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How L.A.’s Richest Man Went From Billions to Bust
Onetime billionaire Gary Winnick spent his vast fortune on lavish homes in Bel-Air, Malibu and New York City.
In the late 1990s, Gary Winnick donated millions of dollars to the Los Angeles Zoo and rubbed elbows with President Bill Clinton. He would soon buy the most expensive home in the country.
The Long Island native and one-time protégé of the former junk-bond king Michael Milken had amassed an estimated $6.2 billion fortune, and the Los Angeles Business Journal ranked him the richest man in L.A. Global Crossing, a company he founded that promised to lay undersea fiber-optic cable around the world, made him a billionaire on paper in less than two years, a faster rise than Gilded Age oil baron John D. Rockefeller or Microsoft co-founder Bill Gates.
“He’s so rich that his longtime housekeeper, to whom he gave stock in a company he was starting, is now a millionaire herself,” the Los Angeles Times wrote in 1999. “She’s about to get a housekeeper of her own.”
But since Gary Winnick’s death at the age of 76 in 2023, a very different financial picture has come to light. For all his flashy possessions—a storied Bel-Air estate known as Casa Encantada, a Malibu beach house, a New York pied-à-terre and an enviable art collection—he was severely strapped for cash and deeply in debt. His 79-year-old widow, Karen Winnick, is now fighting to keep control of their homes, art and jewelry, all of which Gary put up as collateral against a massive loan.
The revelations have shocked L.A.’s upper crust, and even some of the couple’s closest friends, many of whom assumed that Gary had almost unlimited financial resources.
“How this was not better managed is just totally beyond me,” said Lori Hyland, whose late husband, L.A. power broker Jeff Hyland, was close friends with Gary for years until his own death in 2022.
The situation underscores a broader truth about modern wealth: For all the breathless rankings and headline valuations, the finances of the superrich are often opaque. Many in the top 1% have a vast net worth on paper, which they borrow against to fund a luxurious lifestyle. But with some of the country’s biggest fortunes tied up in illiquid stakes or leveraged assets, or based on valuations that rely on private-market optimism, that wealth isn’t as accessible as cash and can quickly disappear.
Karen Winnick didn’t respond to a request for comment.
Leveraged start
Gary cut his teeth in the 1970s and early ’80s working for Milken, the Wall Street titan widely recognized as the architect of the high-yield bond market.
Gary and Karen married in 1972, moved to L.A. for his job with their two young sons and had a third.
At what became Drexel Burnham, Gary was part of the Milken inner circle, working on leveraged buyouts and trading convertible securities.
Gary and Milken once hitched a ride on casino magnate Steve Wynn’s private jet from New York to Los Angeles in the early ’80s. On the flight, they tried to persuade Wynn to back a hostile takeover to the tune of $300 million. Wynn said he didn’t have the money available. But Milken said he would help Wynn raise the money if he were to be called on it—and pay him a 1% fee for his commitment.
“Picture this,” Gary recalled at a 2021 conference in Beverly Hills. “We’re paying them a point for a commitment of money they don’t have.”
In other words, they were paying Wynn for the promise to have money later. The whole scenario illustrated how Gary thought about financing: Reputation was capital.
A spokesman for Milken disputed the events. Wynn couldn’t be reached for comment.
Milken was later indicted in an unrelated insider-trading investigation at Drexel. He pleaded guilty in 1990 to securities and tax violations and served two years in prison.
Gary moved on to found Global Crossing in 1997, persuading backers to fund an ambitious plan to thread new fiber across the Atlantic Ocean. The thesis was simple: As the internet became ubiquitous, the world’s communications arteries were about to be rewired, and those who owned the fiber would own the future.
What started with a single flagship undersea cable linking the U.S. and the U.K. quickly turned into a pitch for a global network.
“There were these big companies in telecom that were trading at just absurd valuations,” said Romeo A. Reyes, who was a senior analyst covering Global Crossing for Jefferies at the time of the company’s rise. “It was fast and furious. The hype was off the charts.”
Casa Encantada
Gary quickly put his Global Crossing money to use, buying luxury homes and art.
Growing up in Roslyn, N.Y., where his mother was an interior decorator and his father ran a small business selling restaurant supplies, Gary had admired the “Great Gatsby”-style estates along Long Island’s Gold Coast. In 1988, he visited billionaire David Murdock’s Casa Encantada for a fundraiser for George H.W. Bush. The grand estate reminded him of those Gold Coast properties, Gary told The Wall Street Journal in 2023.
Murdock invited him back about a decade later, as Global Crossing was on the rise, with the implicit intention of selling the property to him, Gary said in that interview. With a 40,000-square-foot house on 8.5 acres, it was so large that he was physically tired after the full tour, he said.
He and Karen bought Casa Encantada in 2000 for $94 million, the priciest U.S. home-sale on record at the time. Previously, the Winnicks had lived for 20 years in a much more modest home in Brentwood.
They spent tens of millions of dollars on the renovation, hiring star architect Peter Marino to oversee the 2 1⁄2-year process. There were about 250 workers on site each day. For the intricate plasterwork, he hired the same artisans who had worked on the Bellagio Hotel in Las Vegas. For the dining room walls, eight Parisian artisans were flown in for months to achieve a Japanese-inspired lacquer finish. Gary tracked down much of the original furniture that British-born furniture designer T. H. Robsjohn-Gibbings had designed for the house and bought back about a dozen pieces at great expense.
“I came to appreciate the craftsmanship and workmanship in the house,” Gary later told the Journal. “So, I wouldn’t do anything less than 100%.”
The couple filled the home with works by major artists like Cy Twombly and Edward Hopper. A portrait of George Washington that hung in the wood-paneled study was commissioned by Benjamin Franklin. Gary served on the board of trustees of the Museum of Modern Art and hosted events at his home for fellow trustees and board members, including Ron Lauder and David Rockefeller, Jr.
Around the same time they bought the Bel-Air mansion, the Winnicks purchased a two-bedroom pied-à-terre at the iconic Sherry-Netherland Hotel in New York City, and hired star architect Charles Gwathmey to completely revamp it.
‘Lavish lifestyle’
Global Crossing’s fall in the early 2000s became one of the signature implosions of the dot-com era. Demand for its bandwidth fell far short of projections, and the aggressive build-out left it with billions in debt.
“All these new internet companies would go raise money, then spend $10 million buying capacity from Global Crossing,” said Reyes. “Then, the music stopped. The cash-burning startups that were funding the revenue were gone.”
Gary cashed out roughly $730 million in stock between 1999 and 2001.
In January 2002, Global Crossing filed for bankruptcy, vaporizing tens of billions in market value.
Some former employees, pension funds and shareholders sued Gary and his fellow executives, alleging that they had misled them about the company’s financial condition. In 2004, he personally agreed to pay $55 million to settle shareholder suits.
The Winnicks’ lifestyle didn’t seem to change.
The couple split their time between their Bel-Air estate, their New York pied-à-terre and a seven-bedroom, circa-1930s beach house they owned in Malibu. Gary could be spotted with other wealthy Angelenos at the Hillcrest Country Club, where he was a longtime member. He was one of L.A.’s best-known philanthropists, contributing more than $100 million to causes such as the Special Olympics and the Los Angeles Zoo. Gary was also a significant contributor to and pal of President Bill Clinton, and hosted events with politicians like Arnold Schwarzenegger.
The mogul lived an objectively lavish lifestyle, said Andy Ferber, a business partner of Gary’s a decade ago.
“When you went out to dinner with Gary, he always had a big crowd with him. He would go to the best restaurants, and he would order everything on the menu,” Ferber said. Gary always picked up the check.
Serial investor
Following Global Crossing’s collapse, Gary was something of a serial investor in companies across technology and media.
In 2014, he invested in T+Ink, a developer of patented “thinking ink” products, where he was briefly CEO. Ferber, one of the founders of T+Ink, said Gary brought a lot of financial firepower, despite the stigma after Global Crossing. “He had probably at least five or six billionaires who he got to invest along with him,” Ferber said.
However, he ended up in a power struggle with the founders and was eventually bought out.
Around the same time, he invested in MD Insider, a startup that used big data computing techniques to rank the performance of doctors. It was later acquired by healthcare technology company Accolade.
In his final years, Gary found himself engulfed in costly litigation spawning from various new investments—and in need of cash.
He turned to Richard Ressler, a longtime pal and alumni of Drexel, who was now co-founder of real-estate development and investment firm CIM Group.
Gary requested a $100 million revolving line of credit from CIM in 2020. Approximately $60 million of the loan was slated to repay a loan he already had with HSBC. The other $40 million would be available to draw as working capital advances to finance his businesses, according to a legal declaration by CIM Managing Director Smith Daley.
Like the HSBC loan, the bigger CIM loan was backed by Casa Encantada and the Malibu home, plus art and jewelry.
Legal costs
In 2016, Gary had invested $4 million into a company then called Qello, with a goal of turning the concert-streaming provider into a bigger platform that would deliver streaming content to Asian media markets, according to court documents. The company filed for Chapter 11 bankruptcy protection in September 2020.
Both Gary and his partner in the project, David Gentile, were sued in 2022 by investors who held promissory notes on Qello. They claim to have been misled in 2017 about the company’s new direction.
Apart from Qello, Gentile was the founder and CEO of private-equity firm GPB Capital and was convicted last year of defrauding more than 10,000 investors across three of its funds. President Trump commuted his sentence in November 2025, and he served less than two weeks of a seven-year sentence.
Gary was also engaged in protracted litigation with T-Mobile US over the strategy of a private investment firm he founded, WCO Spectrum. In June 2023, T-Mobile accused WCO of running a “nationwide criminal scheme.” The suit alleged that his company made fraudulent purchase offers for spectrum licenses held by U.S. schools that were inflated to trigger “right of first refusal” agreements T-Mobile had with the schools. T-Mobile claims WCO then demanded kickbacks via secret side-agreements once T-Mobile matched its offers. T-Mobile said the scheme cost it more than $10 million.
WCO denied the allegations, arguing its offers were legitimate and characterized the side agreements as typical breakup fees. The case is ongoing.
The revelation
With legal fees mounting, Gary made moves to raise more cash. In June 2023, the Winnicks put Casa Encantada on the market for $250 million, by far the country’s priciest home for sale. That fall, he was negotiating a fourth amendment to the CIM loan to borrow even more.
Then Gary died suddenly on Nov. 3, 2023.
In the weeks after his death, Karen claims she learned about the terms of the loan—and all of the assets pledged as backing for it, including her wedding ring.
“Gary managed our household finances. I was unaware that, in the years prior to his death, he faced significant financial demands,” Karen, who is a children’s book author and illustrator, wrote in court documents. “I did not know, until Gary passed away, that we were overextended and that Gary needed money to repay debts and maintain his lifestyle.”
In December 2024, she was sued by the law firm Winston & Strawn for her late husband’s alleged failure to pay legal fees of roughly $314,000 plus accrued interest.
Then the Winnicks defaulted on payments to CIM. The debt had grown to roughly $155 million. On Sept. 26, CIM formally notified the Winnick family that it was foreclosing on Casa Encantada and the Malibu home, the latter of which was now owned by their three sons. An auction was set for this week.
In court documents, Karen alleges CIM set up a “loan-to-own scheme” that will leave her “effectively destitute” and strip her of her home and life savings and claims that CIM’s wealthy co-founder Ressler preyed on his longtime friend for profit.
CIM has called her allegations “fantastical” and noted that Karen continued to draw advances from the loan agreement after Gary’s death. Ressler declined to comment.
Gary died two weeks before he was to be deposed in the Qello suit. A settlement agreement for $200,000 is awaiting judicial approval—an outcome Dan Centner, the lawyer representing members of the Qello class action, called “incredibly disappointing.” Gary’s estate can’t afford to pay more; it’s insolvent because of the CIM loan, his representatives explained in mediation this year.
Reyes, the former Jefferies analyst, said he was taken aback by how much debt Gary had accumulated.
“What does surprise me a little bit is that the dude knew leverage,” he said. “Leverage kills when it goes the wrong way.”
The foreclosure auction for Casa Encantada and the Malibu home was slated to take place Tuesday morning behind a nondescript fountain, surrounded by construction fences, at Pomona Civic Center Plaza, some 30 miles east of L.A. A small gathering of people milled around as auction items were read through by a woman speaking at a volume not much louder than a semiprivate conversation.
But the two luxury homes never came up for bidding. Karen’s lawyer succeeded in getting an emergency stay at the 11th hour until a court of appeals judge can review her case further.
Erich Schwartzel contributed to this article.
Write to Katherine Clarke at Katherine.Clarke@wsj.com
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