Former Major League Baseball Player Lenny Dykstra Pleads Guilty in Federal Court to Bankruptcy Fraud and Money Laundering

LOS ANGELES—Lenny Kyle Dykstra, an All-Star outfielder who played for the New York Mets and Philadelphia Phillies, pleaded guilty today to bankruptcy fraud and other federal charges for selling items pilfered from his mansions in Ventura County.

Dykstra, 48, who was known by the nickname “Nails,” pleaded guilty to three felony counts—bankruptcy fraud, concealment of assets, and money laundering. As result of the guilty pleas, Dykstra faces a statutory maximum sentence of 20 years in federal prison.

Dykstra is currently in state custody after having been convicted in Los Angeles Superior Court on unrelated charges.

In court today, Dykstra admitted that he filed a bankruptcy case on July 7, 2009, and later lied about taking and selling items that were part of the bankruptcy estate. Dykstra specifically admitted he committed bankruptcy fraud by lying about whether he had taken and sold items from his $18 million mansion in Sherwood Estates that he had purchased from Wayne and Janet Gretsky. Dykstra also admitted that he concealed property from the bankruptcy estate, including baseball memorabilia stored in his other Sherwood Estates mansion. And Dykstra admitted that he sold some of the memorabilia and laundered the proceeds by taking $15,000 earned from the sale and purchasing a cashier’s check in another person’s name.

Dykstra also admitted that there were at least 10 creditors who were victims of his crimes, and those victims lost between $200,000 and $400,000.

“Mr. Dykstra’s days of playing games with the public and the legal system are over. With these federal convictions, Mr. Dykstra’s fraud and deceit have been exposed for all to see,” says André Birotte, Jr., whose office prosecuted the case. “These convictions should serve as a cautionary tale of a high-flying sports celebrity who tried to manipulate and exploit both his creditors and the bankruptcy laws of the United States.”

The bankruptcy fraud and concealment charges carry a statutory maximum penalty of five years in federal prison. The money laundering charge carries a potential sentence of up to 10 years in prison, in addition to fines and mandatory restitution.

Dykstra pleaded guilty before United States District Judge Dean D. Pregerson, who scheduled a sentencing hearing for December 3, 2012 at 1:30 p.m.

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

“The FBI is committed to investigating financial crime, including the bankruptcy fraud to which Mr. Dykstra pleaded guilty,” said Timothy Delaney, Acting FBI Assistant Director in Charge in Los Angeles. “At one time, Mr. Dykstra inspired Americans, but later, sadly, he chose to defraud his fellow Americans and the United States government. His acknowledgement of these crimes may prevent others from engaging in similar activity.”

“Lenny Dykstra improperly concealed and sold assets—including baseball equipment and memorabilia—failing to disclose the proceeds from the sale to the bankruptcy court. Mr. Dykstra didn’t just commit an error—he committed a felony,” said Leslie P. DeMarco, Special Agent in Charge of IRS-Criminal Investigation’s Los Angeles Field Office. “IRS-Criminal Investigation is proud to work with our law enforcement partners by lending its financial expertise in these complex investigations.”

Peter C. Anderson, the United States Trustee for Region 16, stated, “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. The bankruptcy-related conduct to which Mr. Dykstra pleaded guilty constitutes an egregious abuse of the bankruptcy system and will not be tolerated.”

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.