How are you setting the hook??Are you giving it a swift jerk??Cause a circle hook is not meant to be used that way..I would first try a bigger hook, an 8/0 maybe..If that fails try the double hook with trebles..If it is a flatty, which it sounds like it to me, yes they do usually just hold the bait in there mouth and gnaw on it..Thats why I don't like using circles for flatheads..He's not really running off with it he's just mouthing it..Kinda like a gar would do, but a gar would shred the bait with its teeth..Sounds like your saying it just kinda crushed it and scaled it, right???If he's not really running with it and he's mouthing it, trying to set the hook would just pull it out his mouth, a circle kinda needs to get in that corner of the jaw as the fish runs with the bait..So try a bigger and different style hook and make sure its sharp..Thats my take..Hope it helps, and don't give up..I'm anxious to find out what it is too..