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 toy that sparked a whirlwind craze across America – and the world.

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

He took odd jobs as a young man, worked as a busboy, bellhop, and even an encyclopedia salesman before landing at the toymaker Dakin.

There he secretly began making his own line of products, beanbag-like animals, distinct from the traditional, stiff stuffed animals that filled the shelves at the time.

After being fired, he began producing Beanie Babies and devised an ingenious marketing strategy by making the toys scarce – creating limited editions and limiting how many could be sold in stores.

Business boomed and Beanie Babies captured the spirit of the 1990s.

But the staggering rise caused a fall from grace, as Warner’s greed eventually led him to deposit millions into Swiss bank accounts and he was ordered to pay back more than $53 million. Today he is a recluse, although he is still revered for his entrepreneurial spirit.

Characters, such as the Princess Diana special commemorative coin (pictured), became highly sought after and could be resold for more than their original price

Warner’s success allowed him to buy a sprawling 6.58-acre Montecito estate near Butterfly Beach

Born in Chicago in 1944, Warner had a difficult upbringing in an unhappy family and later in life claimed to have been “a youth with no educational benefits.”

He was sent to military school at the age of 15 and then started at the University of Kalamazoo in 1962, but was forced to leave because he could not afford his tuition.

Attempts to enlist in the military were unsuccessful after they were deemed unfit to serve due to hearing loss.

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

To make ends meet, he worked random odd jobs, including as a busboy, bellhop, and encyclopedia salesman.

His job with toy maker Dakin was his first introduction to a company that produced stuffed animals and figurines.

At the time, the company was the market leader and sold nearly 70 million toys a year.

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

He was prompted to form his own company, Ty Inc., where he launched Beanie Babies, first introducing prototypes at the World Toy Fair in 1993 before production began in 1994.

The range 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 toys had been “stiff and hard” until then. He attributes part of Beanie Babies’ success to its design and flexibility to “sway, dance and cuddle” at their owner’s will. The cute little toys were small enough to carry around.

With a $5 price tag, Beanie Babies were also affordable enough for kids to buy with pocket money.

But the key to their unparalleled success was creating scarcity.

Although sales were slow at first, Warner made the inspired decision to withdraw the quantities of toys for sale.

A five-year-old with arms full of Beanie Babies in 1999

Warner came up with a strategy to limit the number of Beanie Babies in each store

Limiting shops to 36 of each character made people obsessed with getting one while they could.

In fact, carefully choosing which characters to retire created a market for reselling the toys for more than what was initially paid.

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

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

By the end of 1996, sales exceeded $280 million. Warner’s personal income for that year, before taxes, was a whopping $90 million.

The following year, a partnership with McDonald’s continued to fuel the Beanie Babies mania. The fast food chain produced 100 million Teenie Beanie Babies for their Happy Meals.

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

In 1998, more than half of America 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 shaken off the shackles of his home office’s humble beginnings, and eventually the operation included a 370,000-square-foot warehouse.

But within a year, the novelty seemed to wear off. When a series of retirements were announced, resale prices remained about the same.

Another collection of 24 new Beanie Babies was announced, flooding the market and scaring off collectors.

In 2000, beanies were flogged in threes for $10 bargains and began appearing in dollar stores.

Beanie Babies were affordable enough for kids to buy with pocket money

Their adorable designs attracted a legion of fans

Sales dropped significantly at the turn of the new millennium, and in 2004 Warner’s tax returns claimed a loss of more than $39 million.

In the previous four years, he had invested in hotels and real estate, 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 allowed him to purchase a sprawling 6.58-acre Montecito estate at Butterfly Beach, where he lived from 2010 to 2020 with his former long-term partner.

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

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

The toymaker pleaded guilty and admitted opening and maintaining undeclared foreign bank accounts between 1996 and 2008.

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

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

He was placed on two years’ probation and completed 500 hours of community service for at least three Chicago high schools, as well as a $100,000 fine.

Warner also paid more than $53 million in a civil penalty, representing 50 percent of the top balance of his undeclared foreign bank accounts.

His well-known philanthropic efforts, which have donated more than $300 million to charities since launching Ty Inc, were considered in the judge’s decision.

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

A fan holds an armful of special beanie babies from the Disneyland gift shop

Warner entered a guilty plea to tax evasion, apologized in a choked voice and told a federal judge he knew his tax forms weren’t accurate

The toymaker’s career has been reimagined and retold in the new Apple TV+ movie The Beanie Bubble

The film is an adaptation of Bissonnette’s 2016 book and is said to “pull aside the curtain on the absurdities and injustices of the American Dream – particularly the female relationship with it.”

On the film, Warner said he appreciates the creativity used for the story of the Beanie Babies tree.

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

The film is, in its own words, part fiction. But like the filmmakers, I’m dreaming and I admire their creative spirit.’

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

The 78-year-old lives in Oak Brook, Illinois. He never married and had no children.