Former Baseball Star Lenny Dykstra Charged With Bankruptcy Fraud

This wire story was updated at 4 p.m.

Former Major League Baseball outfielder Lenny Dykstra was charged with federal bankruptcy fraud Friday for allegedly selling or destroying $400,000 in property that was part of his bankruptcy case, prosecutors said Friday.   

Dykstra, 48, of Encino, was named in a one-count criminal complaint filed Wednesday in Los Angeles federal court that accuses him of embezzling from a bankruptcy estate, according to the U.S. Attorney's Office.   

The former New York Mets and Philadelphia Phillies outfielder was arrested at about 8 p.m. Thursday at his Encino home by Los Angeles police on a separate state charge of grand theft in connection with the purchase of vehicles through fraudulent means, prosecutors said.

He is being held on $500,000 bail. The charge of bankruptcy fraud carries a maximum sentence of five years in federal prison. Local prosecutors have apparently not yet filed grand theft charges against Dykstra in state court.

Dykstra filed bankruptcy in July 2009 in Woodland Hills. It is alleged that after declaring bankruptcy, Dykstra removed property that was part of the bankruptcy estate without the permission of the bankruptcy trustee, City News Service reported.   

“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,” according to the U.S. Attorney's Office.   

After his baseball career, Dykstra became a businessman, opening a car wash chain in Corona that he later expanded to other parts of Southern California.   

Dykstra was also hired by CNBC Mad Money host Jim Cramer to write a stock-picking column for his Web site, thestreet.com.   

When Dykstra filed for bankruptcy, he listed two residences—a mansion in Ventura County 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 his 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.   

City News Service contributed to this report.