Beanie Baby Billionaire Avoids Jail Time

15 Jan

The story on another wealthy tax evader finally draws to a close with no jail time. This was first presented in the IRS vs EXPATS blog more than three months ago.

When Ty Warner was in court for his trial, he emoted expressions of remorse which led to Judge Kocoras to interrupt him, saying he could say more at his sentencing January 14th. But when the time came, Warner left the courtroom without comment on his sentence. A public relations representative later emailed reporters a statement from his lawyer, Gregory Scandaglia. “We are grateful for and humbled by the judge’s ruling,” it read. “The judge heard from many people who have benefited from Ty’s quiet generosity over the years, and he crafted a sentence that allows Ty to continue to make amends in a way that most benefits society. ” So this tax evader got off, partially based on a previous like-minded ultra-rich thief named

It was reported, however, that  Warner read aloud from a prepared statement before his sentencing, telling the judge that he was “truly sorry” and “never realized that the biggest mistake (I) ever made in my life would cost me the respect that was most important to me.” The bottom line is that he will not serve any jail time. He was sentenced to two years of probation and 500 hours of community service for evading taxes on a secret Swiss bank account that reached $106 million in value. The account, which Warner opened at UBS AG in 1996 and kept secret for 12 years, earned $25 million during that period, allowing him to  avoid $5.5 million in tax. The probationary sentence is the latest and arguably most dramatic case yet of federal judges going easy on tax cheats,and particularly old rich folks convicted of hiding offshore accounts. According to the U.S. Sentencing Guidelines, which ratchet up sentences with the dollar value of a white collar crime, Forbes 400 member Warner should have gotten 46 to 57 months in jail.

Warner’s lawyers argued that because others convicted of having secret offshore accounts, including fellow Forbes 400 member Igor Olenicoff, have avoided jail. California real estate developer Olenicoff got two years probation in 2008 after he pleaded guilty to the felony of filing a false tax return and admitted hiding more than $200 million at UBS and other offshore banks. In a deal the Department of Justice must certainly regret, prosecutors didn’t object to Olenicoff getting off with probation after he paid $52 million in back federal taxes, interest and civil fraud penalties. This is now called the Olenicoff defense.

In pushing for a jail term for Warner, prosecutors had said in their court filing that probation “would further a public perception that a defendant of means can avoid further punishment simply by writing a large check” and could lead would-be evaders to believe that if they under report their income, they can simply pay a fine and the tax due.

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