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Beanie Babies creator on naugh-Ty step after $3m tax evasion

Beanie Babies tycoon Ty Warner faces five years in prison after admitting to hiding $3m of income in Swiss bank accounts.

by Emma Haslett
Last Updated: 19 Sep 2013
Remember Beanie Babies, the beady-eyed beanbag beasties that were big business in the 90s? From the nine original toys launched in 1993 (all with names conveniently printed on their labels, saving children the effort of having to come up with their own), the empire ballooned, with dozens of versions available by the time the fad began to fade in the late 90s.

At one stage, you could even get mini versions (‘Teenie Beenies’) in McDonald’s Happy Meals. That’s when you know something’s made it big…

But it turns out Ty Warner, the Ty-coon behind the Beanie Babies menagerie, doesn’t share the glass-eyed innocence of his creations. The entrepreneur has agreed to admit charges of tax evasion by hiding more than $3m (£1.9m) in a secret Swiss bank account, and now faces a fine of $53m and up to five years in prison.

Beanie Babies’ popularity might have faded by the late 90s, but Warner is no fading star. His net worth is estimated at $2.6bn by Forbes, making him the 209th richest man in America.

Nevertheless: according to court documents, Warner opened a secret UBS account in 1996, and in 2002 moved $93m to Zurich-based Zürcher Kantonalbank. In 2002 alone, that account produced over $3m of income, which he didn’t mention to tax officials. Although to be fair to him, in 2002 he did pay a huge amount of tax on the $50m of income he did report.

Analysts have already begun the argument about whether his tax dealings will affect Warner’s brand or not. Branding expert Laura Ries thinks not:

‘It’s not as cool as it was, but I don’t think consumers care the owner didn’t pay his taxes and is in big legal trouble.’

MT is inclined to agree. Most 10-year-old girls – the brand’s target market – don’t put a lot of thought into the tax dealings of the creators of their favourite toys. What’s much more likely to put them off is the brand’s eyeball-curdling website. Ouch.  

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