Beanie Babies Founder Gets Probation For Tax Evasion
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Updated 01/14/13 – 1:05 p.m.
CHICAGO (CBS) – The billionaire creator of Beanie Babies avoided prison Monday, when he was sentenced to two years of probation for evading taxes by hiding millions of dollars in a Swiss bank account that contained more than $100 million at one time.
CBS 2’s Susanna Song reports Ty Warner, 69, pleaded guilty in October to avoiding federal taxes on $25 million of income he stashed in a Swiss bank account.
At a hearing on Monday, U.S. District Judge Charles Kocoras sentenced Warner to two years probation, including 500 hours of community service, and fined him $100,000.
Federal prosecutors had asked for a sentence of more than a year in prison, saying warner only started to pay up when the feds discovered his secret Swiss bank account. Federal law requires taxpayers to report bank accounts in foreign countries if the total balance exceeds $10,000 at any time during the year.
Defense attorneys asked Kocoras to spare Warner from prison, citing a troubled childhood and extensive charitable works.
The judge called Warner’s philanthropic efforts “overwhelming,” and said society was better off with him on the street doing good works than behind bars.
U.S. Atty. Zachary Fardon said, even though prosecutors wanted Warner to spend at least some time in prison, he paid a high price for tax evasion. Warner had previously agreed to pay $53.5 million in civil penalties — half the value of his Swiss bank account at the height of the 11-year period when he was hiding income from the IRS. He paid that penalty on Jan. 2, according to court records.
“I think it is a significant and very hardening reality to go through a federal criminal prosecution, to have to pay very substantial fines,” Fardon said.
Warner pleaded guilty in October, admitting he failed to pay around $5.5 million in taxes due to the federal government between 1996 and 2008.
The tax evasion charge to which he pleaded guilty carried a maximum sentence of five years in prison.