Beanie Baby founder – Ty Warner – is collecting some other valuable things these days: His own money. The Chicago-based billionaire (yes he made over a billion dollars on his Beanies) did not turn over the rightful amount of tax, and now the 69-year-old Warner will have to pay out $50 million stemming from tax evasion charges, reports the Chicago Tribune on Sept. 18.
Warner pleaded guilty to felony tax charges stemming from an off-shore account established 17 years ago in Zurich, Switzerland. At the time he opened the account, he specifically requested that the bank not mail any documents stateside.
“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,” Warner’s lawyer Gregory Scandaglia said. “Mr. Warner accepts full responsibility for his actions with this plea agreement.”
Tax evasion differs from tax avoidance in the eyes of the IRS in one distinct way: Evasion is the willful defeat of tax through illegal means. Avoidance is the lawful structuring of income and expenses in order to yield the best tax outcome.
“The charge alleges that Warner went to great lengths to hide from his accountants and the IRS more than $3.1 million in foreign income generated in a secret Swiss account,” said Gary Shapiro, U.S. attorney for the Northern District of Illinois.
Court documents also show that Warner concealed his name on the Swiss account, instead titling the account under a fictitious “Molani Foundation.”
Warner ranks 209th in Forbes recent 400 Richest Americans list, estimated with a net worth of $2.6 billion.
Beanie Babies were the rage collectable in the mid 90s and early 2000s. The craze slowly declined after maker Ty Warner Inc. announced they were retiring all babies, making a final bear called “The End.” Some individuals saw the Beanie market as a chance to horde up, thinking the investment would pay off. For one family, the Beanie craze ended in bankruptcy.