In September 2013, Beanie Babies creator Ty Warner was in the news for evading taxes through offshore Swiss accounts. In October, Warner pleaded guilty to tax evasion; in January, he was sentenced in U.S. District Court to Chicago to 2 years’ probation and a minimum of 500 hours of community service. Warner also faces a civil penalty of $53.6 million. He failed to report $24.4 million in income and nearly $5.6 million in federal taxes from his secret Swiss bank accounts.
Prosecutors argued that Warner should face time in prison. Warner earned more than $3.1 million in 2002 through investments held in his UBS account. He did not report these gains on his tax returns. Federal sentencing guidelines for failure to report money in offshore accounts include a prison term for 5 years.
Beanie babies, small plush toys that sold for $5 to $7 each, were especially popular in the nineties. They have retained their popularity as collectible items.
On January 15, before his sentencing, Warner told Judge Charles Kocoras that tax evasion was the “biggest mistake” of his life. Judge Kocoras then cited Warner’s many acts of charity and imposed probation as opposed to prison time.
The U.S. government filed a “notice of appeal” to the United States Court of Appeals for the Seventh Circuit over Judge Kocoras’ sentencing order. Warner’s spokesperson declined to comment on the appeal, but stated that community service details for Warner are in process of being worked out.
Please contact Vic Abajian, former IRS tax attorney who specializes in offshore bank account disclosures, audit and related criminal proceedings.