Whitney Houston squandered multimillion-dollar fortune, sources say

Whitney Houston was once the darling of the music industry with a voice and career few other singers could even come close to matching. But at the time of her death Saturday, Houston's critics were skeptical that the star would ever return to the praise and fortune of her glory days.

At the height of her career, Houston’s work on “The Bodyguard” soundtrack sold more than 17 million copies in the United States alone. She commanded millions for films and was ranked in the top 20 of Forbes’ most powerful entertainers. In 2001, despite her personal problems beginning to come to light, Arista signed her to an unprecedented six-album contract valued at more than $100 million.

Yet in the last decade, Houston’s powerful voice had slowly begun to slip away from the public attention and the stories about her became dominated by reports of substance abuse instead of her substantial talents.

In 2009 Houston returned to the studio and released her first album in several years, titled “I Look to You,” which sold 304,000 copies in its first week, entering the charts at No. 1 and giving her the best debut week of her career. She followed this with a worldwide tour, which was widely panned by critics who were left disappointed by her distressed vocal chords. The tour still managed to gross $36 million.

But just three weeks ago, the rumor mill started churning that Houston was broke, and now more details are starting to unravel as to how and why the iconic singer may have died with few dollar signs to her name. In January, Radar Online reported that the music maven was in financial ruins and on the verge of bankruptcy, and had even resorted to asking friends for small amounts of cash to get her through.

“Whitney’s fortune is gone. Music industry heavy hitters are supporting her and her label is fronting her cash against her next album, but no one knows when that will be released. She might be homeless if not for people saving her,” an insider told the entertainment site. “She is broke as a joke. She called someone to ask for $100. It is so sad. She should have Mariah Carey money, and she’s flat broke.”

According to several reports, Sony music mogul Clive Davis, who launched Houston’s career, loaned her more than $1 million last year to assist in the rehabilitation process of getting clean.

Experts tell Fox411’s Pop Tarts column that the simple reason for Houston’s financial troubles is her drug use.

“When people become addicted they become more impulsive and often have impaired memory and attention. In addition to squandering money on drugs, they are easy prey for unethical financial managers and consultants who exploit their vulnerabilities,” Dr. Sack, CEO of the famed Malibu rehabilitation facility Promises told FOX411’s Pop Tarts column. “It’s certainly possible that Ms. Houston fell victim to either or both of these problems.

"While her public sightings were limited to doctor's visits and an occasional club outing over the past year, Whitney traveled heavily over the course of 2010 – staying in upscale hotels at her many overseas destinations, which included romps in Sydney, Paris and London,” said Michael Lavalette, managing editor of the GossipCenter Network, which tracks all celebrity sightings and paparazzi pictures.

And despite the sudden resurgence of Houston’s music in the wake of her death, her estate may not actually benefit as much as one might expect. Unlike Michael Jackson, who controlled and owned much of his music, Houston was not entitled to a prominent share of revenues from her work. She did not write her own hits, and doesn’t have share in the revenues for publishing rights. Sony’s Legacy Records owns the catalog of her albums and instead paid Houston singing royalties. As for “The Bodyguard,” Time Warner-operated movie studio Warner Brothers controls the rights, which means Houston doesn’t profit from downloads or sales.

Still, author and trial attorney Chris Leibig begs to differ that Houston passed away a pauper.

“No one of Houston’s caliber, with the potential for ongoing sales, would be technically broke,” he added. “Unlike athletes and so forth, whose opportunity for salaries and endorsements would usually have a shelf-life based on the person’s current productivity, artists and writers and the like can suddenly become more popular after dying. Unless she sold away the future rights to her material, whether she wrote her own songs or not would not be the question.”