The Sad Case of Lenny Dykstra
With so many famous athletes declaring bankruptcy, the case of former Major League Baseball all-star Lenny Dykstra (New York Mets, Philadelphia Phillies) is notable by its complete disregard of the authority of Bankruptcy Court. Lenny has experienced a breathtaking “fall from grace”–from multi-millionaire entrepreneur to bankrupt felon. Dykstra filed for bankruptcy three years ago, claiming he owed more than $31 million and had only $50,000 in assets. After the filing, Dykstra hid, sold or destroyed more than $400,000 worth of items without permission of a bankruptcy trustee, according to federal prosecutors.
Dykstra was indicted in February on 15 criminal counts. Last week, Dykstra entered his plea in U.S. District Court to one count each of bankruptcy fraud, concealment of assets, and money laundering. Prosecutors said he agreed to waive his right to appeal if sentenced to less than 51 months in prison. Dykstra also could face fines up to $750,000.
This case highlights the consequences to bankruptcy filers who disregard the authority of the Court, the Bankruptcy Code and the Court rules. Most believe that they cannot be held accountable for defrauding their creditors but as this case makes clear, honesty in your bankruptcy filing is essential. If you try to hid assets or otherwise go outside the parameters of the Code you could pay a heavy price for those assets that you tried to keep out of the trustee’s sight.