How a guy touted in 1999 as L.A.’s richest man went bankrupt

"How L.A.’s Richest Man Went From Billions to Bust"
  (adapted from an excellent, much longer WSJ piece by Katherine Clark, Dec 18, 2025)

Gary Winnick was once the richest man in Los Angeles.  Owned lavish homes in Bel-Air, Malibu and New York City.  Only after his death did the world learn that the empire was built on borrowed money and gullible investors.

In the late 1990s he donated millions of dollars to the Los Angeles Zoo and rubbed elbows with Bill Clinton.  He would soon buy the most expensive home in the U.S.

In 1999 Winnick--a former protégé of junk-bond king Michael Milken--was estimated to be worth $6.2 billion, making him the richest man in L.A.  His main source of money was from founding a company called Global Crossing, which promised to lay undersea fiber-optic cable around the world.

This may not strike most people as a hot idea for a company.  That's because you're either too young to know, or never knew, that when the Internet became The Hot Thing, people realized there would be a huge increase in the demand for high-capacity data connections between the U.S. and Europe.  Existing wire cables couldn't satisfy that demand, but fiber-optic cables could.  So Global Crossing became The Hot Stock, making Winnick a billionaire on paper in less than two years--a faster rise than Microsoft co-founder Bill Gates.

But after Winnick’s death two years ago, at the age of 76, a very different financial picture has come to light.  For all his stunning possessions—a stunning Bel-Air estate, a Malibu beach house, a fabulous New York condo and a pricey art collection—he was deeply in debt.  Everything he owned had been pledged as collateral for an ever-increasing series of loans that kept the charade going.

Lenders didn't worry about Winnick's ability to repay huge loans because everyone knew he was the richest man in Los Angeles, eh?  And the loans were secured by specific assets.  So no problem, citizen!  And the lavish lifestyle continued unabated. 

His crown jewel was an eight-acre estate and a 40,000 square foot 1930's mansion in Bel-Air called Casa Encantada.

Winnick's demise reveals a disturbing truth about modern wealth:  Despite all the fawning headlines, the finances of the super-rich are--as the WSJ writer Katherine Clark diplomatically puts it--"often opaque."  Oh yes. 

In the 1970s and early ’80s Gary worked for Michael Milken, the Wall Street mover who amassed a fortune pushing what are diplomatically called "high-yield bonds"--meaning high risk.  You may have heard the term "junk bonds."  Gary was part of Milken's inner circle, working on leveraged buyouts and trading convertible securities.

In 1977 Gary founded Global Crossing--a plan to lay fiber-optic cable across the Atlantic.  Like faaaabulous electric cars, the idea seemed sure to be the next Hot Thing, and investors eagerly poured billions into the stock.  What started as a single undersea cable linking the U.S. and the U.K. quickly turned into a pitch for a global network.  One analyst covering Global Crossing said "The hype was off the charts.”

Sound familiar?

Money poured in to Global Crossing, and the stock went exponential.  Gary cashed out a billion dollars worth of stock, using the money to buy luxury homes and art. 

In 2000 Gary bought Casa Encantada, a 40,000 square foot mansion on 8.5 acres overlooking the Bel-Air Country Club, for $94 million.  It was the most expensive U.S. home-sale on record at the time.  Experts estimated that just maintaining its vast gardens and grounds cost millions of dollars a year. 

Gary then spent tens of millions of dollars and 2.5 years renovating the mansion.  A portrait of George Washington that hung in the wood-paneled study was commissioned by Benjamin Franklin. 

Around the same time he bought the Bel-Air mansion, the Winnicks bought a two-bedroom condo in New York City and hired a star architect to completely remodel it. 

The fall of Global Crossing in the early 2000s was one of the signature implosions of the dot-com era.  The project had cost billions, but income fell far short of projections.  Part of the problem was that lots of new internet companies would raise money, spend $10 million buying capacity from Global Crossing, but then would go bankrupt.  Satellite communications also sealed Global Crossing's fate.

Between 1999 and 2001 alone, Winnick sold roughly $730 million in GC stock.  In January 2002 the company filed for bankruptcy, vaporizing tens of billions in market value.

Some former employees, pension funds and shareholders sued Gary and his fellow executives, claiming the company had misled them about the its financial condition.  Two years after the company collapsed, Gary personally agreed to pay $55 million to settle shareholder lawsuits.

The demise of Global Crossing didn't seem to dent Winnicks’ lifestyle.  Gary became one of L.A.’s best-known philanthropists, contributing more than $100 million to causes like the Special Olympics and the L.A. Zoo, and to Bill Clinton and other Democrats.

In 2014 he invested in T+Ink, a developer of patented “thinking ink” products, where he was briefly CEO.  One of the founders of T+Ink said Gary "probably got five or six billionaires to invest along with him.”

In 2016 Gary invested $4 million in a company called Qello, which planned to deliver streaming content to Asian media markets.  Four years later the company filed for Chapter 11 bankruptcy.  Gary and his partner in the project were sued by investors who claim to have been misled.

Following the collapse of Global Crossing Gary was facing several lawsuits—and in need of cash, so in 2020 he turned to his friend Richard Ressler, a co-founder of real-estate development and investment firm CIM Group.  CIM loaned him $100 million. 

CIM says about $60 million of this loan would be used to repay a previous loan he'd gotten from HSBC.  The rest would be used for Gary's businesses.  Like the HSBC loan, the bigger CIM loan was backed by Casa Encantada and the Winnicks' seven-bedroom Malibu beach home, plus art and jewelry.

In June of 2023, with legal fees mounting, Gary put Casa Encantada on the market for $250 million.  That fall he was negotiating a fourth amendment to the CIM loan to borrow even more.  Then on Nov. 3, 2023 Gary died.

His wife Karen says only after his death did she learn that all of the couple's assets had been pledged as collateral for various loans.

The Winnicks had failed to make payments to CIM on the amended loan, and that debt was now roughly $155 million. On Sept. 26 of this year CIM formally notified the Winnick family that it was foreclosing on Casa Encantada and the Malibu home, which was now owned by their three sons. 

An auction was set for this week. 

In court documents Karen's attorneys say being forced to repay the loan will leave her “effectively destitute.” 

The foreclosure auction for Casa Encantada and the Malibu home was scheduled to take place last week.  But the two luxury homes never came up for bidding:  Karen’s lawyer got a judge to issue an emergency stay until the case can be reviewed by a court of appeals.

Now, students, what can we learn from this?

You can't really blame someone for pushing a company whose sole product--cables under the ocean--was quickly obsoleted by satellites.  Advances in technology do that several times a year.

It's more reasonable to blame Gary for selling a billion dollars of stock in Global Crossing in the two years before it collapsed.  As the co-founder he clearly knew the trend line on the company's finances--classic insider trading.  But of course he was never charged, cuz...reasons.

What we can sarcastically conclude is that Gary's mistake was that he didn't offer top members of congress shares in his company at the outset, then urge them to pass a LAW decreeing that U.S. companies were barred from using satellites to send data overseas--leaving his company's fiber-optic cables as the only legal means.  Yeah, dat's it.

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