Beanie Baby Founder Will Plead Guilty To Tax Evasion

Beanie Baby founder Ty Warner was charged with felony tax evasion by federal authorities. Warner, who is the sole founder of TY Inc., has agreed to plead guilty to the charges.

Statements from federal officials and Warner’s attorney added that the entrepreneur will also pay a $53.5 million penalty.

The Chicago Tribune reports that the charges stem from an overseas account the Beanie Baby creator opened in 1996. Warner traveled to Zurich, Switzerland in January of that year to open the account, according to court documents.

At that time, the businessman apparently asked that all correspondence related to the account be held by the bank, rather than being mailed somewhere.

Warner’s lawyer, Gregory Scandaglia, confirmed his client will plead guilty to the charges. He explained, “This is an unfortunate situation that Mr. Warner has been trying to resolve for several years now, including through an attempt to enroll in the IRS’s Offshore Voluntary Disclosure Program in 2009.”

Scandaglia added, “Mr. Warner accepts full responsibility for his actions with this plea agreement.” USA Today notes that Warner is ranked 209th on Forbes Magazine’s list of Richest Americans. The Beanie Baby founder’s net worth is estimated at $2.6 billion.

Warner was charged with tax evasion in federal court in Chicago after a federal probe of US clients of Union Bank of Switzerland. The probe included other overseas banks that hid US accounts from the IRS.

UBS admitted in February 2009 to helping taxpayers hide their accounts. After the revelation, the bank agreed to disclose information regarding its clients and their accounts to the IRS. In a statement, US Attorney Gary Shapiro asserted that the Beanie Baby creator “went to great lengths” to hide over $3 million in income in the Swiss account.

The $3 million in question was apparently earned by Warner in 2002 through investments in his UBS account. However, Warner allegedly committed tax evasion by failing to inform his accountants of the money. He also failed to report the existence of the account to the IRS. Tax evasion charges like those levied at the Beanie Baby founder carry a maximum penalty of five years in prison.