10 Updates

Prosecutor: Beanie Babies Billionaire Tax Cheat Didn't Deserve `Get-Out-Of-Jail' Card

May 9 2014, 10:36pm CDT | by

Federal prosecutors argued in a court filing today that the no-jail sentence given to  billionaire tax-cheat H. Ty Warner was “substantively unreasonable,’’ in part because the sentencing judge was...

Filed under: news

 
 
 

10 weeks ago

Prosecutor: Beanie Babies Billionaire Tax Cheat Didn't Deserve `Get-Out-Of-Jail' Card

May 9 2014, 10:36pm CDT | by

Federal prosecutors argued in a court filing today that the no-jail sentence given to  billionaire tax-cheat H. Ty Warner was “substantively unreasonable,’’ in part because the sentencing judge was unduly impressed by his “not so extraordinary” charity and by 70 letters attesting to his generosity written primarily by employees, business associates and those he had donated to after learning the government was investigating him.

Last September, in a deal with the U.S. Attorney for Northern Illinois, Beanie Babies inventor Warner pleaded guilty  to one felony count of tax evasion and agreed to pay a $53 million fine for hiding as much as $106 million in secret Swiss accounts and evading at least $5.5 million in tax on the accounts’ earnings over 12 years. According to the U.S. Sentencing Commission Guidelines, which ratchet up sentences with the dollar value of a white collar crime, the 69-year-old Warner should have been sentenced to between 46 and 57 months of jail time.

But in January, Chicago Federal District Court Judge Charles F. Kocoras let him off  with probation and community service,  after reading aloud from nine letters and declaring:  “Mr. Warner’s private acts of kindness, generosity and benevolence are overwhelming. Never have I had a defendant in any case —white collar crime or otherwise—demonstrate the level of humanity and concern for the welfare of others as has Mr. Warner.’’  Warner’s charity, the judge added,  “Trumps all of the ill-will and  misconduct he engaged in.”

The downward departure from guidelines in Warner’s case was particularly dramatic and the U.S. Attorney for Northern Illinois, who had asked Kocoras to give Warner jail time, is now appealing  the sentence to the 7th Circuit Court of appeals.  The rare appeal, which had to be approved by the U.S. Solicitor General, is hardly a slam dunk; the government hasn’t  won an appeal of a below-guidelines sentence for a tax crime since the Supreme Court ruled that the guidelines are not binding on sentencing judges.

In their opening appeals brief filed late Friday, prosecutors painted Warner as distinctly ungenerous when compared with either ordinary Americans or with the billionaires who have pledged to give at least half their net worth to charity. (Since Warren Buffett and Melinda and Bill Gates started The Giving Pledge  four years ago, 127 of the 1,650 or so billionaires that have been confirmed by Forbes, have signed the pledge , with a new crop, including Facebook COO Sheryl Sandberg , announced just this morning.)

At his sentencing, Warner’s net worth was pegged at $1.8 billion and his lawyers said he had donated $140 million to charity over the past decade. But prosecutors argued before the sentencing and again in their appeals brief, that that number was inflated because it reflected the retail value of the Beanie Babies Warner had donated and not his cost for producing the stuffed animals. They pegged the value of Warner’s contributions from 1998 to 2011 at just $35.7 million. Moreover, prosecutors pointed out, many of the donated toys “helped spur a Beanie Babies craze,’’  including, for example, a Beanie created for the benefit of the memorial fund for Princess Diana. Warner’s cash donations for an aquarium and bike path in Santa Barbara, Cal., they added, helped attract tourists to the nearby Four Seasons Resort he owned.

That $35.7 million Warner gave over 14 years, prosecutors calculated, amounted to  just 2% of his net worth at sentencing.  Translating that to common man equivalence, prosecutors noted that the median net worth of households in the U.S. in 2011 was  $68,828 and  that 2% of that is $1,377,  which would amount to  $100 a year of donations over 14 years.

“Warner is no `Robin hood.’ His past charitable contributions were not so  extraordinary, in light of his wealth, that they qualified as a `get-out-of-jail-card,’’’ the prosecutors wrote.

The prosecutors also pointed out, as they have before, that Warner has never said where the money he deposited in UBS AG in Switzerland in 1996 came from.  “The books and records of defendant’s company show the funds were not transferred from the company, nor did they come from defendant’s personal domestic bank accounts,’’ they wrote, raising the possibility that the money he stashed in UBS was  income he skimmed from his business and never reported to the IRS.  If that is the case, then Warner evaded a lot more than $5.5 million in tax.  (In 1999 alone, Warner, as the sole owner of Ty Inc., had an adjusted gross income of  $662 million.)

Before sentencing, Warner’s lawyers made much of the fact that he had tried to “rectify his mistake” by applying to the Internal Revenue Service’s Offshore Voluntary Disclosure Program in September 2009. More than 40,000 individuals with previously secret offshore accounts have entered that program, which gives miscreants  amnesty from criminal prosecution if they tell all and pay stiff penalties and back taxes. Warner was turned down for the program, however, because the government was already investigating him, making him ineligible.

In their brief, prosecutors noted for the first time that, as Forbes first reported in February , Warner resisted complying with a federal grand jury subpoena for his foreign bank records. (He turned over the records after an appeals court ordered him to, but nevertheless appealed anonymously to the Supreme Court, which declined to hear his case.)

Billionaires Who Spent Time Behind Bars

 
Update
10

6 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

Cambodia's Famous Battambang Circus
KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

6 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

Newcastle United Training Session
KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into by ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

6 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

Federal Aviation Administration Bans All US Flights To Israel
KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan Raky ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

6 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Seri ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

6 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

INDIA-CHINA-DIPLOMACY-TRADE
PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern states last mon ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

6 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

Government Weekly Cabinet Meeting
KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 mill ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

6 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Mustapa Mohamed sai ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

Iskandar Johor Open - Previews
JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of RM20 million ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

EurAsia Cup presented by DRB-HICOM - Day One
PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Scheme 20 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

7 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Ki ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

47 killed in Taiwan as plane makes botched landing (Roundup)
Taipei, July 23 (IANS) Forty-seven people on board a Taiwanese TransAsia Airways plane were killed in a failed emergency landing in the island county of Penghu Wednesday, Taiwan's transportation authority has confirmed.
 
 
47 killed in Taiwan plane's botched landing
Taipei, July 23 (IANS) Forty-seven people on board a Taiwanese TransAsia Airways plane were killed in a failed emergency landing in the island county of Penghu Wednesday, Taiwan's transportation authority has confirmed.
 
 
51 killed in Taiwan plane emergency landing
Beijing, July 23 (IANS) At least 51 people were killed and seven others injured when a passenger plane with Taiwan's TransAsia Airways made an emergency landing on the outlying island county of Penghu Wednesday, media reported.
 
 
High salt ups heart disease risk in diabetics
Tokyo, July 23 (IANS) People with Type-2 diabetes have more to add to their list of dietary restrictions as researchers have found that a high salt diet may double their risk of developing cardiovascular disease.
 
 
 

Latest from the Network

Mobile Wallet May Launch With iPhone 6
Apple already has hundreds of millions of credit cards on file with the help of iTunes, although now they are hoping to move into the mobile wallet world with the help of major credit card companies.Earlier this year...
Read more on Apple Balla
 
Atletico welcome back Cardoso, hints at Torres's return
Madrid, July 24 (IANS) Atletico Madrid president Enrique Cerezo says he is delighted that Portuguese midfielder Tiago Cardoso has made a U-turn to re-sign with the club while at the same time dropping a big hint that...
Read more on Sport Balla
 
Apple On An Acquisition Rampage
When the fiscal year began in 2013, there was no telling what Apple would be up to for 2014. The company has been staying incredibly busy, though, and they have purchased more companies than ever in the past nine months...
Read more on Apple Balla
 
Mutilated bear gets new lower jaw in Mexico
Mexico City, July 24 (IANS/EFE) A team of surgeons and veterinarians in Mexico implanted a titanium lower jaw in a bear that was mutilated, an official said. The bear, named Invictus, underwent surgery Sunday and...
Read more on Politics Balla
 
Brazilian president exonerated in probe of refinery deal
Brasilia, July 24 (IANS/EFE) Brazil's federal audit tribunal has said that President Dilma Rousseff bore no responsibility for state-controlled oil giant Petrobras's ultimately disastrous acquisition of a US refinery...
Read more on Politics Balla
 
Frenchman Mathieu beefs up Barca defence
Madrid, July 24 (IANS) French central defender Jeremy Mathieu was all set to fly out to Peru with Valencia when the La Liga club sealed a deal with Spanish giants Barcelona, invoking the buyout clause in the 30-year-...
Read more on Sport Balla
 
Contador rules out Vuelta return
Madrid, July 24 (IANS) Spanish cyclist Alberto Cotador has confirmed that he will be forced to pull out of this year's Vuelta de Espana (Tour of Spain) cycle race as a result of the injury he suffered recently in the...
Read more on Sport Balla
 
iPhone Sales Set New Records
The iPhone is the life-force behind Apple after they announced another stellar quarter in 2014. In the third quarter, Apple sold 35.2 million iPhones, which is up 13 percent from the previous year.While that number is...
Read more on Apple Balla
 
Blake to miss rest of the season after surgery
Kingston (Jamaica), July 24 (IANS/CMC) Former world 100m champion Yohan Blake will miss the remainder of the season after undergoing surgery in Germany to repair a damaged hamstring muscle. The Jamaican sprinter...
Read more on Sport Balla
 
Can't think of anything better than coaching Germany: Loew
Berlin, July 24 (IANS) Contrary to expectations that he would retire after the World Cup triumph, Joachim Loew will see out his contract and lead Germany into the Euro 2016. This was confirmed by the coach in an...
Read more on Sport Balla