Lenny Dykstra pleads guilty to bankruptcy fraud and could get 30 months in prison for stripping his house of valuables

Too often, I hear clients who feel that if they/we do not tell about the things they want to hide, they will not get caught. Former Mets outfielder Lenny Dykstra plead guilty to bankruptcy fraud and if the prosecutor has his way, will be sentenced on December 3, to 30 months in prison. What did he do? He cleared valuables out of his California mansion, hid them in his bankruptcy filing, then  secretly sold them. We don’t know what he got for the purloined items but I doubt it was worth it.

Reputable attorneys will tell their clients that this behavior is not worth it, especially for high-visibility, or formerly-high-income debtors. Why doesn’t this work? First, there is always someone else who is involved or who knows what you did or what you had. Second, many people “tell lies to their lawyer, and tell the truth to the judge”. (As a trustee I saw this often, and the poor lawyer is sitting there, dumbfounded.) Third, trustees spend their professional lives as lie-detectors, and some are very good at it. Going in you have no idea who your trustee will be, or who else may be whispering in her ear about you.

Here is my take on this: There are worse things in life than having to pay your creditors something. Usually there is something that can be done, and some good deals that can be cut with a trustee to “redeem” (or buy back) things the trustee would otherwise sell. The key is to be honest, and to follow the lead of the knowledgeable and reputable lawyer you should be dealing with.

Or you can do what Mr. Dykstra did, and hope that you get lucky. ( and hope that no one notices all the stuff that is missing, or sees you selling it).  The prosecutor told his sentencing judge that he had an “arrogant world view”, feeling that he was untouchable because of his celebrity. The judge might very well throw  the book at him.

Any lawyer who suggests or recommends that you skirt the road of honesty is likely to be one who already has a reputation among the trustees. By being represented by such persons, you may unwittingly be putting a target on yourself. And the collateral damage could include the lawyer who counsels such behavior, or even the one who winks and looks the other way. I never want to put myself in a situation where what I did could be used as my client’s bargaining chip in plea negotiations.

Most people, when they understand the risks, take the high road, and make a better deal for themselves that Lenny Dykstra did.

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