Ty Warner’s sentence still doesn’t amount to hill of beans

Written By By Mark Brown Posted: 06/12/2014, 12:53am

I don’t like to think of myself as someone who holds a grudge. Forgive and forget, I say. Move on.

Well, that is, except for maybe three or four people from college for whom I still harbor a wee bit of a grudge, but they really deserve it. And OK, maybe one or two others along the way. What I probably should say is I don’t hold MANY grudges.

But here we are four months later, and that slap-on-the-wrist sentence for Beanie Babies creator H. Ty Warner is still sticking in my craw.

That’s why I’m glad to see it’s not sitting well either with the U.S. Attorney’s office, which filed legal arguments Friday with the 7th Circuit Court of Appeals in hopes of yet sending Warner to prison.

I almost gagged in January when U.S. District Judge Charles Kocoras sentenced Warner to two years probation and 500 hours of community service for tax evasion while arguing that the billionaire’s charitable work “trumps all the ill-will and misconduct he engaged in.”

That misconduct involved Warner hiding more than $100 million in secret Swiss bank accounts without reporting the interest on his income taxes for more than a decade until he was caught. He avoided at least $5.5 million in taxes in this manner, perhaps considerably more when you take into account that he’s never disclosed the source of the money he stashed there originally.

I have nothing personal against Warner. As I wrote previously, he suckered me fair and square out of whatever share of his wealth to which I contributed by buying his toys now taking up space in my attic. Beanie Babies always put a smile on my kids’ faces, so I figure I got my money’s worth.

But I really get my undies in a bundle over these super-rich creeps who make their fortune here and then hide it in off-shore accounts to avoid the tax consequences, as if it would just be so unfair as in Warner’s case if his net worth were $1.65 billion instead of the $1.7 billion he reports.

Warner’s charitable contributions, nearly $140 million in cash and toy donations during his lifetime by his lawyer’s estimates, clearly do not trump MY ill will.

In fact, prosecutors did a little math of their own after noting that Warner’s lawyers were valuing the toy donations based on the retail price instead of the cost of making them. They calculated the cost to Warner of his charitable donations was really only $35.7 million, which isn’t all that much for an individual of his wealth. And he already used these donations as a tax write-off.

Under these circumstances, prosecutors argue it was “unreasonable” for Kocoras to depart so drastically from the federal sentencing guidelines that would have given Warner a prison sentence in the range of 46-57 months. They were hoping he’d at least get a year in prison.

Warner’s lawyers have a month to officially respond, but his spokesman issued this statement: “Unfortunately, the government is spending resources to challenge a well-reasoned and careful sentence issued by a well-respected judge.”

What I find unfortunate is that overturning the sentence is a longshot. Considerable deference is usually shown to the sentencing judge and probably even more so in this case with Kocoras, a veteran judge who indeed has always been quite well-respected.

But I hold out some hope based on one of the legal precedents cited by prosecutors, which is the only other instance where I can recall getting righteously indignant about a light sentence.

In the case of former Cook County Democratic Chairman Edward R. Vrdolyak, the 7th Circuit overturned a similar probation sentence that also had been justified by the trial judge on the basis of the convicted fraudster’s charitable works.

“Wealthy people commonly make gifts to charity,” the court wrote in sending the case back to the judge to try again. “They are to be commended for doing so but should not be allowed to treat charity as a get-out-of-jail card.”

I think it’s great if all the crooks out there want to donate some of their dough to charity to help cleanse their consciences. But judges really need to be careful that doesn’t give the wealthy an advantage in the criminal justice system.

One more reason I fear the prosecution’s effort is doomed is that they actually cited my column in their arguments to the appeals court and quoted from it, “the lesson [from the Warner sentencing] to tax cheats in the U.S. is clear: Go big or stay home.”

I always figure it’s a sign of desperation when lawyers start citing newspaper articles in legal briefs.

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