Header graphic for print
Asset Search Blog Investigating & Recovering Hidden Money & Other Assets

Beanie Babies Tycoon Hid Cash In Secret Swiss Bank Accounts

Posted in Asset Search/Fraud Investigation, Financial Institutions, Swiss Banks, Tax Fraud

Google finance says that since 1993, Mr. Ty Warner’s company Ty Inc. “produced more than 370 different Beanie Babies with colorful names such as Feder Bear (current) and Cheeks the baboon (retired).”  Google finance reveals that Mr. Warner creator of the Beanie Babies, parlayed his profits into his purchase of a half-dozen luxury hotels.  Mr. Warner is a billionaire, with a net worth of 2.6 billion as of September 13th.

As outlined by a press release and his criminal information, Mr. Warner was accused of utilizing Swiss bank accounts to hide undeclared revenue from the IRS.  At his arraignment hearing last Wednesday, Mr. Warner pleaded guilty to tax fraud.  The Chicago Tribune reported that Mr. Warner told the judge at the hearing ‘I apologize for my conduct. It’s a terrible way to meet you’.  

An October 2, 2013 plea agreement reveals that Mr. Warner participated in an abusive offshore tax avoidance scheme.  To read Mr. Warner’s plea agreement, click on the image below:

In pursuance of this scheme, Mr. Warner apparently instructed UBS in Zürich to withhold correspondence related to his secret bank account there.  Mr. Warner could have given this instruction to hinder any effort by the IRS to detect the secret UBS account.  Mr. Warner’s plea agreement also shows he closed this UBS account and authorized the transfer of approximately $93,630,083 to another Zürich bank,  Zürcher Kantonalbank (“ZKB”).

At the time Mr. Warner opened the ZKB account, ZKB would have required Mr. Warner to file a declaration of beneficial ownership, (commonly referred to as a “Form A”).  The plea agreement does not reveal whether Mr. Warner falsified the Form A presumably collected by ZKB for the Molani Foundation account.   The plea agreement does say that: “WARNER concealed his name from being listed on the ZKB account by holding the account in the name of a purported ‘Molani Foundation;’…”

Given Mr. Warner’s use of Swiss bank accounts, how was the IRS able to detect Mr. Warner’s tax evasion scheme?  In 2009, Mr. Warner is thought to have applied to the IRS for amnesty via the IRS Offshore Voluntary Disclosure Program, but the IRS is believed to have found Mr. Warner ineligible for the program.  If Mr. Warner was not then under investigation, any application from him to participate in the program would of course have been a red flag for IRS investigators.

It is also conceivable that UBS tipped the IRS about Mr. Warner’s Zürich-based UBS bank account, pursuant to the August 19, 2009 agreement between the Swiss Confederation and the United States.  Mr. Warner faces up to five years in prison and under the October 2nd plea agreement, he has agreed to pay a civil penalty of $53,552,248.  Mr. Warner is expected to next appear in court for his sentencing scheduled for January 15, 2014.

Copyright 2013 Fred L. Abrams