Lenny Dykstra from Stock Guru to Bankrupt

Known as “Nails” in his playing days for his intense drive, Lenny Dykstra is now facing a pretty sizable obstacle to overcome in his personal life. The former NY Met and Philadelphia Phillie, who enjoyed a fairly nice 12 year MLB carrer and even finished 2nd in the MVP voting in 1993 to Barry Bonds, filed for Chapter 11 bankruptcy yesterday in Los Angeles.

Dykstra made $36.5 million in his 12 year playing career, but allegledy had made much more than that since leaving baseball and becoming a self proclaimed stock options guru. Now he claims to have no more than $50,000 in assets with liabilites somewhere between 10 and 50 million dollars. You don’t need to be a financial guru to see that the situation is bad.

Dystra owes all this money to many different creditors, with a lot of them being major banks. According to an article on Philly.com, Dykstra owes the following creditors…

“Sometimes the difficult decisions in life are the most necessary,” Dykstra wrote me in an email. “In the end, the restructuring will definitely be a good thing.” Yes, he’s filed for voluntary Chapter 11.

A good thing, for whom? Dykstra owes, among others:
$12.9 million, unsecured, to Washington Mutual (now part of JPMorgan Chase & Co.)
$4.2 million, unsecured, to Bank of America’s Countrywide and credit card units
$3.5 million to Rockbridge Bank, Atlanta, Ga.
$2.5 million to David and Teresa Litt, real estate pros in Calabasas, Calif.
$1.5 million to K & L Gates LLP, a Santa Monica law firm
$1.1 million to United Commercial Bank, San Francisco
$962,000 to private-jet companies in New York, Cleveland and California
$512,000 to the California state labor department’s enforcement unit

And hundreds of thousands more, each, to celebrity lawyer Daniel Petrocelli, New York literary agent David Vigliano, California anaesthesiologist Dr. Festus Dada, former publisher Doubledown Media, Index Investors, Wachovia Securities, and more. And smaller amounts to New York’s Carlyle and Jumeirah Essex hotels, Verizon, UPS, AmEx, Citibank, and other private-jet companies.

It seems that Mr. Dykstra has gotten in way over his head. He had been living in his “dream home” that he bought from hockey star Wayne Gretzky for 17 million. Now that home is facing foreclosure, and reportedly totally vacant of any furniture save for his office.

Dykstra was thought to be some sort of financial guru, now it is evident that was not completley true. Until recently Dykstra even had a column on TheStreet.com. This now begs the question, if he’s so smart and savvy then why is he bankrupt?

Even after this whole bankruptcy thing runs it course, Dykstra is still facing over 20 lawsuits. According to an article published in GQ magazine in April entitled “You Think Your Job Sucks? Try Working for Lenny Dykstra”, a vast majority of these lawsuits are for unpaid wages. Even his brother Kevin is suing him saying that he didn’t get his share when Dykstra sold a chain of car washes for 50 million.

It seems that Lenny Dykstra was as ruthless in the financial world as he was on the baseball diamond. Unfortunately for him, in the real world we have laws that protect people from that kind of bullying.

There is another interesting side note to this whole situation. There is a possibility I think that Dykstra has blown all this money due to a gambling problem. In March of 1991 he was placed on a year’s probation by then commissioner Fay Vincent for admitting to losing $78,000 in a high stakes poker game in Mississippi. As with any problem gambler, as his wealth rose he would have to bet more and more to have the bet mean anything. I’m gonna be interested to see how much of these debt can be traced back to gambling losses. I’m confident it will come out in the upcoming days. So stay tuned to The Debt Gazette for any updates.