by Brian Mahany
My early legal career was spent in the metropolitan New York City area. At about the same time I began practicing law, Lenny Dykstra began playing for the New York Mets. A phenomenal hitter, Dykstra was well loved in New York – even by rival Yankees fans. After retiring from baseball, he became a financial adviser. Today he is headed to prison for grand theft auto.
Dykstra’s free fall from successful businessman to felon serves as a warning to everyone of how quickly fortunes can change. For people looking to invest their hard earned money, it also serves as a reminder to always perform your own due diligence and research before you invest.
According to published reports, in September 2008 Dykstra started a magazine called Player’s Club hoping to sell financial services to athletes. Less than 1 year later stories began circulating that he writing bad checks and engaged in credit card fraud. By the summer of 2009 he had filed bankruptcy listing tens of millions of dollars worth of debt and almost no assets. News reports say that he was living out of his car.
Normally, a bankruptcy offers debtors a fresh start but in Dykstra’s case he was charged with criminal bankruptcy fraud. According to an affidavit obtained from the court, the attorney for the United States Bankruptcy Court trustee learned from pawn and consignment shops that Dykstra showed up with a UHaul filled with furniture and valuable artwork taken from his home after he filed bankruptcy.
An FBI affidavit also says that Dykstra lied about the missing property. He claimed his housekeeper’s son stole the objects, however the stores’ owners and housekeeper say otherwise. He also never reported the alleged theft – most people that lose a million dollars worth of valuables would immediately report such a loss.
Dykstra’s trial date for the federal fraud case is scheduled in June of this year. Bankruptcy fraud may be the least of his problem, however. Earlier today he was sentenced to 3 years in a California state prison for grand theft auto.
There are no suggestions that Dykstra ever hurt any financial services clients. That someone could so easily get into that business in the first place is the scary part. Although the Financial Industry Regulatory Authority (FINRA) does not show him holding any securities licenses, there are many ways that people in that industry sell investments – some legal and some not.
No one can ever take away from Lenny his ability to catch and hit a baseball. He was a great player. Athletic skills, however, don’t qualify someone to sell investments. That’s not the only lesson in this sad story, however.
When trouble strikes, a person or brokerage firm can quickly fall from grace. One need only look at the rapid collapse of MF Global last year. One day the firm is the darling of Wall Street, the next day it is literally taking money from customers’ accounts in a failed effort to remain solvent. If the media reports are accurate, Dykstra’s financial empire unravelled very quickly as well.
The real lesson is to always do your due diligence before you invest. Google, SEC and FINRA’s BrokerCheck searches are free and easy.Find out if your stockbroker or agent is licensed and see if there are any unresolved complaints.
If you are a victim of investment fraud or feel you were hurt by a financial professional (stockbroker, investment adviser, financial planner or even an accountant or lawyer), call us. The fraud recovery lawyers at Mahany & Ertl have recovered millions of dollars for fraud victims.
Mahany & Ertl – America’s Fraud Lawyers. We proudly help fraud victims find their voice from our offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & Minneapolis, Minnesota.