Beanie Babies billionaire Warner pleads guilty to tax evasion
BY JON SEIDEL Staff Reporter October 2, 2013 11:34AM
Updated: January 2, 2014 1:43PM
Beanie Babies billionaire Ty Warner’s voice began to tremble as he confessed to a federal judge Wednesday about the millions of dollars he hid in Swiss bank accounts:
He apologized. He said there’s no excuse. And he said, “it’s a terrible way to meet you, your honor,” as he admitted tax evasion.
“I’m pleading guilty because I am guilty,” said Warner, 69.
U.S. Judge Charles Kocoras interrupted him and told Warner, “there will be a time to bare your soul.”
That day will come at Warner’s Jan. 15 sentencing, where he’ll face up to five years in prison for failing to pay nearly $5.6 million in taxes on more than $24 million unreported gross income between 1999 and 2007. He’ll also pay a $53 million civil penalty.
The judge put no travel restrictions on Warner for now and let the billionaire keep his passport.
Warner’s lawyer, Gregory Scandaglia, said Warner has paid more than $1 billion in taxes to the federal government in his lifetime. He’s previously said his client was charged even though he tried to enroll in a voluntary IRS offshore disclosure program in 2009.
But Warner himself had no comment after court. He fought past a throng of reporters and ducked into a car waiting outside the Dirksen federal courthouse.
The creator of Beanie Babies opened a secret account with the Union Bank of Switzerland in January 1996, according to his plea agreement. Its balance by December 2002 was $93,630,083, and its funds were transferred to Zurcher Kantonalbank around that time.
Prosecutors said Warner kept his name off the second account, holding it instead in the name of a sham business known as the “Molani Foundation.”
Warner’s gross income through investments in the first account was about $3,161,788, records show. Prosecutors said he failed to report it and pay $1,257,064 in taxes.
His undisclosed gross income for 1999 through 2007 totaled $24,448,912, according to the plea agreement. He failed to pay overall $5,594,877 in taxes, it said.
After Kocoras listened to prosecutors Wednesday, the judge turned to Warner and asked the billionaire to explain — in his own words — what he’d done.
“I opened up a foreign bank account in Switzerland about 20 years ago,” Warner said.
“And I didn’t tell anyone.”