Court upholds light sentence for Beanie Babies creator

Staff Writer
Columbus CEO

CHICAGO (AP) — A federal appeals court upheld the probation sentence Friday for the billionaire creator of Beanie Babies, rejecting arguments by federal prosecutors that he deserved prison time for hiding millions of dollars in a Swiss bank account.

H. Ty Warner was accused of evading $5.6 million in U.S. taxes by concealing assets. He later pleaded guilty, made full restitution and paid a nearly $54 million civil penalty.

But when the trial judge sentenced him to two years' probation, prosecutors — who wanted Warner sentenced to at least a year in prison — took the rare move of appealing the sentence. They argued that the toy maker got off too easy given the lengths to which he went to conceal his crime.

In its Friday ruling, the 7th U.S. Circuit Court of Appeals said the district court did not abuse its considerable discretion with the sentence.

"While incarcerating Warner undoubtedly would have sent a stronger message, the message sent by his existing sentence is, in our view, strong enough," the judges wrote. "Even without a prison sentence, Warner's payment of a $53.6 million penalty already provides a measure of deterrence."

The appellate judges added that "probation is a common sentence in offshore tax evasion cases," citing a statistic that roughly half of defendants convicted since 2008 have received probation instead of prison time.

The U.S. Attorney's Office in Chicago refused to comment on Friday's ruling. An attorney for Warner did not immediately respond to a request for comment.

Prosecutors have said the sentence threatened to erode the judicial system's ability to deter other tax evaders. They also argued that the judge inadvertently sent the message that there are different standards of justice for the rich and the poor.

In handing down the lighter sentence, the trial judge cited Warner's "overwhelming" charitable works and essentially deemed his misdeeds to be out of character.