Gary Winnick, founder and chairman of bankrupt carrier Global Crossing, apparently isn't done trying to recoup wealth from his fallen telecommunications empire -- in fact he thinks he might get it back from his own company.
North Crescent Realty V LLC, a real-estate company controlled by Winnick, is demanding that Global Crossing pay nearly $500,000 in late rent, according to papers filed in a U.S. Bankruptcy Court.
The bankruptcy claim serves as testament to Global Crossing's tangled web of relationships. The claim also comes despite the fact that Winnick personally pulled at least $500 million in sales of Global Crossing stock before the company collapsed (see GlobalX: The Burst Bubble).
Though Global Crossing is based in Bermuda, it has kept an extravagant Beverly Hills address for several years, and Winnick's investment company, Pacific Capital Group, is also based there. Global Crossing paid rent for its 86,740-square-foot digs to North Crescent Realty, which is managed by Pacific Capital Group.
Pacific Capital Group is the investment firm Gary Winnick founded in 1985 and it controlled most of Winnick's ownership of Global Crossing and was central to that company's structure (see Winnick's Web). Now, according to a bankruptcy court filing, North Crescent is saying Global Crossing owes it $495,866.43 in unpaid rent.
North Crescent claims that Global Crossing's accrued and unpaid interest for rent totaled $36,338.55 through April 30, 2002. That amount increased by $84.40 a day, the filing states.
Winnick isn't the only founder of a company to have intertwined venture-backed companies and real estate deals. Cogent Communications Inc., for instance, once disclosed in an SEC filing that it pays about $470,000 a year for its office space lease to a Washington, D.C.-based partnership in which Cogent founder and CEO Dave Schaeffer is a general partner (see Cogent's Finances Revealed in Filing).
Are you ingoring all that has been written lately about GBLX, or do you have a reason not to believe it? I'm thinking of, for instance, the set of articles published by the New York Times this year. Or the one just published by Fortune that states: "What's inarguable, as our story will document, i s that billions of dollars flowed out of this company and into the pockets of insiders. Gary Winnick and his cronies are arguably the biggest group of greedheads in an era of fabled excess ... he treated Global Crossing from the get-go as his personal cash cow, earning exorbitant fees from consulting and real estate deals between Global Crossing and his own private investment company." http://www.fortune.com/indexw.jhtml?channel=artcol.jhtml&doc_id=208320
Are you really questioning whether GBLX declared phony revenues? I thought this was beyond debate. Fortune states "Global Crossing inflated its revenues by swapping capacity with other carriers, say analysts, and lured customers and investors by overstating the reach and capabilities of its network". (Yes, GBLX executives put a lot of energy into telling people to buy stock.)
I'll grant you that Winnick has not been charged with a crime. This may be due to any of several reasons: Winnick is a good guy; charges will be filed in the future; the case is too complex or difficult to prosecute; current law has loopholes that allow this behavior. Are you really suggesting that Winnick is a good guy? I think the answer is one of the other choices.
Don't kid yourself, Winnick was not driven by entrepreneural spirit, he was driven by money greed. So too were his pumpers and dumpers. These bastards belong in Leavenworth prison for the next 60 years for their crimes. They knew exactly what they were doing and didn't give a S... about you and me.
Quite honestly I’m not quite sure what iptwister is going on about. I think the article sets the crime scene quite aptly. The facts are obvious to (almost) everyone - even us $50K/year union workers. What the reporter is saying, without actually saying it because that, of course, would be illegal until the guilty parties are convicted in a court of law, is that the shareholders interest were not taken into account when negotiating rental property. I doubt other, dare I say ‘cheaper’ (because I can’t substantiate that claim, right iptwister!) office space was considered, do you?! Are these guys running a public company – protecting the interests of their shareholders, or are they way to busy working shady real estate deals like greasy 2-bit realtors? Sounds like the latter. But then the fact that these guys are “hard working executives” probably explains why they forgot to put a Press Release out on the wire entitled “GX pays a premium for office space”
" Tell me, is there any corporate behavior you consider out of bounds? How about declaring phony revenues? How about issuing untrue press releases to manipulate the price of your stock? How about executives telling people to buy the stock when they are personally selling? " sure, things that are illegal are out of bounds, and things that are immoral are too. Untrue press releases? Which ones? Declaring phony revenues? That's illegal and you get fined or go to jail for it. Telling people to buy the stock? Tell me what executive from GBLX ever told you to buy stock?
" Or are you totally and completely willing to kiss ass for every senior executive in every way possible?"
My comments are limited to GBLX/GX. I don't kiss ass. Your assertions are argumentative and baseless without supporting facts.
These people aren't crooks, they are people that built America. They didn't do everything perfectly, GX/GBLX has collapsed for a number of reasons, but chiefly that they were too aggressive in taking risks.
It's awfully easy to sit there in your $50,000/year union job and blame these hard-working executives for the problems, but in reality, the people who lost money in the stock markey (myself included!!) should blame themselves, not an entrepeneur.
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Tell me, is there any corporate behavior you consider out of bounds? How about declaring phony revenues? How about issuing untrue press releases to manipulate the price of your stock? How about executives telling people to buy the stock when they are personally selling?
Or are you totally and completely willing to kiss ass for every senior executive in every way possible?
The previous poster says that these people are crooks.
It's easy to be a populatist sheep and say complex things "must be illegal" and "eat the rich".
However, if you think about it, should they have given the property to their company for free? Shouldn't the owners (partial owners, because these property management companies are usually partnerships) be reimbursed from the shareholders?
As John Doerr is alleged to have once said when asked how he dealt with conflict of interest:
"No conflict? No Interest!!!"
These people aren't crooks, they are people that built America. They didn't do everything perfectly, GX/GBLX has collapsed for a number of reasons, but chiefly that they were too aggressive in taking risks.
It's awfully easy to sit there in your $50,000/year union job and blame these hard-working executives for the problems, but in reality, the people who lost money in the stock markey (myself included!!) should blame themselves, not an entrepeneur.
All these guys are just crooks. Good job in reporting their blatant thievery. I’ll raise my glass in celebration as they are tried as the common criminals that they are.
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