Beanie Babies creator Ty Warner to settle tax evasion charges
CHICAGO — Ty Warner, the entrepreneur who became a billionaire creating Beanie Babies toys, has been charged with federal tax evasion and has agreed to pay a $53.5-million penalty, federal officials said.
Warner was charged with failing to report income he earned in a secret offshore account he held with UBS, the financial services firm based in Switzerland, the U.S. attorney’s office in Chicago said Wednesday.
Warner’s lawyer, Gregory Scandaglia, confirmed that Warner, the sole owner of Westmont, Ill.-based toy designer Ty Inc., reached an agreement to resolve an investigation into an overseas account he opened in 1996.
“This is an unfortunate situation that Mr. Warner has been trying to resolve for several years now, including through an attempt to enroll in the IRS’s Offshore Voluntary Disclosure Program in 2009,” Scandaglia said. “Mr. Warner accepts full responsibility for his actions with this plea agreement.”
Warner, 69, ranks 209th in a recent Forbes ranking of richest Americans. His net worth is estimated at $2.6 billion.
“Warner went to great lengths to hide from his accountants and the IRS more than $3.1 million in foreign income generated in a secret Swiss account,” Gary Shapiro, U.S. attorney for the Northern District of Illinois, said in a statement. He failed to pay taxes of $885,300 for calendar year 2002, court documents said.
In December 2002, Warner transferred the assets in his UBS account to a second Swiss financial institution, when the account had a balance of $93.6 million.
Federal law requires taxpayers to report financial accounts in foreign countries if the value exceeds $10,000 at any time during the calendar year.
Failure to file a Report of Foreign Bank and Financial Accounts form with the IRS can result in a civil penalty of up to 50% of the amount in the account at the time of the violation.
Tax evasion carries a maximum penalty of five years in prison and a $250,000 fine. Warner will be arraigned in a federal court at a later date.
Chicago Tribune staff writers Ameet Sachdev, Gregory Karp, Kathy Bergen and Samantha Bomkamp contributed to this report.
