[UPDATED with Indictment:] Lenny Dykstra's Spectacular Fall Continues

UPDATE, MAY 9, 11:22 A.M.: Lenny Dykstra, the former major leaguer out of Garden Grove, could get up to 80 years in federal prison if the numerous bankruptcy fraud counts against him stick.

That's disclosed in an announcement of a federal grand jury indictment accusing Dykstra of bankruptcy fraud for allegedly
selling items from his $18 million mansion in Ventura County.

Here is a copy of the latest statement from the U.S. Attorney in Los Angeles:

May 6, 2011

Former Baseball Player Lenny Dykstra Indicted by Federal Grand Jury in Bankruptcy Fraud Case

LOS ANGELES–Lenny Dykstra, an All-Star
outfielder who played for the New York Mets and Philadelphia Phillies,
was indicted today by a federal grand jury that accused him of
bankruptcy fraud for allegedly selling items from his $18 million
mansion in Ventura County.

Lenny Kyle Dykstra, 48, who was known by the
nickname “Nails” and is currently residing in Murietta, California, was
named in a 13-count indictment returned this afternoon.

The indictment accused Dykstra of one count
of bankruptcy fraud, one count of obstruction of justice, four counts of
concealing property from the bankruptcy estate, three counts of
embezzlement from the bankruptcy estate, and four counts of making false
declarations to the Bankruptcy Court.

The indictment is the result of conduct
Dykstra allegedly engaged in after filing a bankruptcy case on July 7,
2009. The indictment alleges that after filing the bankruptcy
protection, Dykstra looted his Sherwood Estates mansion, lied about who
stripped the mansion, 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.

An indictment contains allegations that a
defendant has committed a crime. Every defendant is presumed innocent
until and unless proven guilty.

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. Therefore, if he is convicted of all 13 counts in the
indictment, Dykstra would face a maximum possible penalty of 80 years in

Dykstra's bankruptcy case is still pending in United States Bankruptcy Court in Woodland Hills.

The investigation in the bankruptcy fraud
case was conducted by the Federal Bureau of Investigation and IRS –
Criminal Investigation. The United States Trustee for the Central
District of California (Region 16) provided substantial assistance
during the investigation.

“The bankruptcy-related conduct charged in
the indictment constitutes an egregious abuse of the bankruptcy system
and will not be tolerated,” stated
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

UPDATE, APRIL 26, 11 A.M.: The lawyer for Lenny Dykstra is denying rampant media reports that Charlie Sheen bailed the embattled former Major League Baseball star out of jail.

Meanwhile, the hits keep coming against the former New York Met and Philadelphia Philly facing federal fraud and local grand theft charges: a woman who answered a Craigslist ad for a housekeeper earlier this month says he arrived at Dykstra's home to find him totally naked and wanting to sample her massage techniques.

“Alas, the story has no happy ending,” Howard Gensler writes in the Philadelphia Daily News.

Sexual creepiness has been alleged against Dykstra before. In December, a female escort accused him of bouncing a $1,000 check. A month later, the ballplayer-turned-financial-whiz kid faced sexual assault allegations by his former housekeeper,
who claimed that one of her duties involved blowing him weekly.

Because she needed the money, she claimed, she went along, prompting Gensler to point out, “Lenny always could get to third base.”

Meanwhile, Dykstra's exceedingly busy attorney tells the New York Daily News' Nancy Dillon that there is no truth to reports his client was bailed out by Sheen.

“Charlie Sheen has absolutely nothing to do with posting the bond in the federal case,” Mark Werksman reportedly said. “He's a friend and supportive of Lenny, but there's simply no truth to this rumor.”

TMZ.com reports that rumor came directly out of the mouth of Sheen, who reportedly said, “The rendition-guilty trolls that kidnapped my dear friend Nails clearly forgot that he's a fellow Vatican assassin and his best pal is a warlock.”

Sure sounds like Sheen, who was reported elsewhere online to have paid $22,500 to spring Dykstra.

“It's preposterous,” Werksman tells the Daily News.
ORIGINAL POST, APRIL 15, 4:51 P.M.: Santa Ana-born and Garden Grove-bred Lenny Kyle Dykstra, the former Major League Baseball star with the Philadelphia Phillies and New York Mets, has been charged with bankruptcy fraud for allegedly selling items from an $18 million mansion he originally bought from Wayne and Janet Gretzky.

The federal case was revealed after Dykstra was arrested at an Encino home Thursday night by local cops working a grand theft case.

No longer on Topps

The one-count federal criminal complaint stems from Dykstra's July 7, 2009, filing for bankruptcy in U.S. District Court in Woodland Hills. If convicted, the ballplayer nicknamed “Nails,” who enjoyed post-career accolades as a stock picker, could get five years in a federal pen.

According to the U.S. Attorney's office in Los Angeles, Dykstra “removed, destroyed, and sold property that was part of the bankruptcy estate without the permission of the bankruptcy trustee.”

Court documents allege that Dykstra sold many items belonging to the bankruptcy estate for cash, as well as destroying and hiding other items. A bankruptcy trustee estimated the loss at more than $400,000.

When Dykstra filed for bankruptcy, he listed two residences: the mansion in Lake Sherwood Estates purchased from the Gretzkys that he estimated was worth $18.5 million, and a home in Westlake Village that he estimated was worth $5.4 million.

Dykstra's bankruptcy filing meant those residences and the property inside became part of the bankruptcy estate, which would sell the homes and items off to repay creditors. Dykstra was prohibited from liquidating any part of the estate on his own. But, according to the complaint:

About a month after filing for bankruptcy, Dykstra 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 Lake Sherwood mansion; Dykstra admitted in a bankruptcy hearing to having arranged the sale of sports memorabilia and a dresser that were property of the bankruptcy estate; 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.

As the federal agencies were whipping up their fraud case against Dykstra, the Los Angeles Police Department Commercial Crimes Division
was investigating him for alleged grand theft.

According to a statement from U.S. Attorney's spokesman Thom Mrozek: “On April 14, 2011, around 8:00 p.m., investigators from the
Metropolitan Forgery Section of the LAPD Commercial Crimes Division
arrested former baseball player Lenny Kyle Dykstra for Grand Theft in
Encino. The 48-year-old Dykstra was arrested following an investigation
where he is suspected of purchasing vehicles through fraudulent means.”

After retiring from baseball in 1998 at age 35, Dykstra opened a car
wash in Corona, which led to the opening of more car
washes, 'Team Dykstra' Quick Lube Centers, a Conoco Phillips fueling
facility, a real estate development company, “I Sold It on eBay”
stores, a high-end jet charter company and a magazine marketed toward
professional athletes known as Player's Club.

With his new wealth, Dykstra was able to purchase the Gretzkys $17 million estate. The media became filled with stories about
Lenny's amazing stock-picking abilities. Among Dykstra's biggest
cheerleaders was CNBC's Jim Cramer, who had the former ballplayer on his shows and even gave him a column.

But troubles soon emerged. Dykstra was sued by his partner in the
car wash ventures. A 17-year-old girl
who worked for Dykstra filed a sexual harassment complaint. Talk of steroid use from his
playing days began to gurgle up.

Dykstra was still being hailed as a genius businessman up
through early 2009, when evidence began mounting that Dykstra's
financial empire was in a tailspin. Allegations surfaced of credit-card
fraud and failure to pay bills. A check of court databases produced dozens of
legal actions filed against him.

Ironically, Dykstra claimed to be a victim of mortgage fraud when he lost the Gretzky
house. That's not all he lost: his wife left him
and his brother sued him for breach-of-contract.

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