Want to get a warm fuzzy feeling?
If you do, you might want to read about H. Ty Warner and his admirer, Charles Kocoras.
Warner is the billionaire businessman behind the Beanie Babies.
Kocoras is a federal district judge.
The judge fawned over Warner for nearly 20 minutes in open court heaping praise on Warner for his charity before sentencing Warner to 500 hours of community service in Chicago area high schools. Warner also had to pay $27 million in back taxes and a civil penalty of $53 million. Chump change for a guy worth $2.6 billion.
So what did Warner plead guilty to? Was it failing to pay taxes?
Well, yes, but it was more than that. Much, much, more.
Warner hid part of his income. At one time it was as much as $100 million. He opened a secret offshore account in 1996 in a bid to avoid the IRS. When that financial services company came under United States scrutiny he shifted millions to another foreign bank and then instructed the financial firm to destroy some records to cover his tracks.
To put this in perspective singer Lauryn Hill evaded taxes on $1.8 million. And even though she paid the $1 million in penalties and fines after she was caught she was sent to federal prison for three months,
Hill has six children under 18 plus has an extensive repertoire of charity works spanning decades that includes giving of her time and her money.
Warner’s charity work consisted of giving $20 million in proceeds from a toy he helped design commemorating Princess Diana after her death that went to charities. The judge also noted how Warner gave $20,000 to cover a medical bill of a kidney patient. Admirable but does it justify an avoid jail card for scheming to avoid paying $27 million in taxes?
That’s not to say Hill didn’t break the law. But what she did was fairly simple and easy for the IRS to catch. She neglected to pay any income on $1.8 million over a three-year period.
Warner, by comparison established an illegal secret foreign account with the expressed purpose of hiding money from the IRS. And then when the federal government started a crackdown on the financial services firm for serving as an illegal haven for the expressed propose of avoiding lawful taxes, Warner not only transferred the money to another foreign bank but he ordered incriminating records destroyed.
Warner not only didn’t pay taxes, he went out of his way to hide money. He also knew he was breaking the law as demonstrated by his directive to destroy records.
Too bad Hill didn’t engage in criminal conspiracy on top of the criminal act of tax evasion. She is probably wishing that she had paid $20,000 to cover the medical bill of some unfortunate person so she could really impress a judge instead of just doing run-of-the-mill charity work helping poor people and struggling kids.
The judge minimized the gravity of Warner’s crime noting, “society will be better served by allowing him to continue his good works.”
Really. The guy just wrote checks. He can tell his financial advisors to do that from behind bars.
Rest assured the IRS and the judicial system makes life a living hell for penny ante tax evaders — those who come in at $100,000 a year or less. They don’t sweet talk them or fawn over their charity work. They go after them full throttle, throw the book at them and give them jail time.
All Warner was guilty of in retrospect was a bad investment given the severity of his punishment.
He forfeited $80 million in back taxes and fines. He gave up just 500 hours of his life in the form of community service.
Hill paid $1 million in back taxes and fines. She gave up three months of her life then has to spend three months under house arrest.
That said, do you think Judge Kocoros would cut a drug dealer slack because he may have donated money to help people? I know, I know. A drug dealer actually hurt other people.
Sorry, but so did Warner. The federal government estimates they lost $3.09 trillion between 2001 and 2010 because of tax evasion. That means the rest of us poor slobs who are honest and pay taxes pick up the slack in the form of increased taxes and reduced services. Meanwhile the rich like Warren get the benefits of being Americans without paying their fair share. And in case you’re wondering, study and after shows the Average Joe donates more to charity and such proportionately in comparison to their income and net worth than the rich ever thought of doing.
Perhaps Warner will immortalize the judge and design a warm and cuddly Beanie Baby with him in mind. An apropos nickname might be “Judge Pushover.”
If you don’t get all choked up about this story, consider this: Not only are the rich treated differently than you and I but the superrich are treated even differently than the rich.
This column is the opinion of executive editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA. He can be contacted at firstname.lastname@example.org or 209-249-3519.
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