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Beanie Babies tycoon spared jail

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H. Ty Warner gets into a car outside the federal building in Chicago.

ANDREW NELLES / THE ASSOCIATED PRESS Enlarge Image

H. Ty Warner gets into a car outside the federal building in Chicago.

CHICAGO -- The billionaire businessman behind Beanie Babies learned Tuesday he won't go to prison for hiding at least $25 million from U.S. tax authorities, and the judge who gave him two years' probation instead went to great lengths to praise his charitable giving.

H. Ty Warner, one of the highest-profile figures snared in a federal investigation of Americans using Swiss bank accounts to avoid U.S. taxes, issued a brief apology before he was sentenced in Chicago federal court. The toy-maker, who pleaded guilty to a single count of tax evasion, said he felt "shame and embarrassment" for what he had done.

Warner, 69, could have been sentenced to up to five years in prison. Prosecutor Michelle Petersen asked U.S. District Judge Charles Kocoras to give Warren at least a year behind bars.

Peterson detailed how Warren meticulously hid his income -- more than $100 million at one point -- by filing false tax returns for at least 11 years, and pointed out that another area businessman caught in the same dragnet, Peter Troost, got a year in prison from another judge in that courthouse for hiding far less -- $3 million.

"(Without prison time), tax evasion becomes little more than a bad investment," Petersen told the judge. "The perception cannot be that a wealthy felon can just write a cheque and not face further punishment."

Kocoras, though, opted against prison time, and he devoted most of the 20 minutes he spent explaining his sentence praising Warner's charitable work.

"Society will be better served by allowing him to continue his good works," he said, adding he believed the toy-maker had already paid a price in "public humiliation" and "private torment."

Warner, who grew up poor and had an unhappy childhood, according to his attorneys, created Beanie Babies in the mid-1990s. The small, plush toys resembling bears and other animals triggered a craze that generated hundreds of millions of dollars for his Westmont-based TY Inc. Forbes recently put his net worth at $2.6 billion.

Warner maintained a secret offshore account starting in 1996 with the Switzerland-based financial services company UBS -- shifting millions to another foreign bank when U.S. authorities began closely scrutinizing UBS. He even instructed the bank, under its rules, to destroy some records, Petersen said.

But Kocoras said that, in Warner's case, his "endless acts of kindness" deserved to "trump" his criminal behaviour.

 

-- The Associated Press

Republished from the Winnipeg Free Press print edition January 15, 2014 B5

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