H. Ty Warner, the creator of Beanie Babies toys, has been charged with federal tax evasion for allegedly failing to report income he earned in a secret offshore financial account, says the U.S. Department of Justice.

The money was in an account with Swiss bank UBS and later with Zürcher Kantonalbank. The federal charges allege Warner started the offshore account in 1996.

Read: CRA cracks down on tax evasion

Warner, 69, is the sole owner of TY Inc., maker of the Beanie Babies. He also owns other business interests.

The DOJ says he is cooperating with the Internal Revenue Service and will plead guilty to the charge.

“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,” says Gary S. Shapiro, United States Attorney for the Northern District of Illinois.

Read: House arrest and fine for bizarre tax-evasion scheme

In late 2002, Warner allegedly transferred the assets in his UBS account to a second Swiss financial institution, Zürcher Kantonalbank, when the account had a balance of approximately $93,630,083.

That year he earned about  approximately $3,161,788 in gross income through investments held in his UBS account, according to the charge, says the Department of Justice.

Warner allegedly failed to tell his accountants about that income and failed to report that income or the existence of the UBS account to the IRS.

By omitting his UBS income, Warner allegedly falsely reported his total income in 2002 was $49,124,095, according to the charge.

He faces a maximum penalty of five years in prison and a $250,000 fine. He may also have to pay all of his outstanding taxes, plus a penalty.

Read: Tax return help busted for tax evasion

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