Billionaire Beanie Babies creator Ty Warner avoids jail for tax evasion
Judge rules that tycoon’s ‘endless acts of charitable kindness’ should ‘trump’ his $25m tax evasion
The billionaire creator of Beanie Babies has avoided a prison sentence after he pleaded guilty to evading millions of dollars of taxes owed in the US.
Ty Warner was accused of hiding away $25 million (£15 million) in Swiss bank accounts, and after admitting a single count of tax evasion said he felt “shame and embarrassment” for what he had done.
The 69-year-old faced a maximum sentence of five years in prison, but was instead ordered to complete 500 hours of community service.
Presiding over the case at a Chicago federal court, Judge Charles Kocoras went to great lengths praising Warner’s extensive charity work, saying: “Society will be better served by allowing him to continue his good works.”
Prosecutors had asked for Warner, who was also given two years’ probation, to be made to serve at least a year in jail.
“(Without prison time), tax evasion becomes little more than a bad investment,” prosecutor Michelle Petersen told the judge. “The perception cannot be that a wealthy felon can just write a check and not face further punishment.”
Ms Peterson told the court how Warner had deliberately and meticulously hidden his income — more than $100 million at one point — by filing false tax returns for at least 11 years. She added that Peter Troost, another businessman caught in the same IRS operation, was sentenced by another judge to one year in prison for hiding far less — $3 million.
But Judge Kocoras decided that Warner's “endless acts of kindness” deserved to “trump” his criminal behaviour. He added that the high-profile toy-maker had already been punished by “public humiliation” and “private torment”.
Speaking at court, Warner said: “I never realised the biggest mistake of my life would cost me the respect of those closest to me.”
Warner, who according to his lawyers grew up poor and had an unhappy childhood, created Beanie Babies in the mid-1990s. The toys became hugely popular, generating hundreds of millions of dollars for his Westmont-based TY Inc. Forbes recently put his net worth at $2.6 billion.
As well as spending 500 hours working at local Chicago high schools, Warner agreed to pay back $27 million in taxes owed and interest, as well as a fine of more than $53 million – one of the largest penalties ever paid in such a case.
Laughing at the end of yesterday’s hearing, Judge Kocoras advised the billionaire that he had the formal right to appeal his sentence. “That’s if you think you can get a better deal in the court of appeals,” he added.