Global Crossing Ltd. founder Gary Winnick will be absolved by federal regulators for his role at the company that made him one of the richest men in Los Angeles -- and one of the most vilified executives in corporate America.
An attorney for the Beverly Hills financier said Monday that the Securities and Exchange Commission would not file charges against Winnick after a three-year investigation into the telecommunications provider's accounting practices. Winnick was chairman of the company when it made controversial deals with other telecom providers in an effort to boost sales figures.
"We always believed that the evidence demonstrated that Gary Winnick acted lawfully and properly in connection with Global Crossing," said his attorney, Gary Naftalis. Winnick, who is running a private investment firm, declined through a spokesman to comment.
SEC Chairman William H. Donaldson joined two fellow commissioners in overruling the agency's staff and deciding not to charge Winnick, according to people familiar with the matter. The SEC declined to comment.
The SEC's action means that Winnick has cleared the last significant hurdle related to his troubled tenure at Global Crossing. His formal involvement with the company ended when he resigned two years ago, just before it was rescued from bankruptcy proceedings by Asian investors.
Winnick, who sold ski equipment and furniture before peddling junk bonds alongside Michael Milken, had little experience in the telecom business when he dreamed up an audacious plan to build a global communications network. He raised nearly $20 billion to finance the laying of more than 100,000 miles of fiber optic cables across continents and beneath oceans. The goal: to zap voice and data around the world at the speed of light.
At its height, Global Crossing's stock-market value reached $54.5 billion even though the company had never turned a profit.
No one benefited more than Winnick. In 1999, when his stock holdings were worth $6 billion, the Los Angeles Business Journal named him the richest person in a city of ostentatious wealth. His 64-room mansion overlooking the Bel-Air Country Club set him back $94 million; then he spent millions more on painstaking renovations.
Winnick was also generous. He lavished Rolls-Royces and Aston Martins on executives and directors and donated heavily to charitable causes. The Winnick family name adorns the children's wing of the Los Angeles Zoo, a section of the Los Angeles Central Library, a hall at the Skirball Cultural Center and a cafeteria at his alma mater, Long Island University.
