Beanie Baby Tycoon Fined Millions for Tax Evasion
Ty Warner was given two years of probation and 500 hours of community service for hiding his assets in a Swiss bank account. The creator of Beanie Babies toys, Warner avoided paying an estimated $5.6 million in taxes over the last ten years. Warner’s plea agreement has him paying the government $53.6 million, plus $27 million worth of back taxes and interest. According to the Washington Post, this is thought to be the biggest offshore account penalty ever reported.
In 1996, Mr. Warner created a bank account in Switzerland at UBS. Once its contents reached $94 million, he transferred the money to the Swiss bank, Zurcher Kantonalbank. Warner’s was among the 4,000 names UBS turned over to the U.S. when it admitted to helping over 38,000 U.S. citizens hide their income. In response to the information from UBS, the IRS created the Offshore Voluntary Disclosure Program to allow those with offshore accounts to pay penalties without having to face criminal prosecution. According to his lawyers, Warner attempted to enter the Disclosure Program, then unaware that the UBS had already revealed his involvement to the IRS. Prosecutors disagreed with this account. They said that he only admitted to his actions once his assets manager had been indicted and the UBS investigation had become public.
Federal prosecutors said that Warner’s relatively light sentence would send the wrong message to other potential tax evaders. In her court filing, Assistant U.S. Attorney Michelle Peterson argued, “The perception can’t be a wealthy felon can just write a check.” According to Forbes, The U.S. Sentencing Guidelines say Warner ought to have gotten 46 to 57 months in prison. As it stands, Warner’s $53 million fine adds up to only 50% of what he had hidden overseas.