, above.

Counts 4-9 alleged that Hatch had defrauded four companies which contributed $36,500 in charitable donations, in violation of the mail and wire fraud statutes. Count 10 alleged that Hatch defrauded the People's Credit Union when he altered a $25,000 donation check so that he would appear to be a payee, as opposed to the designated charity, Horizon Bound, to whom the check was originally made out, and then deposited it in his account there.

Following a nine-day trial, the jury convicted Hatch on the three tax counts but acquitted him of the remaining charges. On May 16, 2006, the district court sentenced him to 51 months in prison, at the high end of the sentencing guideline range.

Facts

I. The 2000 Tax Returns (Count One)

For seven weeks in 2000, Hatch competed with sixteen other contestants on "Survivor," a reality television show filmed on the island of Pulau Tiga. As the "survivor" of the competition, Hatch won a prize of one million dollars and a car. He additionally received $10,000 for appearing on the August 23, 2000 televised finale of the show. "Survivor Entertainment Group" ("SEG"), which produced the show, cut two checks to Hatch in these amounts. Hatch deposited the one-million-dollar check in his bank account. He endorsed the $10,000 check over to a construction company at work renovating his residence in Middletown, Rhode Island.

Prior to the show, Hatch had signed a contract stating he was not an employee or agent of SEG and that he would be responsible for all taxes associated with any winnings: "I shall pay all state and federal or other taxes on any prizes I win." After Hatch received his prize, in early 2001, SEG sent Hatch an IRS 1099 form reporting his receipt of $1,010,000 in income from SEG in 2000.

Following his win, Hatch appeared December 7, 2000 on the pilot episode of a show called "For Goodness Sake!," which focused on the charitable causes of celebrities. The show's producer, Chamber's Communication Corporation, paid Hatch's travel expenses and made a $25,000 donation to "Horizon Bound," a charity Hatch had founded. Horizon Bound's ostensible object was to take disadvantaged teens on camping trips to build their self-esteem.

Hatch attempted to deposit the $25,000 Horizon Bound check in his personal account at Newport Federal Savings Bank, but as the check was payable to a corporation, the bank refused the deposit. Hatch then deposited the check in his personal account at another bank, People's Credit Union. The payee of the deposited check was "Horizon Bound/Richard Hatch," and there was conflicting testimony from Hatch and bank employees about alteration of the payee of the check.² Hatch subsequently used the money for gifts and the renovation of his home in Middletown, none of it going to Horizon Bound. Hatch's accountant, Daniel J. Urso, called as a defense witness, testified that Hatch's personal use of the funds was justified because Hatch had given other funds to the charity.

Hatch also in 2000 received $18,708 in rent from the tenants on a property he owned in Newport. He often collected the rent himself.

In March 2001, Hatch hired accountant Richard Plotkin to prepare his 2000 tax return. Hatch gave Plotkin the 1099 received from SEG showing his $1,010,000 in "Survivor" income, along with 1099s showing income from other sources, including a book deal and deals with Conde Nast and Reebok. Hatch gave Plotkin a copy of his own accounting of his income (which distinguished 1099 contractor income from W-2 employee income), in which he noted the "Survivor" income but did not list the $25,000 charity income and the $18,708 rental income. Hatch wrote on the accounting sheet that his "Total Income" was "$1,166,626.10." In a second written summary, Hatch referred to the rental property but claimed, wrongly, that it had generated "no rental income" in 2000 because it was "in renovation." Hatch later said he had received sixty days of rent in the sum of $4,000, and Plotkin's assistant accordingly crossed out "no rental income" and wrote "$4,000" underneath it, but this was also a misrepresentation because he had received seven months of rent for a total of $18,708. Plotkin emphasized to Hatch that the "Survivor" income had to be reported to the IRS, and Hatch did not disagree.

In November 2001, Plotkin showed Hatch the 2000 tax return Plotkin had prepared, which included the "Survivor" income but not the $25,000 charity income or the $18,708 rental income, of which Hatch had not informed him. Plotkin's draft 2000 tax return stated that Hatch owed $374,831 in taxes and $66,670 in interest and penalties for late filing. Hatch did not tell Plotkin that he disputed the inclusion of the "Survivor" income in the return. Hatch and Plotkin discussed various IRS payment options, and then Plotkin and Hatch signed the return. Plotkin offered to file the return, but Hatch said he would do it himself. Hatch never filed the return. Instead, in late 2001, Hatch hired a self-employed accountant and family friend, Jodi Rodrigues Wallis ("Wallis"), to prepare a new 2000 tax return. Hatch provided Wallis with a return for the year 1999 prepared by Plotkin, but not the return for 2000 Plotkin had prepared. When Wallis mentioned she wanted to contact Plotkin, Hatch indicated he preferred that she not be in contact with him because Hatch did not want any more to do with Plotkin's firm.

There was conflicting testimony by the two accountants about whether they ever discussed Hatch with one another. Hatch did not give Wallis the 1099s reflecting his non-"Survivor"-related income for 2000— even though he had given those forms to Plotkin. Hatch told Wallis he had been so busy with "Survivor" he had not had time to earn other income that year. As he had once told Plotkin, Hatch again claimed his rental property had earned no income because it was under renovation. Hatch denied receiving any royalties from a book deal, although Wallis knew Hatch had written, a book. Hatch told Wallis he had disclosed all his sources of income for 2000.

Hatch gave Wallis the 1099 furnished by SEG reflecting his "Survivor" income, as well as the original handwritten accounting sheet he had given Plotkin which stated there was no rental income. He did not give Wallis the other handwritten summary of his 1099 and W-2 income. Hatch also advised Wallis, incorrectly, that in connection with his receipt of the "Survivor" prize, he had paid twenty percent in commissions to an agent and a manager; that CBS had required him to retain an agent and manager in advance in order to claim the prize; and that the SEG contract had not contained any language warning him he would be responsible for paying taxes. Notwithstanding, Wallis told Hatch he was still required to pay taxes on the "Survivor" income, although he could deduct the purported commissions.

On March 1, 2002, Wallis handed to Hatch a 2000 tax return she had prepared reflecting the "Survivor" winnings less deductions for the claimed $200,000 in commissions but omitting the $25,000 "charity income," the $18,708 rental income, and the other 1099 income Hatch had divulged to Plotkin...