Beanie Babies billionaire Ty Warner, guilty of tax evasion, likely alcoholic.
Beanie Babies billionaire Ty Warner, 69, who reached an agreement with federal prosecutors to plead guilty to federal tax evasion in connection with undeclared Swiss financial accounts. He went to great lengths to conceal the accounts, including holding $94 million under another name. While unreported income totaled more than $3.1 million and unpaid tax on the account came to $885,000, Warner has agreed to pay a civil penalty of $53.6 million,* the largest publicly-reported civil penalty ever in the U.S. crackdown on undeclared offshore bank accounts. Warner also faces up to five years in prison and additional criminal tax fraud penalties.
Thinking that one is more powerful than the U.S. government is a symptom of alcoholism. Tax evasion in general, but especially on this scale, requires inordinate risk-taking in which typically only alcoholics engage (see TAR issue # 54 for examples). Warner also makes large philanthropic donations, which are not inconsistent with alcoholism (see TAR issue # 47 for an example). Alcoholism is often helpful in creating fortunes such as his: it fuels a willingness to take risks others won’t take. Consider Mel Gibson, whose fortune multiplied with the production of the very risky “Passion of the Christ,” and Ted Turner, who most observers thought was nuts in thinking an all-news television station (CNN) could ever make money.
In 1986 Warner mortgaged his home and invested his life savings to found Ty, Inc. He launched Beanie Babies in 1993 and later founded Ty Warner Hotels and Resorts, which owns the Four Seasons Hotel in New York City, the Four Seasons Resort in Santa Barbara, California, the San Ysidro Ranch in Montecito, California and the Kona Village resort in Hawaii. Anyone this successful and wealthy (his estimated net worth is $2.5 billion) who goes out of his way to hide a mere $3.1 million in income from the U.S. Treasury almost certainly has distortions of perception, grandiosity and a feeling of omnipotence, all of which is nearly always rooted in alcoholism.
* The foreign account non-disclosure penalty is typically 50% of the highest balance in the account over the preceding six years; there were probably additional, smaller foreign financial accounts. While I don’t condone hiding income, the penalties even for “voluntary” compliance are draconian; see the Top Story in issue # 49 of Wealth Creation Strategies.