Beanie Babies Founder Gets His 'Get-Out-of-Jail' Card

CHICAGO-Ty Warner, the wealthy entrepreneur who started the Beanie Baby craze, was sentenced today in federal court to two years probation and at least 500 hours of community service after pleading guilty last year to tax evasion. He had faced a maximum possible prison term of up to 57 months, and prosecutors had been seeking a sentence of at least one year behind bars.

In the plea agreement negotiated last fall, Warner admitted that he had undisclosed Swiss banks accounts dating back to 1996 that, at the peak, held $107 million. Warner has since paid a $53 million civil penalty and nearly $30 million more in back taxes and interest.

Just prior to his decision, US District Judge Charles Kocoras took the unusual step of reading aloud from portions of more than 70 letters that were submitted under seal to the court-and which detailed Warner's significant charitable acts, both financial and personal. In one letter from a woman in California suffering from kidney failure, she recounts how a chance meeting with Warner resulted in him writing her a check for $20,000 and assisting her in finding alternative treatment overseas for her condition. Other letters told of Warner's multi-million dollar donations to the Children's Hunger Fund and the Andre Agassi College Preparatory Academy in Las Vegas.

Kocoras cited Warner's long history of "service and kindness to mankind" in his determination that sending the self-made billionaire to jail would serve no purpose. "Society will be best served by allowing him to continue his good works," the judge said.

Warner, who started Ty, Inc. out of a condominium in suburban Chicago in the mid-1980's, and whose net worth is estimated to be more than $2 billion, spoke briefly and haltingly just prior to learning of his fate.

"I want to apologize to the court for my conduct," the 69-year old Warner began. He told the judge that he was "overwhelmed and humbly thankful for all the letters of support," and that the kindness and understanding he had received made his "feelings of shame and embarrassment so much more unbearable."

In filings prior to the sentence, the government contended that Warner's decision to conceal his overseas accounts was motivated by greed and that his charitable acts should not amount to a "get-out-of-jail" card.

Prosecutor Michelle Peterson said today that Warner came forward to reveal his hidden accounts only after it became "a near-certainty that United States law enforcement was going to discover his account."

While noting that the $80 million in payments Warner has made amount to a tiny percentage of his net worth, Peterson argued that a probationary sentence would send a message that tax evasion amounts to "little more than a bad investment."

As a condition of his probation, Warner will be required to pay a $100,000 fine, and to perform his community service hours at several high schools.

Join the Discussion
blog comments powered by Disqus
You Might Also Like...