In the CROSS FIRE
Gary Winnick’s plans to share wealth with alma mater draw scorn and support at C.W. Post
By Mark Harrington
ACROSS THE GREAT LAWN, the Tudor mansion that served as original home to C. W. Post College 47 years ago stands primly against a backdrop of threatening clouds, its inlaid beams weathered like the planks of a battered ship.
Soon, the 90-year-old building, once home to cereal heiress Marjorie Merri-weather Post, will undergo an $8 million restoration. And when the work is finished, the administration building will be renamed “Gary Winnick House,” after the founder of troubled Global Crossing Ltd. who’s paying for the facelift.
At a commencement speech two years ago, Roslyn-native Winnick, who has a degree in economics from this Long Island University campus, recounted meeting Marjorie Post during a freshman-year football game. “My heart began to beat and I almost fell off the bleachers,” said Winnick, who has since talked of hobnobbing with contacts at the White House and Buckingham Palace.
Two years later, in the occasional sunlight of a spring-break afternoon, four students sit outside the Schwartz Library debating Winnick’s legacy.
I wouldn’t exactly memorialize anything after him, said Peter Yuranich, a student from Kings Park who attended a Winnick seminar on campus a year ago. “Look at Enron Field.”
The mansion is a fixture here, it’s the history of the campus, added Stephen Alvarez of Manhasset, who believes the school should delay the renaming.
With two federal investigations into its business practices, swarms of shareholder lawsuits and thousands of employees and investors irate over the loss of jobs and billions in financial holdings, Global Crossing has become a symbol of all that suddenly went wrong in the telecom industry. The company spent billions laying a sprawling network of fiber-optic communications lines around the globe before a glut of competitors caused prices – and its stock – to tumble. In the aftermath, federal authorities are questioning how Global Crossing and others accounted for bandwidth “swaps” – seals that allowed them to inflate reported revenue while losses mounted.
When it filed for Chapter 11 bankruptcy protection in February, Global Crossing said two Asian conglomerates had made a $750 million bid for the company, a far cry from its one-time value of more than $50 billion. The company continues operations, but its fate will likely be determined in bankruptcy court.
In addition to investigations by the Securities and Exchange Commission and the FBI, Global Crossing has been grilled by two Congressional committees seeking to unravel its accounting and stunning collapse. Thus far, neither the company nor its executives has been accused of wrongdoing.
Still, amid reports that Winnick, 54, sold more than $700 million in stock before the company crumbled into bankruptcy and its stock price dissolved, Winnick himself has become a symbol of the lavish spending and extravagant living of the telecom bubble. He owns a $12 million jet, his Bevery Hills workspace is designed after the Oval Office, and he lives in the most expensive single-family house in the nation – the former Bel Air estate of Conrad Hilton valued at $92 million. He’s reportedly spending an estimated $30 million just to furnish and redecorate the place.
A 1999 cover boy for Forbes Magazine after accumulating a net worth (in stock) of $4.2 billion in just 18 months, Winnick has more recently become fodder for Enron-like castigation. Last month, he made the “losers” list on Forbes’ annual billionaire ranking, from which he was dropped after his net worth slipped to $500 million. Global Crossings’ market cap, which once exceeded that of General Motors, last week tipped the scales at just $88.9 million.
The troubles aren’t isolated to Gary Winnick. His older sister, Susan Brody, a Merrill Lynch broker who lives in Lawrence, has seen her share of grief over the collapse of her brother’s company. Her hair dresser and a longtime friend claim Brody, 62, recommended that they purchase Global Crossing stock, leading them to lose thousands.
I’m a little upset about what happened to my money, said Glenn Alpern, who said he lost $25,000 of a $26,000 investment in Global Crossing stock after receiving advice from Brody. He has been doing Brody’s hair at Harvey’s Hair Salon in Cedarhurst for more than 10 years. “She’s a nice lady, and on a personal level I have no problem,” he added.
Like her brother, Brody didn’t want to discuss the affair. “She’s not going to want to talk to you, that I know for sure,” said Merrill Lynch spokesman Joe Cohen, in response to a request for an interview. Winnick didn’t respond to numerous requests for an interview.
But even as Winnick and Global Crossing sort out what promise to be long and tedious investigations and lawsuits, and the company’s fate is determined in bankruptcy court, there remains a core of Long Islanders who view Winnick’s plight as market-inspired, and they are standing by their friend.
I’m a Gary Winnick guy, I had a lot of good times with him, said Michael Axelrod, an attorney in East Meadow who grew up with Winnick and bought some Asia Global Crossing stock at a “friends and family” discount. He declined to tell any of his “many Gary Winnick stories,” but described his longtime friend as a “lousy golfer” who “I can’t say is very bright in terms of reading books and sitting in class and getting an A. But he’s very savvy.”
As for Winnick’s financial advice, Axelrod said “My investment in his company didn’t go well. I try not to think about it. I still love him.”
As a man, Gary’s a fighter, said another Winnick fan, Steven Klar, a former Roslyn High School classmate of Winnick’s who still keeps in touch with his pal. “I don’t think he meant to harm anybody.”
Klar, who is principal of real estate development firm the Klar Organization in East Meadow, said there’s no denying Winnick’s business acumen. “He built a remarkable business out of nothing.”
Before the dot-com bubble burst and a glut of broadband fiber-optic lines around the globe led prices for those connections to tumble, Winnick was considered a New Economy capitalist of the highest order. Atop Winnick’s initial investment of $15 million, Global raised and spent more than $20 billion building an expansive network, starting with a $750 million cross-Atlantic fiber-optic cable connection between Long Island and England.
But following its bankruptcy filing this February, Global Crossing’s assets were valued at less than $700 million. Global shares, which once traded on the New York Stock Exchange above $60, now trade for pennies on the Over-the-Counter market, and stockholders are expected to receive next to nothing for their shares.
He does feel very badly for people, said a spokesman for Pacific Capital Group, Winnick’s private merchant bank in Beverly Hills, where he still shows up for work “everyday.” (He remains Global’s vice chairman.)
Gary obviously is not happy about the situation, she said. “He feels bad for people who were laid off and who lost a great deal, as he has.” She said Global’s downfall “hasn’t impacted his philanthropy.”
To C.W. Post campus provost Joseph Shenker, Winnick’s troubles are no reason to rethink his donation. Winnick has pledged the $8 million to the school (along with $2 million for scholarships) and the Tudor mansion restoration will proceed as planned. It could take more than a year.
As far as I know, Gary made a pledge and we assume things will move forward, Shenker said. He declined to say whether all of the money has been received, as the college had indicated earlier this year. “We don’t discuss the payment structure for any donor,” Shenker said.
Not all among the faculty at the C.W. Post campus are thrilled about the dedication.
The reservations I have is that if [Gary Winnick] is brought up on charges. . . that could hurt the reputation of the university, said one professor who asked that her name not be used. “It’s a difficult situation for the university to be in. It’s not as though we’re very wealthy.”
The professor said she emphasizes to students that reputation is a difficult thing to salvage once it’s damaged. “We’ve worked long and hard to develop our reputation and keep it up there,” she said.
A few miles away in an upscale neighborhood in Roslyn sits a sprawling, tawny-colored house off of Crabtree Drive, the home where Winnick grew up. It’s now the home of Manhattan-based professional photographer Andy Marcus. In the early 1990s, Winnick stopped by to visit the place, Marcus said. Several neighbors on the block didn’t remember the Winnicks. But given the family history, the Roslyn home was an important sign of arrival, a place the family rose to with the success of Winnick’s father, Arnold Winnick, who operated a restaurant supply business.
It is also a symbol of all the Winnicks lost. In the early 1960s, Arnold Winnick’s supply business went bankrupt, and the family was forced to move to a modest home in Levittown. Three years after the bankruptcy, in March 1966, Arnold Winnick died of heart failure at the age of 51.
Gary was 18 when his father passed away, said Shenker. “It was a traumatic event for a young man, and the college became his second family. He feels very emotionally attached to C.W. Post.”
So much so that Winnick chose as one of his early charitable donations a $1 million gift to renovate the campus’ old Quad Café, where Arnold Winnick sometimes made deliveries. Last October it was formally renamed the Arnold S. Winnick Student Center. The building now has high-speed Internet connections for laptop computers, a fitting tribute considering Winnick once credited a drive with his father through the Midtown tunnel as his inspiration for Global Crossing, taking particular note of people paying tolls to get through.
Winnick worked hard for his Post degree, juggling a job at nearby Howard Johnson’s soda fountain and as an assistant golf manager at an Old Brookville club. “I [also] worked at Princeton Ski Shop and at Waldbaum’s, when they were in Manhasset,” Winnick told students during his 2000 commencement speech to Post students.
Shortly after leaving college in 1969, Winnick joined his brother-in-law’s furniture retail business. When the business failed in 1973, he took a position at securities firm Drexel Burnham Lambert, and was recruited to move to Los Angeles as a disciple of disgraced junk bond king Michael Milken. Milken’s conviction and ensuing jail time is a topic Winnick tends not to discuss, but he was reported by The Associated Press to have been given immunity from prosecution and ordered to testify in the case.
The fall of Global Crossing hasn’t just affected Gary Winnick’s local legacy. Hauppauge resident Florence Platzer, a family friend of Winnick’s sister Susan, plans to file an arbitration case against Brody and her employer Merrill Lynch, charging that Brody touted stock in her brother’s company, according to her lawyer, Christine Bae of Manhattan.
The advice cost Platzer $250,000 in savings, the Wall Street Journal reported. Bae said Platzer and Brody had been close friends since the 1970s, when they had children in the same nursery school. A source with knowledge of Brody’s relationship with Winnick suggested the two aren’t close and haven’t spoken for years, a claim that couldn’t be verified.
Global Crossing shareholders put lots of blame on Winnick.
Winnick has lost the respect and trust of everyone, said John Hovel, owner of more than 10,000 shares of Global Crossing, who has organized a shareholders forum on the Internet. “I’ll do whatever I can to see to it he loses every penny he’s gained” from selling shares before the stock took a dive.
Federal investigators are looking into whether officials used complex “swapping” transactions with partner telecom firms to inflate revenues.
If Winnick and management aren’t criminals in the true sense of the word, they are such poorly qualified people that they have grossly mismanaged this company by abandoning the original business plan, Hovel said, charging that the company’s decision to accelerate its growth led to its downfall.
Longtime friend Axelrod said the fall of Global Crossing shouldn’t be interpreted as the fall of Winnick.
I’ve spoken to Gary, he said. “He emphasizes, ‘Don’t sell me short.’ He’s obviously become a national figure, but he’s okay. . . I wouldn’t count him out for a second.”
[Top left photo] California-based Global Crossing has become a symbol of all that suddenly went wrong in the telecom industry.
[Bottom left photo] Joseph Shenker, provost of C.W. Post Campus
[Top right photo] One of Gary Winnick’s charitable donations was to renovate the C.W. Post campus’ old Quad Café, where his father, Arnold, who operated a restaurant supply business, sometimes made deliveries. The building was renamed the Arnold S. Winnick Student Center.
FROM DOLLARS TO PENNIES
Global Crossing Ltd. Has been delisted from the New York Stock Exchange and is now trading over-the-counter. Here is a look at the quarterly closing price.
