The widow of telecommunications mogul Gary Winnick recently went to court to prevent the family’s historic mansion, Casa Encantada, in Los Angeles, from being sold at auction after taking out a $100 million loan, which she said was signed without her knowledge. The lawsuit, filed by Karen Winick, 79, accuses family bank CIM Group of profiting from her husband’s emotional and financial state before his death in 2023, according to a report in The Wall Street Journal.
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According to the lawsuit, Gary was to use the property he acquired in 2000 for US$94 million (R$498) — the most expensive residential sale in U.S. history — as collateral for the loan, as well as another home and several personal assets, including artwork, furniture, jewelry and even Karen’s wedding ring. The widow claims that she did not discover the extent of the debt until after her husband’s death, at the age of 76, when the interest was already accumulating and was considered “unpayable”.
Accusations of financial exploitation and benefits deemed “predatory”
Documents cited by the Wall Street Journal indicate that the loan, with variable interest rates that never dipped below 9.55%, was designed to grow quickly. The value, which was initially 100 million US dollars, has already reached 155 million US dollars (822 million Brazilian reals). Karen accuses Richard Ressler, co-founder of CIM and Gary’s longtime friend, of exploiting Gary’s vulnerability by seeking him out amid financial pressures.
The family says the loan requires the wife’s approval, which Karen says was never requested. The lawsuit also accuses financial abuse against the elderly, illegal transfer of property, and concealment of information. CIM, in its judicial response submitted on Wednesday (3), classified the accusations as “fantastic” and stated that Karen knew about the loan, because she requested advances even after the death of her husband.
In September, the institution issued a notice to sell the two properties that were used as collateral, justifying the delay in payment. The auction was scheduled to take place in mid-December. Karen and her children seek an injunction to stop the foreclosure, claiming that the amount of the debt and terms of the contract are invalid.
Casa Encantada, which was announced for US$250 million in 2023, is back on the market for US$190 million, about R$1 billion. Karen claims to have found a buyer for US$130 million, but the deal has been blocked by CIM, which considers the price well below the valuation. The legal battle now seeks to determine not only the fate of the property, but also whether the loan was the result of fraud or financial decisions by the former billionaire, best known for founding the Global Crossing fiber network before its collapse in the early 2000s.
In short, it’s a dispute between a widow who says she’s been blinded by a ruined contract and a bank that denies wrongdoing on both sides, while one of Los Angeles’ most iconic mansions is at risk of being sold at auction in the coming weeks.