Gary Winnick, Who Won and Lost With Global Crossing, Dies at 76

Gary Winnick, a former junk-bond salesman who in 1997 based Global Crossing, a telecommunications firm that laid fiber-optic cable underwater world wide to hurry web and cellphone visitors, however that imploded 5 years later underneath billions of {dollars} in debt, died on Saturday at his property in Los Angeles. He was 76.

His son Matthew confirmed the demise however stated he didn’t know the trigger. Mr. Winnick acquired renewed consideration in June when his property, within the Bel Air neighborhood, was put up on the market for $250 million.

Mr. Winnick began Global Crossing and not using a background in telecommunications however with an bold aim: to construct the world’s first privately financed international fiber-optic community. A $750 million trans-Atlantic cable was adopted by one throughout the Pacific.

Mr. Winnick was sure that by spending $15 billion on the community, he had discovered the best enterprise on the proper time. The web was booming. Telephone markets and cable tv have been being deregulated.

“Sometimes things happen,” he informed The New York Times in 1999. “But you need to get to the plate to have things happen.”

Forbes was impressed. Looking on the firm’s plans in a canopy article in 1999 headlined “Getting Rich at the Speed of Light,” the journal wrote, “Ambitious, yes; implausible, no — even for a company with only 200 employees who just passed around cake and ice cream to celebrate its second birthday.”

The article lauded Mr. Winnick’s fast accumulation of $4.5 billion in wealth by means of the worth of his Global Crossing shares. Mr. Winnick grew to become a billionaire quicker than John D. Rockefeller or Bill Gates.

But Global Crossing by no means discovered sufficient prospects to whom it might lease its worldwide fiber-optic capability and filed for chapter safety in early 2002. It was one of many largest company failures ever.

Leo J. Hindery Jr., who spent a number of months as the corporate’s chief government, stated in a cellphone interview that Mr. Winnick “was a clear pioneer and a visionary when it came to fiber-optic networks, but the complexity ultimately overwhelmed him.”

Norman Brownstein, the chairman of the nationwide regulation agency Brownstein Hyatt Farber Schreck, who was each a Global Crossing board member and a pal of Mr. Winnick’s, stated in an interview that if Mr. Winnick had been overwhelmed, so had virtually all people within the firm, and within the trade.

“Remember, he wasn’t making these decisions all my himself,” Mr. Brownstein stated, noting that Mr. Hindery and different executives, together with Robert Annunziata and John Legere, had helped Mr. Winnick run the corporate.

“Global Crossing needed so much money to build these things and thought the internet would develop much faster,” Mr. Brownstein added, and it had all this debt.”

By the time the corporate filed for chapter safety, it had amassed $12.4 billion in debt. A majority funding within the firm was collectively purchased for $250 million in late 2002 by two Asian firms, Hutchison Whampoa of Hong Kong and Singapore Technologies Telemedia.

Mr. Winnick stepped down as chairman quickly after. But by means of a collection of inventory gross sales he made within the 4 years earlier than the corporate collapsed, he got here away with $734 million. Other Global Crossing executives hit pay grime from inventory gross sales as effectively.

“Gary Winnick and his cronies are arguably the biggest group of greedheads in an era of fabled excess,” Fortune journal wrote in 2002.

Almost half of Mr. Winnick’s windfall got here on account of Global Crossing’s failed try in 1999 to purchase US West, a regional Bell phone firm. After US West accepted a rival provide from Qwest Communications, it backed out of a take care of Global Crossing, however as a penalty it was required to purchase 10 p.c of Global’s shares at a slight premium. Mr. Winnick offered 5.6 p.c of his stake (he held 100 million shares, choices and warrants on the time) at $62.75 a share for $350 million.

In testimony in 2002 earlier than the House Energy and Commerce Committee, which was scrutinizing Global Crossing’s inventory gross sales and accounting practices, Mr. Winnick stated: “Yes, I made a lot of money. But when I went into this venture, building a cable across the Atlantic, I had no contemplation that this thing would turn out to be what it was.”

He added, “I am both proud and I am saddened by it.”

He provided $25 million to cowl the 401(ok) retirement cash that staff misplaced when the inventory collapsed, plummeting to as little as seven cents a share after the chapter submitting.

The House committee disclosed a memo written by Mr. Hindery in June 2000 that provided a bleak portrait of Global Crossing’s prospects.

“The stock market can be fooled, but not forever, and it is fundamentally insightful and always unforgiving of being misled,” Mr. Hindery wrote. “Without looking like we are shaking our bootie all over the world, sell ourselves quickly to whichever of the six possible acquirors offer our shareholders the highest value.”

Gary Winnick was born on Oct. 13, 1947, in Manhattan and grew up in Roslyn, N.Y., on Long Island. His mom, Blanche (Mesirowsky) Winnick, was a homemaker and an inside decorator. His father, Arnold, offered restaurant provides and died when Gary was 18.

Gary studied enterprise at C.W. Post College (now L.I.U. Post) in Brookville, additionally on Long Island, and earned a bachelor’s diploma in 1969. He labored in his brother-in-law’s furnishings enterprise and, within the early Seventies, went to Wall Street as a retail dealer at Burnham & Company.

After the merger of Burnham and one other funding agency, Drexel Firestone, he moved to Los Angeles in 1975 and labored on the Beverly Hills workplace of what was by then Drexel Burnham Lambert.

At Drexel, Mr. Winnick was chief assistant to Michael Milken, who would turn into some of the highly effective and modern financiers of his time by promoting high-yield bonds, which got here to be generally known as junk bonds. The bonds have been deemed dangerous however helped finance cable, mobile and media firms and have been utilized by company raiders.

“Mr. Winnick shared in the spoils,” The New York Times wrote in 2004, “telling acquaintances he eventually made as much as $2 million a month at Drexel.”

Mr. Winnick left in 1985. Five years later, Mr. Milken pleaded responsible to securities fraud and was sentenced to 10 years in jail and fined $600 million. He was launched in 1993 after 22 months after which centered on philanthropic work; amongst different issues, he raised cash for prostate most cancers analysis.

Terry Christensen, a lawyer for Mr. Winnick, informed The Times in 2004, “Milken and some of his close people felt Gary had taken the side of the government, and there was some ill will about it from time to time.”

After leaving Drexel, Mr. Winnick began an funding agency, Pacific Capital, however nothing intrigued him like the potential for wiring the Atlantic with fiber-optic cables. What he knew in regards to the discipline, he realized from a video.

“He was so impressed, he invested $12,000 on a second video to sell the deal to equally naïve investors,” Forbes wrote.

In three years, he raised $20 billion. Global Crossing went public in August 1998, and its shares peaked at $64 in 2000, valuing the corporate at $47 billion.

But that yr, the corporate misplaced $3 billion.

In 2002, two main pension funds, which had misplaced about $110 million in Global Crossing securities, sued the corporate, accusing it of getting manipulated monetary outcomes. Two years later, as a part of a $325 million settlement with the funds, Mr. Winnick paid a reported $30 million.

The Securities and Exchange Commission went on to analyze Global Crossing’s swaps of community capability with different firms, to fill gaps in its fiber-optic protection, and whether or not these swaps have been used to inflate reported income. When the company settled the case in 2005, three Global Crossing executives have been fined, however Mr. Winnick was not, and no fraud was discovered.

“I’m proud to say that not one S.E.C. order was imposed on Global Crossing, nor was there one criminal indictment,” stated Mr. Brownstein, whose Denver-based regulation agency represented the corporate in Washington.

Mr. Winnick is survived by his spouse, Karen (Binkoff) Winnick, a youngsters’s guide author; his sons, Adam, Alexander and Matthew; his sister, Susan Brody; and eight grandchildren.

For a time, Mr. Winnick was the wealthiest individual in Los Angeles, in keeping with the Los Angeles Business Journal. He unfold his philanthropy to the United States Holocaust Museum in Washington and to the Simon Wiesenthal Center and Cedars-Sinai Medical Center, each in Los Angeles.

“My husband had a huge heart,” Ms. Winnick stated by cellphone.

In 2000, he purchased his 40,000-square-foot, 60-room property, known as Casa Encantada, for $94 million from David Murdock, a billionaire businessman. He subsequently spent thousands and thousands extra renovating it. Four years in the past, he listed it for $225 million. Its present asking worth, $250 million, is believed to be the best for a house ever publicly listed within the United States.

Mr. Winnick’s loyalty to his former boss, Mr. Milken, was seen in his push for him to be pardoned by President Donald J. Trump.

“At Trump’s inauguration last year,” the financier Anthony Scaramucci informed The Los Angeles Times in 2018, “Gary said to me, ‘Of all the people, given his lifetime achievements and his commitment to health and global progress, Michael has earned a pardon.’”

Mr. Scaramucci, who had a quick tenure as Mr. Trump’s White House communications director in 2017, stated he met with the president each earlier than and afterward to debate the matter. Mr. Trump granted Mr. Milken a pardon in 2020.