Mr Beanie Babies Ty Warner to pay $53M to settle tax evasion charges

Beanie Babies creator and billionaire Ty Warner has agreed to plead guilty to federal tax evasion and pay a fine of more than $53 million for failing to report money he earned in a secret account offshore, the government said this morning.

1/14/14 update: Ty Warner, billionaire creator of Beanie Babies, was sentenced to 2 years of probation — and no prison — today for evading taxes.

Mr. Warner, 69, philanthropist and chairman and CEO of Westmont, Illinois-based Ty Inc., is cooperating with the IRS, according to a statement from the U.S. attorney's office in Chicago.

He will voluntarily enter a guilty plea to a single charge of tax evasion, his attorney said.

Prosecutors said Mr. Warner started a secret offshore UBS account in 1996. In late 2002, he transferred the assets in his UBS account to a second Swiss financial institution, Zurcher Kantonalbank, when the account had a balance of about $93.6 million.

In 2002 Mr. Warner earned approximately $3.2 million through investments held in his UBS account, prosecutors said. He allegedly committed tax evasion by failing to tell his accountants about that income and failing to report that income or the existence of the UBS account to the IRS.

Prosecutors said Mr. Warner initially failed to pay about $1.3 million in income tax on the unreported income, but his amended 2002 return reduced the amount of additional tax that he failed to pay to $885,300. "By omitting his UBS income, Warner falsely reported his total income in 2002 was $49,124,095," prosecutors said.

Earlier this week Mr. Warner was named to Forbes' list of the 400 richest people in America. He landed at No. 209 with a net worth of $2.6 billion.