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February 13, 2014

Feds to appeal probation sentence given to tax-dodging Beanie Babies billionaire

As reported in this new AP article, the "U.S. attorney's office in Chicago said Thursday that it's appealing a sentence that included no prison time for the billionaire creator of Beanie Babies for hiding at least $25 million from U.S. tax authorities in Swiss bank accounts."  Here is more:

At H. Ty Warner's sentencing last month, Judge Charles Kocoras heaped praise on the toymaker for his charitable giving, declaring society was better served by letting him go free and giving him two years' probation instead of sending him to prison. Warner had faced up to five years in prison.

Warner, 69, of Oak Brook, Ill., was one of the highest profile figures snared in a long-running investigation of Americans concealing funds in Swiss bank accounts. Others convicted of squirreling away less money in Switzerland than Warner have done prison time. Warner, who grew up poor, created the animal-shaped Beanie Babies in the mid-'90s, triggering a craze that made Warner spectacularly rich. Forbes recently estimated his net worth at $2.6 billion.

A one-page notice of appeal signed by U.S. Attorney Zachary Fardon was filed with the U.S. 7th Circuit Court of Appeals, and a full brief will be submitted later. Justice officials in Washington still must OK the appeal, but that's usually considered a formality.

At a Jan. 14 sentencing hearing, Kocoras spent most of his 20-minute explanation of the sentence expressing admiration for Warner. He also said the businessman had already paid a price in "public humiliation." In addition to probation, Kocoras ordered Warner to do 500 hours of community service at Chicago high schools. Earlier, Warner agreed to pay $27 million in back taxes and interest, and a civil penalty of more than $53 million....

During sentencing, assistant government attorney Michelle Petersen urged Kocoras to put Warner behind bars for at least a year.  "(Without prison time), tax evasion becomes little more than a bad investment," she told him.  "The perception cannot be that a wealthy felon can just write a check and not face further punishment."

This should be a VERY interesting sentencing appeal to watch in the months ahead, and I am already super stoked to read the coming Seventh Circuit briefs from the parties concerning what will surely be differing views on what federal sentencing law demands in a case of this nature.

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February 13, 2014 at 05:44 PM | Permalink


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"super stoked"

those marijuana classes are starting to get to you, man.

Posted by: Joe | Feb 13, 2014 6:44:07 PM

i still think he should spend part of that 2 billion removing himself from this criminal country no matter who he has to remove to do it.

Posted by: rodsmith | Feb 13, 2014 10:39:05 PM

Sentence is probably excessive, not coddling the rich, but such a small percentage of his net worth, and the fact that he could easily leave the country isn't saying much, most people cheat on their taxes somewhat.

Everything from buying online purchases w/o paying use tax, to cash only businesses, to even allowing folks to mow your lawn for free, to paying someone for a favor or an errand in cash and not declaring income. It's nothing major, and I wouldn't argue that the neighbor next door should report their cash earnings from shoveling your snow to the IRS. Your barber or waiter probably doesn't pay tax on their cash tips.

The IRS requires worldwide reporting of income and its complicated, so if you have a sell candy or clothing in Switzerland and folks in Switzerland are paying and buying your clothing, you have reporting obligations even if the money never touches US soil.

I would argue that such a small amount of net worth wouldn't establish intent, since he would be better of giving up us citizenship.

The United States is becoming a country in which prosecutors have too much power and sentencing in jail is not proportionate to the crime, folks even arrested for simple crimes who can make bail or such as a minor drug possession or held in the same filthy cages as terrorists and murderers, or rapists, true there are separate security prisons for inmates, but remember prison is prison, and U.S. prisons are certainly no fun, contrary to public imagery. Yes, medical care and security of the inmates, maybe be somewhat better than in third world countries, but its not a coddling facility or a country club, any such anecdotal or unusual cases from 20 years ago is not true anymore and is not representative.

Even if you argue for jail time , since he made a foolish mistake and others didn't get off, once has to admit the complex laws and power of prosecutors especially for the vague legal line of insider trading cases, and the easy process of getting an indictment, make folks wonder, and maybe the other folks should have gotten off, maybe not completely but not jail time.

Posted by: Kris | Feb 18, 2014 5:16:06 AM

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