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

Beanie Babies billionaire soon to be sentenced for tax evasion

Many Illinois residents likely recall the beanie babies craze of the 1990s. Few, however, may be familiar with the story of the man behind the small plush toys. Details related to the life of beanie babies creator Ty Warner were recently detailed as his criminal defense attorney requested Warner receive probation rather than prison time for tax evasion.

During 2009, Warner was targeted by the Internal Revenue Service and U.S. Justice Department in an attempt to identify wealthy U.S. citizens with foreign bank accounts. In a secret deal, foreign financial banking giant USB provided the names of 285 wealthy Americans who had foreign accounts with the bank. Despite Warner's attempts to come clean about assets held in this foreign account, the IRS and Justice Department chose instead to pursue legal action.

In September of 2011, Warner received a subpoena for detailed information related to the offshore account. This signaled the start of a legal nightmare that resulted in the self-made billionaire eventually pleading guilty to criminal tax evasion charges. As part of a plea agreement, he was ordered to pay a $53 million dollar penalty and an estimated $16 million dollars in back taxes.

Warner's sentencing hearing recently got underway and the court learned intimate details of the man who built a multi-billion dollar business from nothing. When requesting that his client be given probation rather than up to five-years in prison, Warner's defense attorney provided details of Warner's difficult childhood as well as his many philanthropic and charitable acts.

Additionally, Warner's attorney provided information related to his client's prior attempts to come clean about the foreign account when he applied for the voluntary disclosure program. His attempts to rectify the situation, however, were unsuccessful as the IRS rejected his request.

We'll continue to report on this case as a judge makes a decision related to Warner's sentence. This case proves, however, the importance of having legal representation when facing serious criminal charges related to tax evasion. 

Source: Chicago Tribune, "Ty Warner details 'unhappy' childhood in plea for probation on tax evasion," Becky Yerak, Jan. 2, 2014

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