Page 3 - Ty Warner Case Study

Ty Warner

Tax Evasion

On January 14, 2014, H. Ty Warner, billionaire (Warner -- worth a reported
$2.5 billion:Forbes U.S. Billionaires list, 2013) creator of Beanie Babies toys,
sat waiting the outcome of his plea to a judge to give him probation and
community service, not prison, for evading taxes on secret Swiss accounts
which he failed to tell his own accountants of those accounts, that held as much
as $107 million. In pleading guilty, Warner admitted to opening an account at
UBS in 1996 and transferring $93.6 million in 2002 to Zuercher Kantonalbank,
a small Swiss bank. He filed a false tax return in 2002 that reported income of
$49.1 million, while omitting his UBS income of $3.2 million.

In pleading guilty, Warner
acknowledged that from 1999 through

2007, he underreported his gross income

by $24.4 million.

Warner, faced 46 to 57 months in
prison. On 2nd October he had asked the
judge to impose a term of probation for evading more than $5.5 million in taxes.

Warner’s name was on a list of account data for 285 Americans that his former

bank, UBS AG (UBSN), gave to the Justice Department in avoiding prosecution

in February 2009. Zurich-based UBS, the biggest Swiss bank, also paid $780

million and admitted to fostering tax evasion. UBS later turned over 4,450 more
names. Warner made no attempt to report untaxed income or funds, held first at

UBS AG (UBSN) and later transferred to the Zuercher Kantonalbank, until

2009 after he learned that UBS was going to disclose client records.