Robert J. Fedor, Esq., L.L.C.

Beanie Babies creator faces tax evasion charges

Many Ohio residents likely remember the popularity of and frenzy that surrounded the tiny bean-stuffed animals known as Beanie Babies. The toy's creator, H. Ty Warner began making Beanie Babies in 1993 and had amassed a multi-million dollar fortune by the early 2000s.

Warner was recently the target of a crackdown by the IRS on account holders found to have secret foreign accounts through the global financial service provider UBS. As part of a 2009 deal struck with UBS, the company agreed to turn over the names and account information of select customers with foreign accounts to the IRS.

Warner was recently indicted on charges related to tax evasion. It's believed he will plead guilty to criminal charges that he failed to pay taxes on $3 million dollars he earned through the Swiss bank account. According to court documents, Warner established the foreign bank account during 1996 and the account was reported to have a balance of $93.6 million dollars by 2002.

If convicted of criminal charges related to tax evasion, Warner could face up to five years in federal prison. Additionally, he will likely be ordered to pay hefty fines and penalties. In addition, Warner's attorney recently admitted that his client is also facing a $53 million dollar civil penalty.

Individuals with foreign bank accounts must disclose the existence of such accounts as well as pay taxes related to assets held in those accounts. Failure to do so can result in criminal charges related to tax evasion being filed.

The evidence against Warner is compelling which is likely why he's chosen to plead guilty to the charges. In exchange for his cooperation, it's possible a judge will hand down a more lenient sentence and that he may avoid serving any time behind bars.

Source: Courthouse News Service, “Beanie Babies Creator Nailed on Tax Evasion,” Lorraine Bailey, Sept. 19, 2013. 

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