He had a great mansion in Lake Sherwood, near Thousand Oaks, but when his financial-services firm fell apart, so did his life. Baseball legend Lenny Dykstra, who went through bankruptcy in 2009 (claiming about $25 million in assets and $37 million in debts), thought he could hide assets from the bankruptcy Trustee. Dykstra removed and sold memorabilia worth $400,000 from his long baseball career from the bankruptcy estate, without telling the bankruptcy Trustee. He was nailed for bankruptcy fraud and will be spending 6 months in jail.
Lesson here: it makes no sense to hide assets from the bankruptcy court. As a debtor, you are seeking a legal determination that you don’t owe the debt; in return, you are supposed to turn your pockets inside out and let the court tell you what you can keep (learn more here). What Dykstra did would have allowed him to get the benefit of bankruptcy without the burden of turning in all his assets; it ain’t fair to his creditors, and it ain’t fair to honest debtors who would have to face their creditors’ suspicions that they might be getting away like Dykstra tried to.
December 3, 2012