H. Ty Warner, the billionaire creator of Beanie Babies plush toys, avoided a prison sentence for hiding income from U.S. tax collectors in a Swiss bank account.
Warner was sentenced today to two years of probation for tax evasion by U.S. District Judge Charles Kocoras in Chicago. He must also perform a total of 500 hours of community service for three area schools, the judge said.
Warner, the founder of toymaker Ty Inc. and Ty Warner Hotels & Resorts, failed to report more than $24.4 million in gross income to the U.S. Internal Revenue Service from 1999 to 2007, according to an agreement signed with prosecutors on Oct. 2, when he pleaded guilty to a single count of tax evasion based on his 2002 liabilities.
“I never realized the biggest mistake of my life would cost me the respect of those closest to me,” Warner, 69, said in court today. “I am truly sorry.”
Warner is among more than 100 people including bankers, lawyers and advisers prosecuted during the past five years in a U.S. crackdown on offshore tax crimes. Peter Troost, a grave- marker and monument maker, was sentenced last year to a year and a day in prison by a judge in the same Chicago courthouse after admitting he evaded taxes on more than $3.3 million in income.
$1.7 Billion
A resident of the Chicago suburb of Oak Brook, Illinois, Warner has a net worth of about $1.7 billion. He has donated $140 million in cash and toys to various charities and organizations, his lawyers said in a filing on Dec. 31.
Before passing sentence, the judge read letters of support for Warner from people who described some of the billionaire’s charitable deeds on behalf of a kidney dialysis patient, schools, Ty Inc. salesmen and his local municipal park district.
“Society will be best served by allowing him to continue his good works,” Kocoras concluded.
Advisory federal sentencing guidelines called for a prison term of 46 months to 57 months. Warner’s lawyers asked for probation and community service, saying their client’s conduct constituted a single deviation from an otherwise law-abiding life in which he has paid $1 billion in taxes.