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Beanie Babies creator wants probation, not prison, for tax evasion

Beanie Babies creator H. Ty Warner hopes to avoid prison for failing to report millions of dollars in secret income from a Swiss bank account.
Beanie Babies creator H. Ty Warner hopes to avoid prison for failing to report millions of dollars in secret income from a Swiss bank account.
(Michael S. Green / Associated Press)
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H. Ty Warner, the billionaire creator of the popular Beanie Babies toys, is urging a federal judge to sentence him to probation for tax evasion.

The 69-year-old tycoon pleaded guilty to a single count of felony tax evasion in October, acknowledging that he failed to report millions of dollars of interest income from a secret Swiss bank account from 1999 to 2007.

Warner was on a list of 285 names that Swiss banking giant UBS gave to the Justice Department in 2009 in an attempt to mitigate its own criminal liability in a massive U.S. crackdown on offshore tax evasion.

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Under a plea agreement, Warner has promised to pay more than $16 million in back taxes and interest, plus a $53.5-million penalty.

“Ty fully understands the gravity of his crime and his culpability in committing it,” his attorney, Gregory J. Scandaglia, said in a sentencing memorandum. “He knew it was unlawful to evade taxes on the income from this account, and he accepts responsibility for his conduct.”

Warner is scheduled to be sentenced Jan. 15 in Chicago.

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Scandaglia suggested that the financial penalty was sufficient punishment, given Warner’s age and lack of a prior criminal history. He urged U.S. District Judge Charles P. Kocoras to sentence him to probation and community service instead of prison. Under federal sentencing laws, Warner faces a possible term of more than four years in federal prison.

“Ty is paying dearly for his mistakes and will continue to do so for the rest of his life,” Scandaglia said in the court filing. “He does not seek to diminish the gravity of his conduct, but he respectfully asks the court to consider all of the facts.”

Scandaglia also asked the court to consider that Warner had paid approximately $1 billion in income taxes in his lifetime and “created thousands of jobs, including highly profitable careers for many of its early employees, some of whom rose from hourly wage jobs to become millionaires.”

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Federal prosecutors have not yet submitted a sentencing recommendation.

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