Beanie Babies Creator Gets Probation for Tax Evasion

Ty Warner faced up to five years in federal prison

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    TK

    The billionaire creator of Beanie Babies on Tuesday avoided prison and was sentenced to two years probation and community service for failing to pay taxes on $25 million in income he'd hidden in an offshore account.

    Ty Warner was contrite in his appearance before U.S. District Judge Charles Kocoras, saying he felt "shame and embarrassment" for what he'd done.

    Warner faced up to five years in prison. The 69-year-old in October pleaded guilty to a single count of tax evasion, but his defense team argued probation was appropriate because he'd already paid a $53 million penalty and at least $16 million in back taxes and interest.

    Beanie Babies Creator Pleads Guilty to Tax Evasion

    [CHI] Beanie Babies Creator Pleads Guilty to Tax Evasion
    Ty Warner, the billionaire who created Beanie Babies pleaded guilty Wednesday to tax evasion charges.

    Kocoras said his decision was difficult but praised Warner for the charity work he's done.

    "Society will be better served by allowing him to continue his good works," the judge said.

    The government was disappointed by the ruling.

    "It is imperative that when an individual brazenly breaks the law and lies repeatedly, year over year on their income tax returns, and evades the payment of millions of dollars of taxable income, that that person be held accountable," said Zach Fardon, the new U.S. Attorney for the Northern District of Illinois. "And that's true if you're rich or you're poor. No one is above the law, and everyone, including the wealthy, has to pay their dues."

    Warner's 500 hours of community service will be performed at three Chicago-area schools in the form of entrepreneurial training. Students at Richards Career Academy, Tilden Career Community Academy High School and Leo Catholic High School will be taught how to design, produce and market a new product.

    Any money raised from the resulting product would go toward scholarships at those schools.

    Beanie Babies first appeared in the mid-'90s, triggering a craze that generated hundreds of millions of dollars for Westmont-based TY Inc. Forbes recently estimated Warner's net worth at $2.6 billion.

    Prosecutors said Warner maintained a secret account with UBS starting in 1996 then transferred the assets in 2002 to a second Swiss financial institution. The account's balance at the time was about $93,630,083.

    Warner allegedly earned $3.1 million through investments held in his UBS account and he allegedly failed to tell his accountants about the income.

    The Associated Press contributed to this report.