FBAR Prosecutions continue throughout Maryland and accross the U.S.. The Government is prosecuting the most serious offenses criminally. Many more international cases are begining to be worked civilly by the IRS. See below:
H. Ty Warner, the creator of Beanie Babies plush toys, was charged with tax evasion for failing to report $3.2 million in income on a secret Swiss bank account that held as much as $93.6 million in assets.
Warner, 69, will plead guilty in federal court in Chicago for hiding income at UBS AG (UBSN), the largest Swiss bank, U.S. Attorney Gary Shapiro said today in a statement. Warner falsely reported his 2002 income as $49.1 million, omitting money he made on his UBS account. He amended his 2002 return in 2007, yet understated his tax by $885,300, according to court papers.
Since 2009, the U.S. has prosecuted about 70 U.S. taxpayers and 30 bankers, lawyers and advisers in a crackdown on offshore tax evasion. Warner, the sole owner of TY Inc., held the highest account balance of the taxpayers prosecuted in the crackdown.
“This is an unfortunate situation that Mr. Warner has been trying to resolve for several years now,” Gregory Scandaglia, Warner’s attorney, said in a statement. “Mr. Warner accepts full responsibility for his actions with this plea agreement.”
Warner, of Oak Brook, Illinois, also will pay a civil penalty of $53.6 million for failing to file a required Report of Foreign Bank and Financial Accounts, or FBAR, according to Scandaglia. He is scheduled to appear in court for his plea on Oct. 2, according to Shapiro’s spokesman Randall Samborn.
Through his Ty Warner Hotels & Resorts, he owns the Four Seasons Hotel New York, the San Ysidro Ranch in Santa Barbara, California, and Las Ventanas al Paraiso in Los Cabos, Mexico, according to the company’s website.
Warner opened a secret account at UBS in 1996. From there, he transferred $93.6 million in December 2002 to another secret Swiss account at Zurcher Kantonalbank, according to his criminal charging document known as an information.
He disguised his ownership of the ZKB account by holding it under an entity called the Molani Foundation, court papers show. In 2002, he failed to report his UBS income of $3.2 million to his outside accountants, and didn’t file an FBAR. The tax return he filed for 2002 also was false, according to the information.
In 2009, Warner tried to avoid prosecution through an amnesty program at the Internal Revenue Service known as the Offshore Voluntary Disclosure Program, according to Scandaglia. He was denied entry, the lawyer said.
Warner found Ty Inc. in 1985. It took off after he created the Beanie Baby, a children’s toy, in the 1990s. Ty Inc., based in Westmont, Illinois, is a $4.5 billion business, according to his biography. Since 1995, he has donated almost $140 million in cash and plush toys to charities and organizations.
More than 38,000 U.S. taxpayers have avoided prosecution through the amnesty program. They have repatriated more than $5.5 billion held offshore, while telling the IRS about the banks, bankers and other enablers who helped them hide their money.
UBS avoided prosecution by paying $780 million in 2009, admitting it aided U.S. tax evasion and handing over data on 4,500 accounts. Wegelin & Co., the oldest Swiss private bank, pleaded guilty in January and paid $74 million.
Fourteen firms, including Credit Suisse Group AG (CSGN), the second-largest Swiss bank; HSBC Holdings Plc (HSBA), the largest European bank; and Julius Baer Group Ltd. (BAER), Switzerland’s third-largest wealth manager, are under criminal investigation. On Aug. 29, the U.S. announced a program for other Swiss banks to avoid charges.
They must pay penalties, disclose their cross-border activities, give detailed account information for U.S. clients, describe other banks that got their secret accounts, and cooperate in requests for information under a U.S.-Swiss tax treaty. Banks that don’t come forward by the Dec. 31 deadline could face criminal charges.
Warner faces as long as five years in prison and a fine of $250,000. Most of the taxpayers sentenced in the offshore crackdown got probation.
Another UBS client in Chicago, Peter Troost, was sentenced on July 16 to a year and a day in prison for evading more than $1 million in taxes on more than $3.3 million in income. Troost owns Troost Memorials, which designs and sells cemetery monuments and gravestones. He pleaded guilty in March.
The case is U.S. v. Warner, 1:13-cr-00731, U.S. District Court, Northern District of Illinois (Chicago).