Prosecutors appeal Beanie Baby billionaire’s probation sentence
BY KIM JANSSEN Federal Courts Reporter May 9, 2014 5:10PM
H. Ty Warner, the billionaire who created Beanie Babies, arrives at federal court for sentencing on Tuesday, Jan. 14, 2014, in Chicago. Last year Warner pleaded guilty to one count of tax evasion for hiding $25 million in income in secret Swiss bank accounts. (AP Photo/Andrew A. Nelles)
Updated: July 10, 2014 10:59AM
Convicted felon and billionaire Beanie Baby inventor Ty Warner “is no Robin Hood” and should be locked up, federal prosecutors appealing his lenient sentence for tax evasion say.
Warner, 69, of Oak Brook, was in January spared prison by a federal judge who instead sentenced him to two years of probation and 500 hours of community service for conning teh IRS by hiding $100 million in secret Swiss bank accounts.
Though federal sentencing guidelines suggested a sentence of four to five years was appropriate, U.S. District Judge Charles Kocoras was moved by the plush toy magnate’s many acts of charity which he said were “motivated by the purest of intentions” and “trumped” Warner’s crimes.
Those “very unique” acts included Warner paying $20,000 worth of medical bills for a sick stranger he’d stopped to ask directions from.
But in an appeals court filing late Friday, prosecutors wrote that Warner’s “past charitable contributions were not so extraordinary, in light of his wealth, that they qualified as a ‘get-out-of-jail card.’”
Warner, who built a small toy business out of his Hinsdale garage into a personal fortune of $1.7 billion, vastly overstated his donations in court by calculating the $140 million retail price of plush toys he gave away over the last decade, rather than the $35.7 million they cost him to produce, prosecutors said.
And Kocoras “put unreasonable and undue weight on defendant’s charitable contributions without evaluating the context of defendant’s wealth; on letters submitted in support of defendant, many of which came from former or current employees and professional advisers; on back taxes and civil fines defendant paid to resolve his separate civil liabilities; and on the ‘embarrassment’ felt by defendant,” they wrote.
Prosecutors wanted Warner sentenced to a year in prison, pointing out that defendants who cheated the IRS out of far less in similar scams were locked up, including Skokie businessman Peter Troost, who got one year.
“A defendant’s acts of charity cannot ‘trump’ his criminal conduct,” they wrote, pointing out that they still don’t know where $90 million that Warner hid in his Swiss accounts came from and that his crimes “enabled him to evade more in taxes than many well-to-do people pay in a lifetime.”
Warner’s attorneys have yet to file a response to the government’s appeal.
But in January they successfully argued that by paying a $53 million fine and $27 million in back taxes, as well as being publicly humiliated, Warner had suffered enough.
Kocoras said at the time he believed “Society will be best served by allowing him to continue to do his good works.”
“The public humiliation the defendant has suffered is manifest,” the judge said. “Only he knows the private torment he has suffered.”
Warner’s backers agreed. His spokesman Eric Herman said late Friday: “Unfortunately, the government is spending resources to challenge a well-reasoned and careful sentence issued by a well-respected judge.”