Master of Disaster - L.A.'s super-rich Gary Winnick



Master of Disaster - How L.A.'s super-rich Gary Winnick is trying to wash blood from the Global Crossing implosion off his hands -- and make more money in the bargain.


Illustration by Eric Almendral; Gary Winnick photo by Marissa Roth

Last fall at the posh home of Hollywood powerhouse Brad Grey, Los Angeles' philanthropic elite gathered to meet New York mayor Rudolph Giuliani and do L.A. proud by donating to the mayor's post-9/11 firefighter fund.

As Giuliani, the most popular politician in the country, welcomed one entertainment industry executive after another, up strode Gary Winnick, the pudgy, audacious telecom billionaire, who joined the circle and got his chance to shake Giuliani's hand.

That moment must have been a profoundly satisfying, if quiet, triumph for Winnick, founder of telecom giant Global Crossing.

Some 12 years earlier, newspapers revealed that Giuliani, then an irascible New York federal prosecutor on a mission to clean up Wall Street, had granted Winnick immunity to spill his guts about his longtime mentor Michael Milken.

Considered by some to be a key witness to the techniques that junk-bond whiz Milken used to commit securities fraud, Winnick was spared from ratting on his boss and besmirching his own reputation when Milken suddenly struck a plea bargain with prosecutors and went to prison. Winnick, his name forever linked to Milken's by such books about '80s Wall Street avarice as The Predators' Ball, shrank from public life.

And now, on a different coast, in a different century, Winnick was receiving the ultimate absolution: warmly invited to help Rudy Giuliani, the same man who once could have dragged Winnick's name through mud.

"It was one of those meetings after 9/11 where you had entertainment industry people and political people," says Steve Soboroff, president of Playa Vista, the proposed Westside megadevelopment in which Winnick is a major investor. "Gary was in a philanthropic mode, and he seemed to know the entertainment folks, and I believe he gave very generously. He was in his element."

It helps to be worth billions of dollars. During Global Crossing's dizzying 18-month ascent on Wall Street, during which its stock zoomed from $9.50 per share to $60 in 1999, Winnick's personal holdings grew to more than $6 billion and he made the cover of Forbes. It took Microsoft's Bill Gates 15 hard-driving years to accumulate that much dough.

Winnick's smashing rise made him an instant player. It helped him persuade people like Clinton defense secretary William S. Cohen to join Global Crossing's board and former Republican governor Pete Wilson to work as a consultant. Winnick hobnobbed with British royals, turned his maid and his rabbi into millionaires, and bought the historic Conrad Hilton mansion in Bel-Air from Dole pineapple king David Murdock for $90 million, believed a record price for a private home in the United States.

But Global Crossing fell even faster than it rose. Winnick announced in January that his company would file for bankruptcy, victim of a suffocating $12.4 billion debt incurred while laying a broadband fiber-optics system connecting 27 nations just as the Internet crash wiped out demand for broadband.

Now fighting in court to sell the firm to its handpicked successors, Global Crossing is the subject of inquiries or investigations by the FBI, the Securities and Exchange Commission, congressional committees and the Pension Benefit Guaranty Corp., which insures pension plans.

Furious stockholders and employees are calling the debacle another Enron. Former vice president of finance Roy Olofson has emerged as a whistleblower who warned Global Crossing's attorney in writing last August that the firm was falsely pumping up its revenue. The company relied upon the same accounting firm as Enron -- Arthur Andersen.

Winnick nonetheless remains in fine financial shape. Though his company never came anywhere near making a profit, Winnick sold $730 million of his stock before the bankruptcy, and is still one of the richest men in California.

But he has far more to lose than when he was an unknown Milken underling at Drexel Burnham in Beverly Hills, sitting with a select few bond traders at the infamous X-shaped desk as they worked 14-hour days and learned from the Wall Street master. As his fortune and influence rose during Global Crossing's go-go days, Winnick and his wife, Karen, were anointed Los Angeles' newest civic pillars.

Unlike in the late 1980s, when he was an obscure trader, Gary Winnick now has a major public image to protect.

And that is the key to understanding the drama now unfolding. Winnick's actions today -- from hiring sophisticated Century City and Manhattan PR crisis-management firms to speak to reporters for him, to cutting a deal to sell the shattered but still valuable Global Crossing to friends, to convincing the media his company was not a sham -- are all designed to ensure that he doesn't go down in the history books as the second Ken Lay.

Mike Sitrick, whose Sitrick Co. until recently represented Winnick, was widely quoted in the media as saying, "This is definitely not another Enron." Winnick's new media crisis handler is Howard Rubenstein of New York, well known for representing George Steinbrenner and Leona Helmsley.

A spokesman from Rubenstein declined to give New Times comments on a number of issues facing Winnick and the company, saying they weren't going to add any details to what has already been published. "We won't act as spokesmen per se, because we feel people can speak best for themselves." Winnick was unavailable for comment.

Winnick also has played his political cards well. Unlike Enron cofounder Lay, who gave money largely to Republicans and made himself a juicy target for withering attacks by Democrats, Winnick gave to both parties. According to the Center for Responsive Politics, a nonprofit Washington, D.C.-based research group, Global Crossing has given $3.5 million to Republican and Democratic politicians since 1999 -- more than the $2.9 million donated by Enron during the same period.

As a result, neither side in Congress is now itching to attack Winnick.

Global Crossing gave $1 million to the Clinton Library, handed Governor Gray Davis $145,000, donated $100,000 to help underwrite the Democratic National Convention in 2000 and last year sent $100,000 in soft money to Democrats. Democratic National Committee chairman Terry McAuliffe was invited by Winnick to invest in Global Crossing before it went public, and reaped a stunning $18 million from a $100,000 investment. Though Global Crossing's contributions favored Democrats by 55 percent to 45 percent, the firm gave $31,000 to Republican presidential candidate John McCain and last year kicked in $210,000 in soft money to the Republican Party.

"It's pretty quiet in Congress," says an aide to Representative Dana Rorabacher (R-Huntington Beach), who opposes Global Crossing's plan to hand over most of its valuable fiber-optics network to Singapore investors for a mere $750 million. Says the aide: "We are criticizing Global Crossing, and a congresswoman from upstate New York is criticizing Global Crossing, and right now that's about it."

Unlike Enron, Global Crossing is still worth an estimated $10 billion - $12 billion because it built and owns something real: a sophisticated undersea and land-based fiber-optics network that spiders across three continents. Some analysts believe the company will revive when the battered telecom sector resurges.

But even if Congress continues to treat Winnick with kid gloves, as was the case in March when only his subordinates appeared before an investigating House committee, and even if Global Crossing's bankruptcy reorganization is approved by the court, multiple forces are at work that neither Winnick nor his handlers ultimately control.

Not the least of these are the employees and Middle American stock owners who, under Winnick's reorganization plan, would be paid zilch for their holdings. Creditors would get a modest percentage of what they are owed and Winnick's Singapore-based associates would get a very valuable company at a fire-sale price.

"I just got off the phone with somebody in Congress and I really bent that person's ear," one former top manager at Global Crossing told New Times.

Moreover, according to lawyers for whistleblower Olofson, a number of employees have come forward to back his account of how Global Crossing claimed increased revenue when it was merely swapping its fiber optics capacity with other telecom companies. Global Crossing has been forced to change its public stance against Olofson's charges, and a spokesman now tells New Times, "If our counting those arrangements as revenue was wrong, then the entire telecom industry is wrong, because everybody does it that way."

Meanwhile, Winnick has disappeared from sight. He is quoted in the media only in single-sentence snippets that journalists lift from old interviews in business magazines. But behind the scenes, Winnick is a very busy man.

His most pressing personal project is no longer the $40 million he is spending on his much-ballyhooed Museum of Tolerance in Jerusalem, being designed by Frank Gehry, or even the massive renovation he and his wife are undertaking of the ornate Conrad Hilton mansion.

Instead, Winnick's greatest project right now is to protect his cherished public image and remain at arm's length from the accusations and revelations unfolding in the fourth-largest bankruptcy in United States history.

In the days when Winnick still gave interviews, flaunting his company's five jets and spending $9 million to lavishly redecorate his corporate headquarters in the old MCA Building in Beverly Hills, he talked of working as a boy for his dad in the food service business in Roslyn, New York.

He always worked. As a young man, Winnick kept a card on which he had written how much he dreamed of earning when he made it big in life: $50,000 a year.

Pursuing that goal, Winnick took a job as bond salesman in New York for a company later known as Drexel Burnham Lambert. When the company's star, Michael Milken, decided to move to Beverly Hills to launch a West Coast branch of the firm, he chose Winnick as one of the young guys to go with him.

For 13 years, Winnick learned not far from Milken's elbow. By most accounts, Winnick turned into a hard-driving dealmaker who was despised by his co-workers despite his quick wit. His boss, Milken, boasted that he had made everyone on his team of Beverly Hills traders rich, with none walking away with less than $20 million.

In 1985, Winnick rented offices near Drexel and set up his own investment fund, Pacific Asset Management. Milken channeled large sums into the fund and exercised significant influence over his protégé Winnick, but Pacific Asset did not particularly thrive.

Winnick started up new ventures, investing in two middle-brow companies that went bankrupt after Winnick got out, RB Furniture and Ortho mattresses. He began building a dual reputation as a personable and even fun guy outside of work, but an SOB in the investment world.

When Milken was indicted for racketeering in the late '80s, Winnick seemed to avoid the taint that hit so many others. But in 1990 he found himself denying reports in the Wall Street Journal and other news outlets that he had sought immunity from prosecutor Giuliani to testify against Milken. Then Milken suddenly copped a plea and left for prison; Winnick was off the hook.

"We used to play basketball over at his place, and the things he clearly cared about most were his family, his wife and kids, and I found him to be just a regular guy," says Richard Katz, a respected Valley civic leader who knew Winnick before his Global Crossing bonanza. "Of course, the Milken events hurt him terribly, and you could see that pretty easily."

A wealthy real estate investor who dealt with Winnick before Global Crossing took off describes quite a different person.

"He was incredibly insecure from his Milken days, and he did outrageous stuff to let you know he was stepping on you, almost as if he was still proving himself to Michael Milken," says the investor.

By Winnick's own account, his big break came when he sent an aide one day to a meeting with AT&T executives, who were looking for investors in a planned broadband network.

Winnick decided to plow nearly $20million of his own money into the venture, and bragged around town that he would be able to raise another $735 million to launch the project. Drawing on his contacts from the Milken era, Winnick stunned the Los Angeles and Wall Street investment worlds by drumming up the money in just 90 days. Global Crossing launched in 1997.

"Things moved very fast," says Lod Cook, the retired chief executive of ARCO whom Winnick asked to become cochairman of the firm. "They were go-go times and a lot of hard work. Like any start-up company that is in a highly competitive marketplace, we were building the structure at the same time that we were trying to create business revenue. We started with 10 employees and at one point through acquisitions we had 17,000 employees."

Cook describes Winnick as witty and jovial, a man who "loves to carry on several very complicated projects at the same time and has the mental agility to do it. And despite those complexities, I don't believe we have ever had a cross word between us."

One of those complicated projects was the Playa Vista megadevelopment, which Winnick, acting as an investment advisor, persuaded the Union Labor Life Insurance Co. pension fund to heavily invest in during the mid-'90s. At that time, Winnick's Pacific Capital Group held an option to buy into the project. ULLICO was also among the early investors whom Winnick persuaded to buy into Global Crossing, and ULLICO made a killing.

"Winnick is seen as a god at ULLICO because of the money that pension fund was able to make off of its Global Crossing stock after they got in early," says one real estate investment expert. "That's one reason they are probably still invested in Playa Vista, even though that project has done nothing but burn money and is proving far more costly than they ever dreamed."

With money pouring in and with some Wall Street analysts predicting 75 percent annual growth in the telecom industry, Winnick's taste for eye-popping extravagance now could be indulged. At the same time, Winnick and his wife began giving huge sums of money to charity, and Winnick and his Global Crossing inner circle began doling out small fortunes to politicians.

Gary and Karen Winnick, both raised by typical, hardworking families in New York, bought the stunning, four-acre Bel-Air estate of the late Henry Salvatori, a wealthy L.A. entrepreneur and longtime advisor to Ronald Reagan. The 12,000-square-foot house was considered one of the finest ever designed by famed L.A. architect Paul Williams. Yet the Winnicks soon bulldozed it.

Their decision enraged many top architects and designers. Critics were even more horrified when the Winnicks lost interest in the project and sold the then-barren land on Bel-Air Road.

Things had changed because, quite suddenly, the Winnicks were far wealthier than they had been just months previously. Now, they wanted the much ritzier Conrad Hilton estate on Bellagio Road. They bought it and eight acres in early 2001 from David Murdock, the wealthy developer and Dole pineapple scion.

"Gary Winnick is a big, fat scumdog with money who ruined that Paul Williams house on Bel-Air Road for nothing," said one furious designer who has tracked the Winnicks' home-renovation misadventures. "He and his mindset disgust me. Now they own the Bellagio house, and you can only pray that the millions they are spending on renovations and redecoration isn't for something truly grotesque."

One feature of the $15 million-$30 million redesign is "a massive, 100-car subterranean garage going in right now," according to a knowledgeable real estate agent. The agent does not believe major changes will be made to the white, herculean Georgian 1930s mansion that some believe rivals Hearst Castle for its exquisite craftsmanship. Featured in the book The Estates of Beverly Hills, the 40-room manse and its gardens with 40,000 flowers sprawl on a hill above the Bel-Air Country Club grounds. It is viewed by many as the single finest mansion in Los Angeles.

Says one wealthy Winnick family acquaintance who has seen the former Hilton estate but prefers modern architecture, "It's kind of Tudor or something and sort of old and depressing. But it has a huge piece of property with a great view on a big flat area which is unique for Bel-Air. I guess Gary got what he wanted: the most expensive house in town."

The acquaintance says despite such overblown pretensions, Winnick won over a lot of people in Los Angeles who were "old money" -- at least old compared to the Winnicks' -- by immediately giving away large sums. So far, the couple has pledged and donated $100 million to such causes as the Skirball Cultural Center, Simon Wiesenthal Center and the city's long-troubled zoo.

"When he had it all, all those billions, he gave it out," says the acquaintance. "Winnick's a decent guy."

The couple's philanthropic endeavors drew out the quiet Karen Winnick, a far less gregarious person than Gary, who often plays the role of the charming, ultimate salesman. In the late 1990s, the Winnick Family Foundation began contacting charities and philanthropic endeavors in Los Angeles and New York, especially those involving children, to find out what they needed.

Manuel Mollinedo, director of the city-owned L.A. Zoo, happily agreed to itemize the zoo's dream projects for Winnick Foundation staffers. He was surprised when Karen Winnick herself showed up for the presentation.

Says Mollinedo, "Karen became very intrigued by our efforts to create a children's zoo, and I explained we had been given $600,000 by the Gluck Foundation to create a wonderful master plan. Before I knew it, she was saying she wanted the children's zoo to become a reality, and committed $2 million to build the zoo."

Karen Winnick, he says, "comes across as quite shy, but when you talk about children and the positive impact you can have on them, you can almost see a sparkle in her eye." A friend describes Karen as "a very, very, very, very liberal Democrat who believes she can truly be of service."

Soon, a new city department was created to run the zoo, and Mayor Richard Riordan appointed Karen Winnick to the newly created Zoo Commission. "She puts in about 40 hours a month of her time," says Mollinedo. "Karen is coming over soon, in fact, so she can see the elephant barn and learn about the husbandry practices and how we care for the elephants."

Riordan says, "Without the Winnicks, especially Karen, that zoo might still be a pretty sad place, with animals swimming around in circles and sitting on concrete, and not much for the kids. Now, the zoo is great, and it's going to start winning awards."

Overshadowed for years by her husband, Karen Winnick, an author of children's books, has been making a mark with her philanthropy. One of her projects is the Winnick's Winners program, endowed with $1 million, which provides cash awards to high school kids who tutor struggling grade-schoolers in the Opencourt, phonics-based reading program. The Winnick name also graces a library at Ramona Opportunity High School in East L.A.

The Winnicks are so important to Jewish causes that the Jewish Journal published a post-bankruptcy story assuring its readers that Winnick was making his payments on time to all the Jewish philanthropies expecting gifts.

Though he wrote huge checks to charity and was enthralled over his project with Frank Gehry to build a Museum of Tolerance in Israel, he was increasingly involved in giving of another sort -- political contributions.

In 1999 and 2000, Winnick lunched on a regular basis with Governor Davis, setting off speculation that Winnick was trying to persuade Davis that the California state employee pension fund should invest in Global Crossing. Others believed the two had gotten cozy because Winnick wanted Davis to give the Playa Vista development plenty of regulatory slack to be built.

To this, Republican political strategist Dan Schnur snorts, "Gray Davis, I can tell you for a fact, does not have lunch with anyone so he can visit with them. Gray doesn't have lunch with people for any reason but one: money! Unless Davis smelled money, he would not be lunching with Gary Winnick."

And indeed, during 1999 and 2000, $145,000 from Global Crossing executives materialized in Davis' campaign coffers. In 1999, Global cochair Lod Cook gave $45,000 to two committees related to Gray Davis. Corporate giving included a $100,000 contribution to two big bond issues supported by Davis, to protect the environment and the state's drinking water, both of which were approved by voters.

"Well, of course Gary expected a certain amount of access -- we'd be foolish to claim otherwise -- but that is all he expected," says one Global Crossing insider.

Some critics believe Congress would be far more suspicious of the Global Crossing bankruptcy, since its members have seen so many outrageous things during the Enron scandal, if not for the fact that Winnick and his inner circle made sure to keep both parties in Congress happy.

Winnick, constantly looking for ways to gain an advantage, also has tried to tap politicians' knowledge and contacts by hiring them outright.

In a move that went virtually unreported by the media, Winnick hired former governor Wilson to do consulting work for him, though neither man will comment on what Wilson did or how long he did it. Last year, Winnick tried to snag another major California politico, offering the departing Mayor Richard Riordan a job at his Pacific Capital Group Ltd. subsidiary, the merchant bank/venture capital concern that is invested in Playa Vista.

Riordan won't discuss the job offer, which he turned down, but a friend of the ex-mayor sniped: "Can you imagine thinking of Dick Riordan, who is worth in the neighborhood of $140 million, as some sort of worker for you?"

Winnick's prickly personality and increasingly grand self-image, which seemed to enlarge with each rosy new fiscal quarter that passed, was a subject of some discussion around Global Crossing's watercoolers.

He fired five CEOs in four years. He knew virtually nothing about telecommunications before AT&T suggested he invest in broadband, and had never actually run a company filled with employees and departments. He proved an impossible boss for some.

One rumor that spread via the Internet among angry shareholders and laid-off employees concerned a female employee who shared an elevator with Winnick but didn't know who he was. When it dawned on Winnick that the woman with whom he was casually chatting did not recognize him, Winnick supposedly fired her on the spot.

"There's just one problem with that "story,' which some people like to call a rumor," claims a former top manager who is a harsh critic of the company. "I happen to know that the story is true." The company has denied the allegation.

Winnick is seen by critics as something of a rube, a badly overweight man who has been known to make employees attend group meetings with him while he works out on a treadmill, sweating and huffing.

The former top manager recalls a day when some supervisors and technical staff invited a group of Global Crossing clients to meet in the firm's gorgeous Beverly Hills headquarters.

After taking in the luxuriously verdant inner courtyard, rarely seen by outsiders, on which Winnick spent hundreds of thousands of dollars, the group moved on to the posh company conference room. There they began tossing around ideas about better ways to design the company's fiber-optics system so it would be seamless once it reached major metropolitan areas.

Suddenly, the former manager recounts, a secretary stuck her head into the room. "This gal says to all of us, "Mr. Winnick says that if you can't be quiet, you will all have to leave immediately!' This was said to clients, as if we were all children," he says. "Now, that's one very strange guy."

Strange, perhaps, but a smooth operator always. As his executives continued to gush over Global Crossing's prospects for growth, Winnick and other company officials were quietly cashing out large blocks of stock.

Long before the company's stock hit the skids, Winnick apparently informed his wealthiest friends that he believed the excitable high-tech market had driven the stock's price far too high.

"Gary knew a couple of years ago that Global Crossing was way overpriced," says one rich pal. "He understood he was riding a very inflated crest, so he sold stock at highly inflated prices and bought into companies that did have assets worth the stock price."

Along with several other officers of the company, Winnick began offloading large chunks of stock and taking huge profits. Winnick sold $730 million worth of stock.

"Nobody blames him in our circle," says the wealthy friend. "He would have been considered a fool if he hadn't taken at least 10 percent of his paper worth out of that company, so that is what he did."

The public, of course, had no inkling that Global's own officers were nervous about the sky-high valuation. While the Winnicks attended glittering dinners and gave to their favorite causes, middle-class investors across the nation were spending massive amounts of money from their savings and stock portfolios to ride the Global Crossing bronco.

Critics suggest that the Winnicks' role as Los Angeles' newest big philanthropists derives from a classic recipe the rich must use to create goodwill if they are in the midst of transferring huge amounts of money from average Americans to their own pockets.

In what is probably the most tragic tale from Global Crossing's rise and fall, the company breezed into Rochester, New York, four years ago with the great news that it wanted to buy up the hometown success story, Frontier Corp. Global Crossing needed Frontier's long-distance fiber-optics system, the fifth-largest in the country, to round out its network.

Frontier and its employees, convinced by Global Crossing that Rochester was to become "Telecom Alley," were quickly smitten. Frontier's proud CEO got license plates for his car reading Global 50, displaying his belief that Global Crossing stock would one day hit $50. When the shares did indeed hit $50, he changed his plates to Global 100.

Global Crossing never did hit $100. It charged up to $60 in 1999, only to sink steadily to a few whimpering cents per share last winter.

Employees had started getting uneasy when Global sold off the local service division of Frontier in 2000 but nevertheless tried to retain control of the employees' $700 million pension plan, accumulated by workers before Global Crossing came to town. State regulators blocked that disturbing effort.

Even so, thousands of employees have lost huge amounts of 401(k) money they had tied up in their old Frontier stock, which was converted to Global Crossing stock during the merger and now is worthless.

Linda McGrath, president of Local 1170 of the Communications Workers of America union in Rochester, is furious with Winnick and his ilk.

"I had seven people in my office the other day who lost a combined $1 million while Gary Winnick was an absentee landlord out in Beverly Hills," says McGrath. "He went through CEOs like you and I would go through coffee. He told us how well the company was doing when he knew otherwise. You can tell Mr. Winnick from me, we in Rochester know he is renovating his home for $15 million while our little guys are ruined."

As late as October, Global Crossing's latest revolving-door CEO, John Legere, gave an interview to Fiber Optics News in which he continued to detail all the avenues Global Crossing was pursuing to come out of the telecom slump in solid condition.

When the reporter asked if the lack of stability in the CEO's position might affect the company, Legere insisted: "There's been tremendous stability at the leadership team level and throughout the whole company, so customers are seeing stability and the shareholders really are seeing stability."

The interviewer then asked why Wall Street analyst Dan Reingold had reported that Global Crossing "is under severe stress -- top line, balance sheet, and cash flow -- and now, in effect, a reorganization is going on that will likely dilute equity holders and not necessarily solve the problems."

Sounding like a new-age therapist, Legere responded, "I think Dan joins a large group of Wall Street analysts that are best characterized right now as angry, and I think it's important to acknowledge that."

Jay Province, an outspoken shareholder in Virginia who communicates via e-mail with a group of loosely organized employees and shareholders, says Legere's and Winnick's lack of candor has left him "extremely suspicious about the fortunes a handful of people have made off Global Crossing."

Shareholders claim they lost $10 billion and have challenged Winnick's and Legere's decision -- revealed just one day after they announced Global Crossing's bankruptcy bid -- to sell the company to Asian investors for $750 million, leaving nothing for the tens of thousands of people who own common stock.

Meantime, stories about pals from Winnick's inner circle who made a killing on Global Crossing inconveniently continue to dribble out.

Business Week has reported that Canadian Imperial Bank of Commerce made more than $1.3 billion in profits from Global Crossing, thanks to shrewd moves by four of Winnick's former Drexel colleagues working at the bank's L.A. office. Some of those former colleagues sat on the Global Crossing board at various times.

The most shocking aspect of the huge profit made by the four men at Canadian Imperial Bank of Commerce is that they earned $200 million of the total after Global Crossing stock had plummeted to a few cents.

As it turns out, Winnick's former Drexel colleagues at the bank had taken a huge "hedge" position --essentially, they risked tens of millions of dollars to bet that the stock was going to nosedive when nobody else believed it would. When the bankers were proved right, they made a fortune.

"It's terrible what they have done," says shareholder Province. "I see Winnick and his friends as a small group of people whose ultimate goal was to cut out the little shareholders. After Winnick's friends made billions when the stock went up so crazily, I believe Global Crossing realized the telecom crash had arrived and looked for a way to benefit. Somebody said, "We can go bankrupt, and our friends will make hundreds of millions more off hedges, and then we call sell the company -- but we'll sell it to some friends at a bargain-basement price, and we'll all come out rich as kings.'"

Province firmly believes that the telecom industry will turn around, and when it does, "The same faces will be back in charge of Global Crossing -- minus the irritating little shareholders whose billions have been transferred to a few pockets." A Winnick spokesman says, "That's preposterous! No way in hell Gary would allow that."

But the brash Winnick has helped to fan the conspiracy theories by pursuing a seemingly endless web of complex, interrelated deals involving Global Crossing that give at least the appearance of special insider deals, self-dealing and other questionable practices.

Even though he's filthy rich, Winnick apparently couldn't bear to miss an opportunity to make an extra dollar. So, for example, he set up a complicated leasing arrangement for his Beverly Hills offices in which one firm he heads essentially paid rent to another firm he owns with other investors. He did the same thing with corporate jets.

The FBI and SEC are particularly interested in allegations made by former vice president of finance Roy Olofson that Global Crossing improperly counted as revenue what were actually arrangements to merely share and swap fiber-optic capacity with other telecom companies. Olofson refused through his attorney to speak to New Times.

The company is entangled in a number of controversies that may spark further congressional inquiries. For example:· Global Crossing prevented employees from accessing their 401(k) accounts during December and January, when the firm was in the process of switching plan administrators and its stock price was plunging. Representative Louise Slaughter (D-New York) has asked a House committee to delve into why this plan-switching happened at such a crucial point in time.

· Winnick co-owns Pacific Capital Group, a merchant bank and its subsidiaries. Pacific Capital made millions off huge lease payments from Global Crossing when Global rented office space and leased jets controlled by Pacific Capital in Beverly Hills.

Company spokesmen have insisted that the payments to Winnick's Pacific Capital Group were aboveboard, noting, "They were disclosed in the 2001 proxy statement."

· Winnick never told his own board that he and another Global Crossing director invested $25 million in a Singapore government-run entity that also owns Singapore Technologies. Singapore Technologies is the bankruptcy bidder preferred by Global executives. Winnick claimed his investment in the Singapore government-run entity, K-1 Ventures, was unrelated to the bankruptcy bid by Singapore Technologies, but resigned from the board of K-1 Ventures after the disclosure. Singapore Technologies is offering $750 million for Global, though it is believed worth $10 billion to $12 billion -- including $700 million in cash. Winnick's investment in a group bidding for his company has exposed him to charges that Global Crossing is promoting this Asian buyout on the cheap because Winnick owns a piece of the buyer. (Global CEO Legere has dismissed this criticism.)

Province, the angry shareholder, is amazed at all the avenues the rich can use to make money, while he struggles to figure out how to recoup his loss of 20,000 shares in Global Crossing. He bought them to finance his children's education.

He points to the money made off Global Crossing through every imaginable gambit by far wealthier players, and asks how his and others' stock can possibly be worthless when there was clearly so much money to be made.

"Yes, as with any stock, there was the risk that the stock would dip significantly," says Province. "But how, exactly, does a stock lose almost every penny?"

Despite shareholders' suspicions about the machinations of Winnick and his associates, the Global Crossing collapse may never be subjected to the kind of deeply detailed investigations that have characterized the Enron debacle.

First, there's the careful wooing of both political parties that has gone on for years. Then there's the public silence of Roy Olofson, the key whistleblower against Global Crossing. His silence, while perhaps legally advisable, has helped Winnick allies paint Olofson in the media as merely another disgruntled employee.

Olofson is suing for wrongful termination, but Global claims he was laid off after refusing to relocate to New Jersey.

Olofson's silence has been in sharp contrast to the near-celebrity status enjoyed by Enron whistleblower Sherron Watkins, whose angry letter questioning the company's accounting practices, written several months before Enron finally imploded, was leaked to the New York Times.

That silence may soon end, because Olofson is expected to testify at congressional hearings, possibly in May. Olofson's attorney, Brian Lysaght, says House investigators recently allowed Olofson to read a packet of Global Crossing documents they had gathered. Lysaght characterized the records as "incredibly incriminating."

If Olofson's claims spark mounting criticism, Global Crossing will be helped by the competence and aggressiveness of media crisis handler Howard Rubenstein, and the levelheaded calm of Global Crossing cochairman Lod Cook, among others.

Winnick is so sensitive about his image that when his former media handler, Mike Sitrick, learned that New Times was delving into Winnick's contributions to Gray Davis, Winnick was contacted immediately. Winnick in turn spoke to a Winnick Foundation employee who had dealt with New Times before, and knew about Winnick's political giving. That employee called New Times back to downplay Winnick's donations to Davis.

Cook, meanwhile, acts as a psychological anchor for Global Crossing. The longtime ARCO chief, 71, is unflappable as a flag on a windless day.

"For a while there, the media was getting its entertainment and its pound of flesh, basically," he says. "But I think the media are finally beginning to understand this is not Global Crossing's failure but a meltdown in the telecom industry."

Only a handful of people know what Gary Winnick thinks about all of this. But his actions indicate he is fighting to protect something he knows is easy to lose, and much harder to regain. Not his beloved billions. His public image.