Beanie Babies Creator Asks For Probation in Tax Evasion Case

Ty Warner notes he already paid a $53 million penalty and at least $16 million in back taxes and interest

Beanie Babies creator Ty Warner, who pleaded guilty last year to one of the largest tax frauds in Chicago-area history, has a proposal for his sentencing judge: give me probation.

In a memorandum filed with the federal court in Chicago on Thursday, Warner noted that he has already paid a $53 million penalty and at least $16 million in back taxes and interest. His attorneys argue that while his offense level would seem to call for a jail term of 46 to 57 months, he has engaged in an “extraordinary acceptance of responsibility.”

Attorney Gregory Scandaglia notes that Warner’s saga is an American success story, that he has employed thousands and created a product “that brought joy and comfort to millions of children.”

Scandaglia quotes numerous letters written to sentencing judge Charles Kocoras. Among them was from a woman who once Warner asked for directions. Warner fully funded her medical treatments after he learned of her need for a life-saving kidney procedure.

Another letter discussed the medical treatments Warner provided at the Mayo Clinic for the son of one of his employees in China, and another came from a European toy distributor who recalled how Warner provided assistance so that a handicapped Japanese child could receive much-needed surgery.

Scandaglia notes Warner gave so much money to various charities, he allowed nearly $16 million in charitable tax deductions to expire. And that in his lifetime, he has paid approximately $1 billion in income taxes.

Warner’s lawyer says he tried to take part in a voluntary disclosure program offered by the IRS but that he was rejected in October of 2009, and that subsequent requests to make good on his taxes fell on deaf ears.

“Ty’s efforts to voluntarily disclose his noncompliance, his filing compliance from tax year 2008 forward, and his acceptance of full responsibility are highly relevant to the nature of his offense,” his attorney writes. “The crime to which he has pleaded guilty is an aberration, stemming from a single, regrettable decision to open (an offshore Swiss account) almost 20 years ago.”

“This case concerns an isolated event in Ty’s otherwise law-abiding life,” the filing states. “There is no reason to believe prison time is necessary to prevent him from engaging in tax evasion again.”

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