The creator of some of the world's most beloved stuffed animals is getting no love from the IRS.
Ty Warner, who made billions when demand exploded for his Beanie Babies in the 1990s, was charged Wednesday with federal tax evasion, accused of failing to report more than $3 million he earned in a secret offshore account.
Warner, 69, has agreed to plead guilty and will pay a civil penalty of $53.6 million, his lawyer, George Scandaglia, said in a statement.
"This is an unfortunate situation that Mr. Warner has been trying to resolve for several years now," Scandaglia said. "Mr. Warner accepts full responsibility for his actions with this plea agreement."
Warner, ranked 209th onForbes Magazine's list of richest Americans with an estimated worth of $2.6 billion, generally sold his Beanie Babies for less than $10. At the peak of their popularity in the 1990s, resale of some favored versions could draw several times their retail value.
Warner, who still sells a variety of stuffed toys through his company TY Inc., was charged in federal court in Chicago in connection with a probe of U.S. clients of Union Bank of Switzerland and other overseas banks that hid foreign accounts from the IRS.
In February 2009, UBS admitted it helped taxpayers hide accounts and agreed to provide the IRS with information on its clients and their accounts. Warner of Oak Brook, Ill., is cooperating with the IRS and will plead guilty to tax evasion, U.S. Attorney Gary Shapiro said in a statement.
The statement says Warner "went to great lengths" to hide more than $3 million in income generated from a secret Swiss account.
According to the charging document, Warner maintained a secret offshore account with UBS starting in 1996. In late 2002, Warner transferred more than $93 million in assets in his UBS account to a second Swiss financial institution, Zürcher Kantonalbank.
In 2002, Warner earned approximately $3,161,788 in gross income through investments held in his UBS account, according to the charge. Warner allegedly committed tax evasion for that year by failing to tell his accountants about that income and by failing to report that income or the existence of the UBS account to the IRS.
Federal tax law requires U.S. taxpayers pay taxes on all income earned worldwide. Tax evasion carries a maximum penalty of five years in prison.
By John Bacon, USA Today