There was a time when Beanie Babies were the hottest thing since Dutch tulip bulbs. But, like all fads, the market eventually collapsed and these strangely obsession-inducing toys were packed away into attics across America. But what of Ty Warner, Beanie Baby tycoon?
Well, he got filthy stinking rich, but he stays so far out of the limelight no one knows much about what he's been up to. Except that he very nearly went to jail for tax evasion. Nice to know the pocket money I spent on those dumb toys is still having some impact on the world.
Chicago magazine has the story. Warner was busted stashing cash in a Swiss bank and copped in 2013 to tax shenanigans. Which, frankly, is only shocking because it's so very cliche. What makes Warner's turn in the public eye so remarkable is that he's managed to live very, very quietly despite the cultural frenzy he inspired, when even Forbes was writing about Beanie Baby investment guides. According to Chicago, the man has granted just one in-depth interview ever, and that was in 1999 for People.
So Chicago went digging and pieced together the story of Warner's rise. He sounds like a real character, too. A former boss from the toy company where he got his start, Warner was smart but maybe a little unconventional:
Nizamian says that he was a "darn good salesman" who earned six figures. On calls, he reportedly pulled up in a white Rolls-Royce Silver Shadow and stepped out in a fur coat and top hat, carrying a cane. "I figured if I was eccentric looking in Indiana, people would think, What is he selling? Let's look in his case," Warner told Blackman in 1996. "Then it was easy to sell."
According to the old boss, he was fired after a decade when he was caught selling his own line of toys alongside his employer's. A trip to Italy, where he found a weird cat toy, inspired the Beanie Babies, which were a near-immediate hit:
"At the height, they were shipping more than 15,000 orders per day to retailers," says Bissonnette, the author. "It just never seemed as ubiquitous, because he was limiting each store to 36 of a style. That's actually why they were able to work as a collectible: People just had no idea how many of them he was shipping."
Which explains why, despite breathless rumors about Sting the Ray's sky-high value, someone in your fifth-grade class always seemed able to find one. So suddenly, Warner had—legal term here—a shitload of money. Which is when he did something stupid:
In 1996, at UBS, one of Switzerland's largest banks, he opened a secret account invisible to the IRS. The exact amount he deposited is unknown, but by 2002 it had grown to $93 million. To keep the account's existence from prying eyes, including those of his own accountants, he signed a "hold mail" form that instructed the bank not to send any mail related to the account to the United States and to destroy any documents in his file when they became five years old.
It saved him $5 million in taxes; ultimately, he coughed up $80 million for the crime. Somehow, it just doesn't have the same cache as The Wolf of Wall Street.
In the end, the judge let him skate on the tax charges, citing his philanthropy and willingness to pay back taxes and penalties: "I believe . . . with all my heart, society will be best served by allowing him to continue his good works." Two years of probation, a 100K fine and 500 hours of community service, and Warner (still worth billions) is all square with the law.
His community service ought to include establishing the fair market value of every single Beanie Baby still shoved into the back of someone's closet.