Inside the rise and fall of the reclusive Beanie Babies billionaire: How Ty Warner went from college dropout to toy-maker extraordinaire behind 90s collectable craze before his secret Swiss accounts left him a disgraced tax fraud

He’s the billionaire behind Beanie Babies, the plush stuffed animals that have sparked a swirling craze across America — and the world.

But Ty Warner, who made his fortune from collectibles, was once an unlikely business icon, dropping out of college and failing to qualify for the military.

He held odd jobs in his youth, working as a busboy, hunter, and even salesman of encyclopedias before landing at the toymaker Dakin.

It was there that he began secretly making his own line of beanbag-like animals, distinct from the traditional, rigid stuffed toys that filled the shelves at the time.

After being fired, he started producing Beanie Babies and came up with an ingenious marketing strategy by making the toys rare – creating limited editions and limiting the number of toys that could be sold in stores.

Business boomed and Beanie Babies captured the 1990s era.

But the dizzying rise precipitated a fall from grace, as Warner’s greed eventually led him to stash millions in Swiss bank accounts and he was ordered to repay more than $53 million. Today he is a recluse, though still revered for his entrepreneurial spirit.

Born in Chicago in 1944, Warner had a difficult upbringing in an unhappy family, saying later in life that he had been “a youngster with no educational advantages”.

He was sent to military school when he was 15, then started college in Kalamazoo in 1962, but was forced to leave because he couldn’t pay his tuition.

Attempts to enlist in the army failed after he was deemed unfit for service due to hearing loss.

Warner’s mother was diagnosed as paranoid schizophrenic and he helped care for her.

To make ends meet, he took on random odd jobs, including as a waiter, hunter, and seller of encyclopedias.

Her job at toymaker Dakin was her first up-close visit to a company that produced stuffed animals and action figures.

The company was the market leader at the time, selling nearly 70 million toys a year.

Warner was the best person they had to release their products, but he wanted a bigger slice of the action and started creating his own line on the side. His 15-year tenure ended when bosses found out.

He was inspired to start his own company, Ty Inc., where he launched Beanie Babies, first showing prototypes at the World Toy Fair in 1993 before manufacturing began in 1994.

The line started with nine original Beanie Babies, including Splash the Whale, Patti the Platypus, Chocolate the Moose, Squealer the Pig, Spot the Dog, Flash the Dolphin.

Warner said the toys so far have been “stiff and tough”. He attributes part of Beanie Babies’ success to the design and flexibility to “wave, dance and cuddle” at their owner’s will. The adorable little toys were small enough to carry.

With a price tag of $5, the Beanie Babies were also affordable enough that kids could buy them with spending money.

But the key to their unrivaled success was creating scarcity.

While sales were initially slow, Warner made the inspired decision to reduce the quantities of toys on sale.

By limiting stores to 36 of each character, people became obsessed with getting their hands on one while they could.

More than that, carefully choosing which figures to retire created a market to resell the toys for more than was originally paid.

One collector, who started buying Beanie Babies directly from the company’s German distributor, spent $2,000 on the toys.

Within months, their value had soared to $300,000, author Zac Bissonnette wrote in his book ‘The Great Beanie Baby Bubble’.

Sales reached over $280 million by the end of 1996. Warner’s personal income for that year, before taxes, was $90 million.

The following year, a collaboration with McDonald’s continued to amplify the Beanie Babies mania. The fast food chain has made 100 million Teenie Beanie Babies for their Happy Meals.

The promotion was expected to last five weeks, instead it only lasted two.

In 1998, more than half of Americans owned at least one of his creations. His pre-tax salary skyrocketed to $700 million, with more than $1.3 billion in sales.

He had thrown off the shackles of his humble home office beginnings and eventually operations included a 370,000 square foot warehouse.

But after a year, the novelty seemed to wear off. When a series of withdrawals were announced, resale prices remained roughly the same.

Another collection of 24 new Beanie Babies was announced, flooding the market, which discouraged collectors.

By 2000, beanies were whipped in threes for $10 and started appearing in dollar stores.

Sales fell dramatically at the start of the new millennium, and in 2004 Warner’s tax return claimed losses of over $39 million.

He had made investments over the previous four years, buying hotels and properties including the Four Seasons Hotel in New York, the San Ysidro Ranch in Montecito, the Montecito Country Club, and the Sandpiper Golf Course in Santa Barbara.

Warner’s success saw him buy a sprawling 6.58-acre Montecito estate off Butterfly Beach where he lived from 2010 to 2020 with his former longtime partner.

In 2007, he switched to Ty Girlz, a series of uniquely patterned dolls that were connected to a website, but both were discontinued in 2013.

That year, on September 18, Warner’s distinguished reputation was tested when he was charged with one count of tax evasion for failing to report more than $24.4 million. dollars in revenue and evading nearly $5.6 million in federal taxes of millions stashed away for more than a decade in secret. accounts in two Swiss banks.

The toymaker pleaded guilty, admitting that between 1996 and 2008 it opened and maintained undeclared foreign bank accounts.

He said he felt “shame and embarrassment” for what he had done.

Warner could have been sentenced to up to five years in prison, with prosecutor Michelle Petersen asking U.S. District Judge Charles Kocoras to give Warner at least a year behind bars.

He was sentenced to two years probation and 500 hours of community service for at least three Chicago high schools and fined $100,000.

Warner also paid more than $53 million in civil fines, which is 50% of the highest balance in its undeclared foreign bank accounts.

His well-known philanthropic efforts, which exceed donating more than $300 million to charities since launching Ty Inc, factored into the judge’s decision.

This year, his efforts were reimagined in the new Apple TV+ movie “The Beanie Bubble.”

The film was adapted from Bissonnette’s 2016 book and is said to “pull the curtain back on the absurdities and injustices of the American Dream – especially the female relationship with it”.

About the film, Warner said he enjoyed the creativity used in the Beanie Babies boom story.

“I commend the filmmakers for capturing the unprecedented energy and excitement – but not the facts – surrounding the original release of Beanie Babies 30 years ago,” he said.

“The film is, by its own admission, partly a fiction. But, like filmmakers, I’m in the realm of dreams and I admire their creative spirit.

In August 2023, Warner’s net worth was $5.7 billion. He is ranked 469 on the Forbes list of billionaires.

The 78-year-old lives in Oak Brook, Illinois. He never married or had children.