No prison time for Beanie Babies founder Ty Warner despite the fact that he pleaded guilty to tax evasion related to hiding more than $100 million in a UBS Swiss bank account.
On January 14, 2014, U.S. District Court Judge Charles Kocoras sentenced Ty Warner to two years probabtion. Warner pleaded guilty to one count of tax evasion and paid $27 million in back taxes and $53 million in civil penalties. Warner admitted that he opened a bank account at UBS Switzerland in 1996 and kept it secret from the IRS. The account earned more than $24 million, allowing Warner to evade the payment of $5.5 million in taxes.
Warner is not the first billionaire to receive probation for secretly hiding over $100 million offshore. Igor Olenicoff also avoided prison and received two years probation after he pleaded guilty to the felony of filing a false tax return and admitted to hiding more than $200 million at UBS and other offshore banks. Olenicoff paid $52 million in back taxes, interest and civil penalties.
Toy manufacturer Jeffrey Chermick received three months incarceration (after he cooperated with prosecutors) for having “merely” $8 million in offshore accounts and former UBS banker Bradley Birkenfield received 40 months for his role in assisting U.S. taxpayers in hiding money at UBS.
As the government prosecutor in the Warner case stated at the sentencing – “[Without prison time], tax evasion becomes little more than a bad investment. The perception cannot be that a wealthy felon can just write a check and not face further punishment.” After Olenicoff and Warner, it appears that this is exactly the case.
If you have questions about Swiss or other offshore accounts, you may schedule a consultation with one of our Former IRS Attorneys at (310) 550-6200.