Beanie Babies Creator Nailed on Tax Evasion
CHICAGO (CN) - H. Ty Warner, the creator of Beanie Babies, will plead guilty to tax evasion after hiding $3 million in Swiss bank account income, federal prosecutors say.
Warner, 69, of Oak Brook, Ill., is the sole owner of TY Inc., which designs and sells Beanie Babies and other plush toys. An attorney for the businessman announced Wednesday afternoon that Warner faces a civil penalty of $53 million.
The secret bank account Warner held with UBS dates back to January 1996, three years after the original nine Beanie Babies were introduced.
By 2002, the account held a balance of approximately $93.6 million.
The government estimates that Warner earned $3 million through investments in the account in 2002, which he willfully failed to disclose, checking "no" next to the box on his tax forms asking if he held a foreign bank account.
Warner owes approximately $885,000 in additional taxes on this unreported income, the government claims.
The charge carries a maximum penalty of five years in prison, a $250,000 fine, plus liability for the back taxes plus interest.
Warner is the second taxpayer charged in the Northern District of Illinois in connection with the government's investigation of UBS for helping U.S. customers hide foreign accounts from the IRS. As part of a deferred prosecution agreement, the bank agreed in 2009 to provide the government with the identities and account information of certain UBS customers.