Beanie Babies Creator's Sentence Debated in Court

Federal prosecutors seeking in an appeal to put the billionaire Beanie Babies creator in prison for hiding millions in Swiss bank accounts told judges Wednesday that the toy maker's sentence of probation threatens to erode the judicial system's ability to deter other tax evaders.

The Chicago hearing delved into the question of whether H. Ty Warner got off too easy given the lengths he went to conceal his crime — or whether the judge was right to essentially declare Warner's misdeeds to be out of character for someone with a substantial record of charitable giving.

An assistant U.S. attorney began her argument by rattling off a list of steps Warner took over more than a decade: lying to his own accountant, instructing the bank to destroy records and shifting money to another foreign bank when his came under scrutiny. He also warned the bank of "consequences" if his requests were not heeded, prosecutor Michelle Petersen said.

One of the appeals judges interrupted her, saying the trial judge considered all that but acted within the bounds of the court's discretion by focusing heavily on Warner's charitable works and private acts of kindness.

The judge is "not some bleeding-heart Pollyanna," said Ilana Diamond Rovner, adding that he must have agonized over the decision and likely knew it would not be popular.

Warner pleaded guilty and was sentenced in January to two years of probation as well as community service for filing false tax returns and failing to report more than $24.4 million in income from the accounts.