A federal grand jury in Los Angeles handed up a 13-count indictment Friday accusing former All-Star outfielder Lenny Dykstra of bankruptcy fraud for allegedly selling property from his $18 million mansion in Ventura County.
Dykstra, known by the nickname "Nails" when he played for the New York Mets and Philadelphia Phillies, is charged with one count each of bankruptcy fraud and obstruction of justice, four counts each of concealing property from the bankruptcy estate and making false declarations to the Bankruptcy Court, and three counts of embezzlement from the bankruptcy estate.
Federal prosecutors allege that after he filed for bankruptcy protection in July 2009, Dykstra looted his Sherwood Estates mansion, lied about who stripped the home and denied receiving money for having sold items that were owned by the Bankruptcy Estate.
According to court documents, an attorney hired by the bankruptcy trustee estimates that Dykstra stole and destroyed more than $400,000 worth of property in the estate.
All of the charges in the indictment carry a statutory maximum penalty of five years in federal prison, except for obstruction of justice, which carries a potential sentence of up to 20 years in prison.
If he is convicted of all 13 counts in the indictment, Dykstra would face a maximum possible penalty of 80 years in prison, according to the U.S. Attorney's Office.
Dykstra's bankruptcy case is still pending in U.S. Bankruptcy Court in Woodland Hills.
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"The bankruptcy-related conduct charged in the indictment constitutes an egregious abuse of the bankruptcy system and will not be tolerated," said Peter C. Anderson, U.S. Trustee for Region 16.
The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws.
Dykstra, 48, posted $150,000 bail two weeks ago in federal court in Los Angeles, reportedly with help from his friend, actor Charlie Sheen.
Dykstra spent about a week in jail until U.S. Magistrate Judge Carla Woehrle released him on bond, ordering him to seek outpatient substance abuse treatment and surrender his passport.
Dykstra was initially arrested April 14 about 8 p.m. by the Los Angeles Police Department in connection with allegations that he purchased vehicles through fraudulent means, according to the U.S. Attorney's Office.
"Dykstra admitted in a bankruptcy hearing to having arranged the sale of sports memorabilia and a dresser that were property of the bankruptcy estate; and Dykstra ripped out a $50,000 sink from his mansion and took granite from the mansion and installed it in an office he set up at the Camarillo airport after he had filed for bankruptcy protection," prosecutors wrote in court papers.
After his baseball career ended, Dykstra became a businessman, opening a car wash in Corona that the ex-major league ballplayer expanded to other parts of the Southland.
Dykstra also was hired by CNBC "Mad Money" host Jim Cramer to write a stock-picking column for his website, TheStreet.com.
When Dykstra filed for bankruptcy, he listed two residences -- the Ventura County mansion purchased from Janet and Wayne Gretzky that he estimated was worth $18.5 million, and a home in Westlake Village that he estimated was worth $5.4 million, according to federal prosecutors.
As a result of the bankruptcy filing, the residences and Dykstra's personal property became part of the bankruptcy estate that would be used to pay off creditors.
Even though Dykstra was prohibited from liquidating any part of the estate, the investigation showed that about a month after filing for bankruptcy, he was paid cash at a Los Angeles consignment store for personal items, including a truckload of furnishings and fixtures that he had taken from the Ventura County mansion, according to the government.
Dykstra, who is currently living in Murrieta, is due back in federal court on May 16.
