Court upholds probation for toy company billionaire's tax evasion

The founder of the popular Beanie Babies plush toy line won't be going to prison for tax evasion, a court ruled Friday.

H. Ty Warner, who founded the toy company in 1993, plead guilty of tax evasion in 2013 for failing to disclose or pay more than $5.5 million in taxes on $24 million he kept in two Swiss banks for more than a decade, the Chicago Tribune reported.

Following the conviction, Warner was sentenced to two years of probation plus community service -- a punishment some considered excessively lenient. Prosecutors appealed the sentence but the appeals court upheld it Friday.

"The court did not abuse its discretion," the three-judge panel said in its 33-page ruling. "Rather, it fully explained and supported its decision and reached an outcome that is reasonable under the unique circumstances of this case."

Warner could have been sentenced to 57 months in prison and prosecutors recommended a year sentence, largely to act as a deterrent for other white collar criminals.

But U.S. District Court Judge Charles Kocoras has said he considered multiple factors in the sentence, which was handed down last year, including the billionaire's history of philanthropic endeavors and dozens of letters written to the court on Warner's behalf in that regard.

Warner was ordered to pay a $53.6 million civil penalty, as well as $14 million in back taxes and interest. He also gave $140 million in cash and toys to charities, his lawyers have said.

"We're gratified by the Seventh Circuit's ruling," Warner's attorney, Gregory R. Scandaglia, said in response to Friday's decision. "Judge Kocoras imposed a just and well-reasoned sentence ... From the beginning, Mr. Warner accepted responsibility for his actions."

"Since this case began, he has paid over $80 million in penalties, fines and taxes to the federal government," the court continued. "He has also eagerly fulfilled his community service program and looks forward to continuing his work with students in the City of Chicago."

Judge Joel Martin Flaum also wrote a separate opinion, even though he concurred with the court's ruling. Flaum said he was concerned about "the signal that it may send about how the criminal justice system treats wealthy tax evaders."