Beanie Babies founder gets probation for tax evasion
Ty Warner, the billionaire founder of Beanie Babies stuffed toys, was sentenced to probation for hiding millions of dollars in a Swiss bank account and failing to report his interest income.
U.S. District Judge Charles Kocoras rejected federal prosecutors’ request for a prison sentence, placing Warner on probation for two years and ordering him to perform 500 hours of community service.
Before he was sentenced, Warner stood in a Chicago courtroom and apologized for his conduct, the Chicago Tribune reported.
“Unfortunately, I never realized that the biggest mistake [I] ever made in my life would cost me the respect that was most important to me,” Warner said. “For all of this, your honor, I am truly sorry.”
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Prosecutors had asked the judge to send Warner to prison, arguing that Warner tried to conceal the offshore accounts for years to evade U.S. personal income taxes.
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.”
After the hearing, U.S. Attorney Zachary Fardon told reporters that despite Warner avoiding jail time, prosecutors “held Mr. Warner accountable by bringing this case,” the Tribune reported.
In addition to the record fine Warner has paid, he is a convicted felon and has had to endure the shame and hardship of a public prosecution, Fardon said.
“It’s not what we asked for,” Fardon said. “But we have taken a position we think is fair and right under the circumstances, and that is the best that we can do.”
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