Ty Warner, a man who doesn’t like publicity at all, was in court earlier this month.
His mission: Plead guilty to one of the biggest tax evasion cases in history, apologize and indicate, via attorneys, that he’ll pay $53.5 million in penalties for hiding a foreign bank account, apparently from his own accountants.
We’ll have to wait a few months until part-time Santa Barbara resident Warner appears again in the Chicago federal court to see what kind of sentence gets handed out. He could face up to five years in prison; guidelines call for something like 46 to 57 months, the Chicago Tribune reported.
Along the South Coast, Warner owns the Four Seasons Resort The Biltmore and San Ysidro Ranch, Montecito Country Club, Rancho San Marcos and Sandpiper Golf Course. He made a stab at developing the long-stalled Miramar hotel project, also in Montecito, but walked away amid community objections. He sold the property to another gazillionaire, Los Angeles developer Rick Caruso.
Warner generously gave millions to build the Ty Warner Sea Center on Stearns Wharf in Santa Barbara, but to say he is a beloved or even widely-respected business person in the area would be an overstatement.
One small-business owner I talked to who has done business with Warner’s South Coast holdings described the man as incredibly demanding and a very, very, very slow payer. The fact that he hid his tax avoidance scheme behind the name of a non-profit called the Molani Foundation will stick in the craw of every entrepreneur who ever filed a corporate tax return without the benefit of having a foreign slush fund that, according to prosecutors, amounted to $107 million.
We’ll grant that Warner, worth an estimated $2.9 billion, is a marketing genius whose Beanie Babies plush toys became a worldwide sensation and that he’s been a careful steward of his South Coast real estate gems.
But as a reporter who likes to meet people, who likes to write about deals and who understands that not everything has to be for attribution all of the time, I was really disappointed to have never met Warner.
He never gave interviews, rarely appeared in public and never showed much interest in doing anything but writing checks and occasionally showing up for a ribbon cutting. No questions, please, Mr. Warner is much too busy for that sort of thing.
After reading through the press accounts of his court hearing on Oct. 2, I was reminded by staff writer Stephen Nellis of another infamous tax cheater, hotel magnate Leona Helmsley, who was quoted by a housekeeper as saying that “only the little people pay taxes.”
And I suspect that across the South Coast there are plenty of small-business owners who are wondering why we continue to pay personal property taxes, payroll taxes, withholding, sales tax and all the other things that come with running a small business, when Warner was able to skip out on millions of taxes. Remember that even the $53.8 million in penalties and interest he is paying is about half the amount in the account. The prosecution of Ty Warner only came about as part of a relatively recent crackdown on offshore accounts in which nearly 70 wealthy individuals have faced fines and prosecutions.
The fact that Warner has paid, according to his attorney, $1 billion in federal taxes over his lifetime is a testament to his success. But now we’re likely to find Warner, along with Helmsley, the unfortunate Dionne Warwick and fellow Chicagoan Al Capone in Time Magazine’s list of the top 10 tax cheaters in the nation’s history.
Hey, nobody likes to pay taxes, but most of us “little people” just suck it up and write the checks. It would be gratifying to see a humbler and more personable Warner emerge from this trial by IRS fire.
But I am not holding my breath.
• Contact Henry Dubroff at firstname.lastname@example.org.