Appeals Court Upholds Probation Sentence For Beanie Babies’ Creator Convicted Of Tax Evasion

Probably the only person to ever have actually gotten rich off Beanie Babies isn’t exactly relaxing on piles of money or swimming in his vault of gold coins anytime soon, but Ty Warner, the billionaire of the plush toys did get to escape jail time after a U.S. Court of Appeals upheld the probation sentence handed down to him after he was convicted of tax evasion.

Back in September 2013, Warner was charged with one count of tax evasion for failing to report more than $24 million in income, skipping out on about $5.6 million in federal taxes from money hidden in two Swiss banks.

He was convicted, and prosecutors wanted him to serve at least a year and a day in prison, reports the Chicago Tribune, to make an example out of his case and keep others from repeating his mistakes. But instead, U.S. District Judge Charles Kocoras had given him a year of probation, saying that he had been swayed by letters attesting to his acts of kindness, among other things.

On Friday, the U.S. Court of appeals upheld that probation sentence. Warner has already paid a civil penalty for not reporting the accounts and restitution for what he owed in back taxes and interest.

“The court did not abuse its discretion,” the appeals court said in its ruling, affirming the sentence. “Rather, it fully explained and supported its decision and reached an outcome that is reasonable under the unique circumstances of this case.”

Warner’s lawyer released a statement upon the news.

“We’re gratified by the Seventh Circuit’s ruling. Judge Kocoras imposed a just and well-reasoned sentence, and the judges of the Seventh Circuit unanimously agreed. From the beginning, Mr. Warner accepted responsibility for his action,” the statement reads. “Since this case began, he has paid over $80 million in penalties, fines and taxes to the federal government. He has also eagerly fulfilled his community service program and looks forward to continuing his work with students in the City of Chicago.”

One appeals judge did note in a separate concurrence that he was concerned with “the signal that it may send about how the criminal justice system treats wealthy tax evaders,” noting “considerable unease” over the outcome of the appeal.

Just because Warner used his money for good deeds and charity, that doesn’t mean that he shouldn’t have gone to jail for at least a little while, Judge Joel Martin Flaum wrote.

“He purposely sought to deprive the federal government of millions of dollars of tax revenue simply to amass more of his enormous wealth,” Flaum noted.

The government itself only decided to charge Warner with one count, Flaum pointed out. And despite the fact that sentencing guidelines would’ve set his time in jail between 46 and 57 months, the government only asked for a year and a day.

“For me, these two debatable acts of prosecutorial discretion point toward an affirmance in this case, as they provided a uniquely limited context for the district judge’s exceptional exercise of leniency.”

If not for that, he wrote that he would be inclined to give him jail time.

“However, in light of a veteran jurist’s thoughtful and thorough consideration of the case, I am compelled to conclude that Warner’s sentence falls within a sentencing judge’s broad band of discretion.”

Beanie Babies creator Ty Warner’s sentence is upheld [Chicago Tribune]

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