Beanie Babies Creator Avoids Jail for Tax Evasion


Ty Warner, the entrepreneur who created Beanie Babies, today was sentenced 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 possible prison term of up to 57 months. Prosecutors had been seeking a sentence of at least one year behind bars.

In a plea agreement entered last fall, Warner admitted that he had undisclosed Swiss banks accounts dating back to 1996 that, at the peak, held $107 million dollars. Since the plea, Warner has 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 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, spoke briefly and haltingly to the court 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 court 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 embarassment 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 free" card. The prosecutors argued today in court 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."

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 Chicago-area high schools - where Warner's defense lawyers say that the billionaire entrepreneur will advice the students on business principles, marketing and product development.


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