Gary Winnick, 76, Who Built and Lost Global Crossing, Dies

Gary Winnick, a former junkbond salesman who in 1997 founded Global Crossing, a telecommunications company that laid fiber-optic cable underwater around the world to speed internet and phone traffic, but that imploded five years later under billions of dollars in debt, died on Saturday at his estate in Los Angeles. He was 76.

His son Matthew confirmed the death but said he did not know the cause. Mr. Winnick received renewed attention in June when his estate, in the Bel Air neighborhood, was put up for sale for $250 million.

Mr. Winnick started Global Crossing without a background in telecommunications but with an ambitious goal: to build the world’s first privately financed global fiber-optic network. A $750 million trans-Atlantic cable was followed by one across the Pacific.

Mr. Winnick was certain that by spending $15 billion on the network, he had found the right business at the right time. The internet was booming. Telephone markets and cable television were being deregulated.

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

Forbes was impressed. Looking at the company’s plans in a cover article in 1999 headlined “Getting Rich at the Speed of Light,” the magazine 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 rapid accumulation of $4.5 billion in wealth through the value of his Global Crossing shares. Mr. Winnick became a billionaire faster than John D. Rockefeller or Bill Gates.

But Global Crossing never found enough customers to whom it could lease its international fiber-optic capacity and filed for bankruptcy protection in early 2002. It was one of the largest corporate failures ever.

Leo J. Hindery Jr., who spent several months as the company’s chief executive, said in a phone 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 national law firm Brownstein Hyatt Farber Schreck, who was both a Global Crossing board member and a friend of Mr. Winnick’s, said in an interview that if Mr. Winnick had been overwhelmed, so had almost everybody in the company, and in the industry.

“Remember, he wasn’t making these decisions all my himself,” Mr. Brownstein said, noting that Mr. Hindery and other executives, including Robert Annunziata and John Legere, had helped Mr. Winnick run the company.

“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 company filed for bankruptcy protection, it had amassed $12.4 billion in debt. A majority investment in the company was jointly bought for $250 million in late 2002 by two Asian companies, Hutchison Whampoa of Hong Kong and Singapore Technologies Telemedia.

Mr. Winnick stepped down as chairman soon after. But through a series of stock sales he made in the four years before the company collapsed, he came away with $734 million. Other Global Crossing executives hit pay dirt from stock sales as well.

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

Almost half of Mr. Winnick’s windfall came as a result of Global Crossing’s failed attempt in 1999 to buy US West, a regional Bell telephone company. After US West accepted a rival offer from Qwest Communications, it backed out of a deal with Global Crossing, but as a penalty it was required to buy 10 percent of Global’s shares at a slight premium. Mr. Winnick sold 5.6 percent of his stake (he held 100 million shares, options and warrants at the time) at $62.75 a share for $350 million.

In testimony in 2002 before the House Energy and Commerce Committee, which was scrutinizing Global Crossing’s stock sales and accounting practices, Mr. Winnick said: “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 offered $25 million to cover the 401(k) retirement money that employees lost when the stock collapsed, plummeting to as little as seven cents a share after the bankruptcy filing.

The House committee disclosed a memo written by Mr. Hindery in June 2000 that offered 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 mother, Blanche (Mesirowsky) Winnick, was a homemaker and an interior decorator. His father, Arnold, sold restaurant supplies and died when Gary was 18.

Gary studied business at C.W. Post College (now L.I.U. Post) in Brookville, also on Long Island, and earned a bachelor’s degree in 1969. He worked in his brother-inlaw’s furniture business and, in the early 1970s, went to Wall Street as a retail broker at Burnham & Company.

After the merger of Burnham and another investment firm, Drexel Firestone, he moved to Los Angeles in 1975 and worked at the Beverly Hills office of what was by then Drexel Burnham Lambert.

At Drexel, Mr. Winnick was chief assistant to Michael Milken, who would become one of the most powerful and innovative financiers of his time by selling high-yield bonds, which came to be known as junk bonds. The bonds were deemed risky but helped finance cable, cellular and media companies and were used by corporate 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 guilty to securities fraud and was sentenced to 10 years in prison and fined $600 million. He was released in 1993 after 22 months and then focused on philanthropic work; among other things, he raised money for prostate cancer research.

Terry Christensen, a lawyer for Mr. Winnick, told 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 started an investment firm, Pacific Capital, but nothing intrigued him like the possibility of wiring the Atlantic with fiber-optic cables. What he knew about the field, he learned 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 company at $47 billion.

But that year, the company lost $3 billion.

In 2002, two major pension funds, which had lost about $110 million in Global Crossing securities, sued the company, accusing it of having manipulated financial results. Two years later, as part of a $325 million settlement with the funds, Mr. Winnick paid a reported $30 million.

The Securities and Exchange Commission went on to investigate Global Crossing’s swaps of network capacity with other companies, to fill gaps in its fiber-optic coverage, and whether those swaps were used to inflate reported revenue. When the agency settled the case in 2005, three Global Crossing executives were fined, but Mr. Winnick was not, and no fraud was found.

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

Mr. Winnick is survived by his wife, Karen (Binkoff) Winnick, a children’s book writer; his sons, Adam, Alexander and Matthew; his sister, Susan Brody; and eight grandchildren.

For a time, Mr. Winnick was the wealthiest person in Los Angeles, according to the Los Angeles Business Journal. He spread his philanthropy to the United States Holocaust Museum in Washington and to the Simon Wiesenthal Center and Cedars-Sinai Medical Center, both in Los Angeles.

“My husband had a huge heart,” Ms. Winnick said by phone.

In 2000, he bought his 40,000square-foot, 60-room estate, called Casa Encantada, for $94 million from David Murdock, a billionaire businessman. He subsequently spent millions more renovating it. Four years ago, he listed it for $225 million. Its current asking price, $250 million, is believed to be the highest for a home ever publicly listed in 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 told 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 brief tenure as Mr. Trump’s White House communications director in 2017, said he met with the president both before and afterward to discuss the matter. Mr. Trump granted Mr. Milken a pardon in 2020.

A fiber-optics pioneer whose company went bankrupt in a historic failure.