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Ty Warner’s tax evasion sentence little more than a hill of beans: Brown

H. Ty Warner billionaire who created Beanie Babies arrives federal court for sentencing Tuesday Jan. 14 2014 Chicago. Last year

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)

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Updated: February 16, 2014 6:40AM

Somewhere in my attic is a big plastic bin full of Beanie Babies, and if memory serves, maybe a dresser drawer full as well.

They aren’t preserved as collector items, just childhood castoffs from a couple of now full-grown kids whose parents aren’t ready to part with the past.

I don’t begrudge Ty Warner for becoming a billionaire by suckering folks like me into spoiling our children with a never-ending supply of the damn things. That’s the American way.

But it sure makes me mad when he hides his profits from those sales in a Swiss bank to avoid paying taxes, and then when he finally gets caught, manages to walk away by writing a big check to the federal government.

Unfortunately, that’s become the American way, too.

On Tuesday, U.S. District Judge Charles Kocoras sentenced Warner to two years probation and 500 hours of community service for tax evasion.

Previously, Warner had agreed to pay a $53 million civil penalty plus $27 million in back taxes and interest, which doesn’t even exhaust the $121 million he still has stashed in Switzerland.

Noting Warner’s charitable ways, Kocoras declared: “Society will be best served by allowing him to continue to do his good works.”

I’d argue society would have been much better served if Warner and every other big-time tax cheat hiding their money in offshore bank accounts got a taste of a short prison term.

I’m sure the 69-year-old Warner could have authorized somebody to write his checks to charity even while he was indisposed for, let’s say, six months.

Instead, to fulfill his community service, Kocoras ordered Warner to work with three Chicago schools where the billionaire says he can organize a curriculum to teach students how to manufacture and sell a product such as a school mascot modeled after his Beanie Baby success.

That’s cool, and maybe on the side, he could help them put on a school play.

I’d recommend the 1959 musical, “Never Steal Anything Small,” starring Jimmy Cagney.

These are my favorite lyrics:

“Steal $100 and they put you in stir;

Steal $100 million they address you as sir.”

The lesson to tax cheats in the U.S. is clear: Go big or stay home.

If you can squirrel away millions off-shore, the IRS is generally going to be willing to cut you a deal even if they catch you. And if for some reason they aren’t willing, as in the Warner case, there’s likely a federal judge who will let you skate anyway.

It makes a fellow wonder if Al Capone were operating today whether the government would have been able to bring him down on tax evasion charges again — as long as he was smart enough to hide his money offshore.

No, I’m not comparing Ty Warner to Al Capone, but I’ve just never understood how hiding money outside the country and lying about it on your tax returns was allowed to become an acceptable business practice.

As Warner’s lawyers made clear to the judge, it’s not as if his sentence of probation was out of the ordinary. In fact, it’s quite rare for individuals caught hiding money in offshore accounts to be sent to prison.

According to data they compiled, more than 100 individuals have been charged in the past five years under a Department of Justice program to pursue tax offenders who concealed funds in offshore accounts. Of the 47 defendants who have been sentenced so far, nearly two-thirds received probation, the lawyers said.

One of the stiffest punishments meted out was the year and a day sentence handed down in July against Skokie’s Peter Troost, a maker of cemetery markers, who only hid a fraction of the money that Warner did.

Warner and Troost were both caught when the bank UBS turned over the names of 285 Americans it had helped hide money from the IRS.

It’s now clear that most of those individuals will never even be charged, Warner’s lawyers said. And then there are tens of thousands of other individuals who were given amnesty after being admitted into IRS voluntary disclosure programs.

Warner wanted amnesty, too, but the IRS told him it was too late because they already had his name from UBS.

One of the parts I find interesting is that federal prosecutors say they don’t know the source of the money Warner put into the UBS account he opened 1996, and therefore can’t tell whether it was pre-tax income that he’d skimmed from his company, which would mean he owed even more in taxes.

Now that the federal judges for the Northern District of Illinois are getting serious about meting out stiff punishment for our crooked politicians, maybe somebody could write a memo on getting tough with the tax cheats as well.

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