Global Crossing top brass may get off hook in civil suits.

Former employees, shareholders and bondholders of Global Crossing Ltd. are nearing a broad settlement of all civil litigation filed against the bankrupt telecommunications firm, its co-founder. Gary Winnick, and 32 former officers and directors.

One lawyer characterized negotiations as "far along," but indicated that the "whole thing could blow up at any time." Several others said a global settlement could be finalized by this fall.

If reached, the proposed deal would grant plaintiffs $200 million in payouts from Global Crossing's two insurance firms. It would also include the $25 million, now in an escrow account, that Winnick volunteered to give back to former employees when he testified before a House subcommittee last year.

Beyond that, negotiations are continuing on whether other insiders will have to contribute to the settlement out-of-pocket, given at least $1.5 billion in insider stock sales made prior to the company's demise.

"Everybody who's involved in this would like to see Gary Winnick pay more," said Matthew Fusco, an attorney in Rochester, N.Y., who represents up to 13,000 former employees of Rochester Telephone Co., which was purchased by Global Crossing in 1999.

The amount of the potential settlement represents a fraction of the money lost by investors and employees when Global Crossing filed for Chapter 11 bankruptcy protection in January 2002. At the time, it was the fourth largest bankruptcy filing in U.S. history.

At its peak in 2000, Global Crossing had a market capitalization of $47 billion--at the time higher than Ford Motor Co.--and had raised more than $20 billion in debt and equity in just three years. It employed as many as 25,000 people.

Plaintiff's lawyers said they want to settle the case because Global Crossing's insurance policies--with Pender Insurance Ltd., a reinsurance company based on the Isle of Man, and Chubb Group of Insurance Cos. of Warren, N.J.--are "wasting policies," in which defendants' legal fees are deducted from the policy. The longer the litigation, the higher the likelihood that a payout would go to defendants' lawyers with less money left over for plaintiffs.

Though a handful of lawyers are involved in the negotiations, as many as 70 am required to sign off on any proposed settlement. Amounts to be received by each class of plaintiff haven't been determined.

Negotiations have been ongoing for several months after U.S. District Judge Gerard Lynch consolidated several class-action lawsuits flied against the company and its executives. He appointed Federal Magistrate Judge Michael H. Dolinger in New York to oversee a settlement. Dolinger has admonished lawyers not to talk about the negotiations.

It is unlikely any Global Crossing officials will face criminal charges. Nevertheless, in their combined lawsuit shareholders and employees allege that Winnick, along with 32 other executives and directors, engaged in a massive fraud and deception that cost investors $40 billion even as company officials enriched themselves.

The 328-page document alleges the defendants touted billions of dollars of "cash" transactions that were "nothing more than illusory, paper transactions with no business substance."

Many former Global Crossing employees found their 401(k) retirement plans, loaded with Global Crossing shares, had become worthless. Others were promised severance packages that were terminated when the company filed for bankruptcy protection in 2002, even though lump-sum payouts were given to top executives.

"We literally have thousands of people who lost their savings, their jobs and their severance and health coverage," Fusco said.

What distinguished Global Crossing from other financial scandals was the size of the stock sales, which even exceeded insider sales at Enron Corp.

Winnick, who founded Global Crossing in 1997 by buying the distressed undersea cable assets of AT&T Corp., sold $735 million in stock, while co-founder David Lee sold $118 million worth of stock.

Abbott Brown, a former senior vice president who now runs Ridgestone Corp. in West L.A, cashed out $46.5 million worth of shares, while former co-Chairman Lodwrick Cook, who still works with Winnick at Pacific Capital Group in Beverly Hills, sold $35 million worth.

The company and Winnick am under investigation by the Securities and Exchange Commission, which would not comment on any pending litigation." Many lawyers involved in the negotiations said a settlement would end most litigation against former executives and directors.

Global Crossing came under .scrutiny after a former vice president, Roy Olofson, accused it of booking so-called "swaps" of capacity with other telecom carriers, giving the appearance of higher revenues in the first half of 2001, just as the company's underlying results began to flag.

Last year, two Asian companies, Hong Kong's Hutchison Whampoa Ltd. and Singapore Technologies Telemedia Pte Ltd., sought to rescue Global Crossing from bankruptcy. After Hutchison Whampoa dropped out, government-owned ST Telemedia continued as a sole buyer. However, the plan has received opposition from the Defense Department on national security grounds.