Gary Winnick, former Chairman of Global Crossing
Winnick (Photo: Marissa Roth, NYT)
It's inarguable that Gary Winnick and his business associates in Pacific Capital Group built Global Crossing and brought it to its first successful peak. But Winnick nearly took the company down just a few years later in one of the telecom bubble's most spectacular plunges.
From its founding in 1997 until 2002, Winnick served as chairman of Global Crossing, overseeing the company's buildout of a global backbone network including subsea cabling in order to offer high-speed communications access to customers around the globe.
Global Crossing's early success made it a hit on the stock market as well. But in fall 2001, as the dot-com bubble began to contract, Winnick and several of his officers quickly cashed out their shares without letting investors or employees know that the company was experiencing problems in the rapidly deteriorating marketplace. Winnick took home $734 million. Even as the company was laying off employees, Winnick was handing out cash to executives like CEO John Legere, who on his hiring received a $1.1 million salary, a $3.5 million signing bonus and a promised annual bonus of $1.4 million. In January 2002, Global Crossing, some $12 billion in debt, filed for Chapter 11 protection.
Even worse, Winnick had purchased a Rochester, N.Y.-based phone company, Frontier Corporation, in 1999. Large portions of the 401(k) plans belonging to Frontier employees were invested in Global Crossing--and in 2002 the company's collapse rendered much of their retirement savings worthless. Laid off Global Crossing employees complained that they never received severance pay and that their health benefits were cut off.
"As an example of callous, cold-blooded greed, Gary Winnick is hard to match," a New York Observer article said in 2002. "He misled employees and shareholders while he stuffed his own pockets, not caring whose lives he destroyed as he enriched himself in a sickening display of gluttony and venal avarice. All told, Global Crossing may be the most outrageous overreach in corporate history; in our judgment, even more than Enron."
A series of lawsuits were filed and an SEC investigation launched into Winnick's affairs following the Global Crossing fiasco, but no wrongdoing was found on Winnick's part. Winnick eventually donated $25 million to help employees who lost money in the company's 401(k) plan, and paid $55 million, part of a $325 million settlement of a lawsuit brought by shareholders who accused the company officers of fraud.
Global Crossing itself survived, emerging from bankruptcy in late 2003 under new leadership and building itself into a Tier 1 communications provider with points of presence in more than 70 countries. The company was acquired by Level 3 Communications (Nasdaq: LVLT) in the summer of 2011.
Winnick has since moved on the greener pastures: green technology, that is. He founded iCrete, a company that uses software to design the precision concrete mix that is being used in the building of the Freedom Tower at New York City's ground zero.