Send Beanie Baby billionaire to prison for tax fraud: prosecutors
BY KIM JANSSEN Federal Courts Reporter January 7, 2014 3:04PM
Beanie Baby creator Ty Warner leaving the Dirksen Federal Building after being arraigned on federal tax evasion charges on Wednesday, October 2, 2013, in Chicago. | Chandler West/For Sun-Times Media
Updated: February 9, 2014 6:29AM
Billionaire Beanie Baby creator Ty Warner should serve time behind the bars of a federal prison for cheating on his taxes, prosecutors say.
The 69-year-old plush toy magnate is a “shrewd and successful businessman” who could “comfortably afford to pay the approximately $5.5 million in taxes that he evaded, but he instead made a conscious effort year after year, for more than a decade, to file false tax returns underreporting his income,” the feds said Tuesday in a court filing ahead of Warner’s sentencing hearing.
Prosecutors didn’t say how long they think Warner should get, but Warner faces a statutory maximum of five years in prison.
His lawyers argued last week that his charity donations and efforts to come clean mean he should be let off with probation or house arrest.
Warner tearfully pleaded guilty last year to hiding his income in a secret Swiss bank account. Under the terms of a plea deal, he agreed to pay a $53 million civil penalty and $16 million in back taxes.
But prosecutors wrote in their filing Tuesday that Warner was “telling the Court what he thinks he needs to say in order to appear to the Court to be open, honest, and ashamed.”
They added, “Unfortunately, the glaring omission of an honest explanation for the crime seems to be a continuation of his Swiss bank scheme: secretive and calculating.”
Warner claims he wanted to come clean by using an IRS amnesty for tax cheats, but prosecutors said they still don’t know what Warner’s motive was for hiding the cash, given he could easily have paid the taxes he dodged.
“Either he dodged more than $5,000,000 in taxes out of greed, or he had some reason to hide the source of the moneys which funded his Swiss accounts,” they wrote.
Warner’s attorney Gregory J. Scandaglia, wrote in a 36-page filing last week that Warner grew up in an “unhappy family” helping care for his schizophrenic mother with little help from his dad, describing him as an “American success story.”
Warner took a second mortgage on his Hinsdale condo in the 1980s to start his toy business, before striking it rich when he invented the $5 Beanie Baby in the 1990s.