The Illinois-based creator of Beanie Babies was charged Wednesday for allegedly failing to report earnings from a secret offshore bank account.
H. Ty Warner, owner of the Westmont company that designs and sells the plush toys, plans to plead guilty to federal tax evasion and will pay a $53.5 million civil penalty, his lawyer said.
“This is an unfortunate situation that Mr. Warner has been trying to resolve for several years now," Warner’s attorney, Gregory Scandaglia, said, "including through an attempt to enroll in the IRS’s Offshore Voluntary Disclosure Program in 2009. Mr. Warner accepts full responsibility for his actions with this plea agreement.”
Prosecutors said Warner maintained a secret offshore account with UBS starting in 1996 then transferred the assets in 2002 to a second Swiss financial institution. The account's balance at the time was about $93,630,083.
Warner allegedly earned $3.1 million through investments held in his UBS account and he allegedly failed to tell his accountants about the income.
“Regardless of wealth, everyone must pay taxes on all of their income, not just the amount they choose to report," Gary S. Shapiro, United States Attorney for the Northern District of Illinois, said in a statement.
Shapiro said Warner allegedly "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."
"Such conduct invites federal prosecution,” he said, noting Warner is the second person charged in federal court in Chicago in connection with an investigation of U.S. clients of Union Bank of Switzerland (UBS) and other overseas banks hiding foreign accounts from the Internal Revenue Service.
Shapiro says tax evasion carries a maximum penalty of five years in prison and a $250,000 fine.