Warner, 69, owns several properties on the South Coast, including the Montecito Country Club, the Coral Casino Beach and Cabana Club, the Four Seasons Resort The Biltmore, San Ysidro Ranch, Sandpiper Golf Club and the Rancho San Marcos golf course.
He contributed to the creation of the Ty Warner Sea Center on Santa Barbara’s Stearns Wharf, which is owned and operated by the Santa Barbara Museum of Natural History.
Warner was charged in U.S. District Court in the Northern Division of Illinois since he lives in a Chicago suburb and his TY Inc. company, which designs and sells plush toy animals, is based in Westmont, Ill.
The indictment was connected to Warner’s account with the Union Bank of Switzerland, which has admitted to helping taxpayers hide accounts from the Internal Revenue Service, according to the U.S. Attorney’s Office.
The UBS entered into an agreement with the United States in 2009 to provide account information for certain customers, and Warner is the second taxpayer charged in federal court in Chicago connected to that investigation.
He is ready to cooperate with the Internal Revenue Service and will plead guilty to the charge, his attorney George Scandaglia said in a statement. As part of the plea agreement, he will pay a civil penalty of $53,552,248 for failure to file a Foreign Bank Account Report.
"This is an unfortunate situation that Mr. Warner has been trying to resolve for several years now, including through an attempt to enroll in the IRS' Offshore Voluntary Disclosure Program in 2009," Scandaglia said. "Mr. Warner accepts full responsibility for his actions with this plea agreement."
According to the indictment, Warner had a secret, offshore account with the Union Bank of Switzerland from 1996 to 2002, when he transferred the money to another Swiss financial institution. The account had a balance of $93.6 million at that time, the U.S. Attorney’s Office said.
Warner allegedly failed to report the $3.1 million in income from investments held in that Union Bank account on his tax forms. Without that money, he falsely reported his total income in 2002 as $49,124,095, according to the U.S. Attorney’s Office.
“Regardless of wealth, everyone must pay taxes on all of their income, not just the amount they choose to report,” Gary Shapiro, U.S. attorney for the Northern District of Illinois, said in a statement Wednesday. “The charge alleges that Warner went to great lengths to hide from his accountants and the IRS more than $3.1 million in foreign income generated in a secret Swiss account. Such conduct invites federal prosecution.”
Tax evasion has a maximum penalty of five years in prison and a $250,000 fine, in addition to back taxes and costs of prosecution. The law also allows for a civil fraud penalty of up to 75 percent of the underpayment, plus interest.
The government is being represented by Assistant U.S. Attorney James Conway, and the U.S. Attorney's Office said Warner will be arraigned at a future time.