Beanie Babies Founder Ty Warner: Unhappy Childhood Warrants Probation In Tax Evasion Conviction

By Chuck Sudo in News on Jan 3, 2014 2:47PM

In this 2003 photo, Beanie Babies creator Ty Warner celebrates the 10th anniversary of the miniature stuffed toy that was all the rage in the late 1990s. (Photo credit: Chris Hondros/Getty Images)

When Beanie Babies founder and creator Ty Warner pleaded guilty to tax evasion last September his attorney said Warner “accepts full responsibility for his actions with this plea agreement.”

Flash forward to Thursday where a filing by Warner in federal court listed the reasons he should be spared up to a five year prison sentence including his lifelong charitable work, his owning up to tax evasion and being the product of a troubled childhood. Why are we not surprised that a children's toy magnate claims to have had an unhappy childhood? It's almost a cliche.

The 41-page sentencing memo, which you can read at the Sun-Times, said Warner “emerged from an unhappy family and a youth devoid of educational advantages” to become a sales representative for the Dakin Toy Co. in the mid-1960 selling “plush toys to children.

"Ty especially enjoyed selling a product intended for children, and he developed a keen sense of what particular plush toys children enjoyed," the memorandum read.

With a second mortgage on his suburban Chicago condominium Warner founded Ty, Inc. in the mid-1980s, the first Beanie Baby hit the shelves and the toys became synonymous with 90s pop culture.

But it was during that time when Warner, on the advice of "polished and experienced Swiss financial advisers (now indicted fugitives)," opened a bank account with UBS and failed to report the income on that account for years. Warner, in his plea deal, agreed to pay a $53 million civil penalty and almost $16 million in back taxes stemming from that Swiss bank account.

Warner’s sentencing memo listed his charitable endeavors including the Red Cross and pediatric AIDS organizations; noted he was rejected from joining an IRS tax amnesty program, and entered several letters of support from friends and business associates. But it’s Warner’s rocky childhood that stands out. He was sent to a Wisconsin military academy at 15, had to drop out of Kalamazoo College because he couldn’t afford the tuition and was rejected from enlisting in the military because of hearing loss. Warner’s mother was diagnosed as a paranoid schizophrenic and institutionalized in an Elgin hospital in the late 1970s. The sentencing memo read that Warner’s father was aloof and not involved in the care of his mother.

Prosecutors have not indicated what, if any, prison term they’ll ask for Warner when he’s sentenced next month.