Gary Winnick went from $6.2B billionaire to $150M in debt, his widow Karen now fighting CIM Group in shocking foreclosure battle over LA’s most exclusive mansion

Gary Winnick’s $6.2 billion fortune crumbled to nothing, leaving him over $150 million in debt by the time he died in 2023. His widow Karen now fights a desperate court battle to save Casa Encantada, the legendary $190 million Bel Air mansion that once symbolized his empire’s meteoric rise.

From Wall Street Titan to Financial Collapse

Gary Winnick built his reputation in the 1970s and 1980s at Drexel Burnham Lambert, working alongside junk bond pioneer Michael Milken and mastering leveraged finance. He became so wealthy during the late 1990s that his housekeeper reportedly became a millionaire from his generosity.

But the foundation of his fortune was fundamentally flawed. Winnick founded Global Crossing, an undersea internet cable company betting that bandwidth demand would explode exponentially. The company borrowed billions to build its network, operating on pure optimism about the future.

The Dot-Com Crash That Changed Everything

In March 2000, the dot-com bubble burst and internet startup clients of Global Crossing ran out of cash. Revenues fell far short of projections while debt ballooned into the billions. The company that once seemed unstoppable suddenly faced impossible financial realities.

In January 2002, Global Crossing filed for Chapter 11 bankruptcy, wiping out tens of billions in market value. Thousands of employees lost their jobs. Pension funds and shareholders sued, accusing Winnick and executives of misleading investors about the company’s financial health. Winnick had already cashed out roughly $730 million in stock before the collapse began.

A Mansion as Collateral and Symbol of Excess

While his business crumbled, Winnick continued living lavishly. In 2000, he and his wife Karen purchased Casa Encantada in Bel Air for $94 million, the most expensive U.S. home sale ever at that time. The legendary 40,000-square-foot estate once belonged to Conrad Hilton and David Murdock.

Property Details	Information
Original Purchase Price (2000)	$94 million
Square Footage	40,000 square feet across 8.5 acres
Market Listing (2023)	$250 million (highest asking price in nation)
Current Listing	$190 million
Status	Foreclosure auction pending

The Winnicks poured tens of millions more into renovations, employing hundreds of artisans to restore the property to museum-level standards. Their real estate empire expanded to include a Malibu beach house, a New York pied-à-terre at the Sherry-Netherland Hotel, and an extensive art collection featuring works by Cy Twombly and Edward Hopper. Winnick served on the Museum of Modern Art board and hosted major fundraisers at Casa Encantada.

Legal Battles Mount, Debts Grow Larger

As legal costs multiplied from his failed investments and shareholder lawsuits, Winnick borrowed continuously to stay afloat. In 2004, he personally settled shareholder lawsuits for $55 million, though he was never criminally charged. He invested in various media and technology startups, many of which later collapsed in litigation.

Over time, his loan balance with lender CIM Group grew substantially. By 2023, the debt had swollen to roughly $155 million from an initial $100 million revolving loan. Casa Encantada and the Malibu property were pledged as collateral, along with family artwork, furniture, antiques, and jewelry—including Karen’s wedding ring.

“Karen Winnick said she was unaware that their homes, art and even her wedding ring had been pledged as collateral.”

— New York Post, December 19, 2025

A Widow Left Fighting Foreclosure on America’s Most Storied Home

Gary Winnick died suddenly on November 3, 2023, at age 76—just two weeks before he was scheduled to be deposed in a lawsuit linked to a failed investment. According to court documents and widow Karen Winnick’s claims, only after his death did the full scope of the family’s financial exposure become clear. Karen, now 79 years old, alleges that CIM Group orchestrated a “loan-to-own scheme” designed to strip her of Casa Encantada and family assets.

After the family defaulted, CIM moved to foreclose on both Casa Encantada and the Malibu property. Karen Winnick filed court documents accusing the lender of setting up conditions that would leave her “effectively destitute.” The foreclosure has also threatened to impact a family home in Malibu jointly owned by her three sons. A last-minute court stay temporarily halted an auction that would have sold the property at a civic plaza auction east of Los Angeles.

The AI’s assessment of Winnick’s financial trajectory

Winnick reportedly cashed out approximately $730 million in Global Crossing stock before the company’s spectacular collapse. Out of that windfall, he donated $100 million to 54 charities and channeled vast sums into his increasingly expensive real estate and art empire. Yet his legal exposure multiplied as various ventures failed and prompted lawsuits, creating a devastating cash drain that depleted what once seemed like an infinite fortune.

Can Karen Winnick Save the Mansion That Symbolized Her Husband’s Rise and Fall?

Casa Encantada remains one of the most storied properties in America. The magnificent estate once symbolized Winnick’s ascent to Los Angeles’ financial elite. Now, it represents both the height of his ambition and the depths of his financial collapse. Karen Winnick’s court battle against CIM Group continues as lawyers argue about whether alleged loan scheme tactics violated her rights and whether her family can retain control of their legendary home before foreclosure becomes final and irrevocable.

Sources

• New York Post – “From $6B to bust: How Gary Winnick, LA’s richest man, lost it all”
• Wall Street Journal – “A Widow’s Battle for Her $190 Million L.A. Mansion”
• NDTV/AP – Gary Winnick financial collapse reporting