Lenny Dykstra Arrested in Encino, Charged With Embezzlement

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Tue, Apr 26, 2011 at 12:09 PM

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Update: TMZ reports that Charlie Sheen put up $22,000 to bail Dykstra out of jail.

Retired baseball star Lenny Dykstra was charged this week with bankruptcy fraud. The U.S. Attorney's Office says he was arrested last night in an unrelated matter. A sheriff's inmate information database shows he was arrested by LAPD bunco/forgery unit and was being held in lieu of $500,000 bail on a no-bail status.

What did he do? Well, the feds say that after declaring bankruptcy in 2009 he sold items from his $18 million mansion in Ventura County on the side. They say he did so without notifying the bankruptcy trustee.

He faces one count of embezzling from a bankruptcy estate.

What's the damage?

He could face five years in federal prison -- if convicted.

According to the U.S. Attorney's Office:

The federal charges stem from a bankruptcy case that Dykstra filed on July 7, 2009. The criminal case filed in United States District Court alleges that Dykstra removed, destroyed and sold property that was part of the bankruptcy estate without the permission of the bankruptcy trustee.

According to court documents, after Dykstra filed for bankruptcy, he sold many items belonging to the bankruptcy estate for cash, as well as destroying and hiding other items. An attorney hired by the bankruptcy trustee estimates that Dykstra stole and destroyed more than $400,000 worth of property in the estate, according to the criminal complaint.

When Dykstra filed for bankruptcy, he listed two residences - a mansion in Lake Sherwood Estates purchased from Janet and Wayne Gretzky that he estimated was worth $18.5 million, and a home in Westlake Village that he estimated was worth $5.4 million. As a result of the bankruptcy filing, the residences and Dykstra's personal property became part of the bankruptcy estate that would be used to pay off creditors. Even though Dykstra was prohibited from liquidating any part of the estate, the investigation showed that:

-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; and

-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.

Garden Grove- Santa Ana-bred Dykstra planed for the New York Mets and Philadelphia Phillies.

The U.S. Attorney's office notes that after his retirement Dykstra gained notoriety as a stock picker.

Update: The LAPD told the Weekly that he was arrested because he was allegedly buying cars based on false loan application information. It was described to us as an alleged money-making scheme.

We're told the that the feds had a warrant out for his arrest but that the LAPD tracked him down first in Encino and possibly forced the hand of FBI agents -- and their separate fraud case -- when Dykstra was arrested last night.

Update No. 2: U.S. Attorney's spokesman Thom Mrozek just confirmed the LAPD's account, issuing this statement:

The Los Angeles Police Department (LAPD) Commercial Crimes Division (CCD) arrested Lenny Dykstra Thursday evening on Grand Theft charges.

On April 14, 2011, around 8:00 p.m., investigators from the Metropolitan Forgery Section of the of 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.

Dykstra was booked on the open charge of 487 (D) of the Penal Code, Grand Theft, and held on $500,000 bail.

Added: Seems like, at least according to his Wikipedia entry, that it isn't the first time Dykstra has seen allegations of financial wrongdoing.

Update No. 3: A spokeswoman for the L.A. County District Attorney says the office has declined to file chargers for now. The Associated Press described it as a case of Dykstra allegedly trying to buy a stolen car. As we lay out above, the LAPD told us he allegedly tried to buy vehicles with false paperwork.

First posted at 12:40 p.m. on Friday, April 15.

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