(FORTUNE Magazine) – Ira Rennert has long nurtured a single, unlikely jewel in his business empire dominated by pollution-belching, lawsuit-ridden, money-mulching metals and mining properties: the Hummer, the boxy, 2.5-ton SUV that's a guilty pleasure (sticker price: $51,000) for everyone from rapper Ludacris to Arnold Schwarzennegger. In early August, Rennert agreed to sell a majority stake in AM General, creator of the Hummer and its military sibling, the Humvee, to Ron Perelman's MacAndrews & Forbes, in a deal that values the Hummer family at around $1 billion. Rennert, 70, will reportedly get over $400 million in cash and keep 30% of the new joint venture that will own AM General. (GM will continue to assemble and market the Hummer.) The deal provides a handsome return on a once stumbling, no-name military contractor that Rennert bought from bankrupt conglomerate LTV in 1992 for a paltry $133 million.

In contrast to the Hummer's knockout success, the rest of Rennert's holdings are a dark shambles. The heavyset, white-coifed Rennert is a reclusive figure whose checkered business history and grand gestures--symbolized by his colossal 100,000-square-foot oceanfront mansion in the Hamptons--inspire intense fascination. Starting in the early 1990s he perfected a formula for extracting huge amounts of cash from mundane, troubled companies. He would buy the failing business, usually a producer of lead, steel, or other metals, on the cheap, then use junk bonds to borrow the entire purchase price or even more. Instead of plowing the full proceeds back into the business, he would pay himself a giant dividend, sometimes pocketing half the cash harvested from the bond offerings.

For years that template worked brilliantly for investors as well as for Rennert. His firm, the Renco Group, was renowned for always making its interest payments. But beginning in 2000 one Renco producer after another hit hard times as a flood of imports from China, India, and other countries hammered metals prices. In the past four years no fewer than four of Renco's metals and mining properties have either gone bankrupt or forced bondholders to take a big haircut, including Magnesium Corp. of America (MagCorp) and coal producer Lodestar. To make matters worse, Renco faces a slew of environmental lawsuits, ranging from claims by workers in Missouri that pollution from his lead plants ruined their health, to a Justice Department suit seeking $900 million in damages for mishandling waste at MagCorp. Even Michael Moore piled on for a TV show, hounding Rennert with his camera crews and branding the retiring billionaire as an epic polluter, prodding Rennert to take out a restraining order on Moore.

Rennert may need the $400 million gain on the Hummer sale to finish and run his dream project, a U-shaped Italianate palace in the Hamptons that's larger than the White House and the Bill Gates mansion combined. Started in 1998, the yellow-limestone, oceanfront mansion on 63 acres boasts two bowling alleys, a giant power plant, 29 bedrooms, and--get this--a 1,500-gallon grease trap for the restaurant-scale kitchens. Artisans imported from France crafted and installed plaster moldings, using an ancient recipe to replicate hand-carved wood. In July, Rennert finally moved in, though the house is still a year or more from completion; he revealed in a rare interview with the New York Times that his Shangri-la is "my insurance policy against being old and lonely." Our prediction? Citizen Kane: The Sequel can't be far off.

--Shawn Tully