Wednesday, July 15, 2009

Nails Done

Ever wondered what happened to former Major League baseball player Lenny Dykstra? Steven Malanga says that Dykstra's post-baseball career is yet another story that was too good to be true:

Back in April Comeau predicted that Dykstra would file for bankruptcy because of the long market slide and because, "I've never met a rich person that tried so hard to look rich." And indeed, Dykstra's bankruptcy filing suggests that most of his outsized lifestyle was financed by debt, not big market profits. He declared just $50,000 in assets while claims against him amount to more than $30million. He's lost his $18.5 million home to foreclosure and had his Gulfstream jet taken back for failing to pay some $228,000 for remodelings. In an article in GQ, a former Players Club employee claimed Dykstra used his credit card number to wrack up some $14,000 in charges to rent a private plane after Dykstra's financial woes started. He similarly stiffed his mother for $23,000 after using her card.

He's also left a string of unpaid bills for his business excursions. Doubledown is asking for $350,000, while a Minneapolis design firm says it's owed $250,000. He owes two law firms nearly $2 million (not a great move if you are filing for bankruptcy), while a California doctor, Festus Dada, claims Nails owes him $500,000 because he tried to change the terms of a deal to sell Dada one of his California properties then, when Dada balked, Dykstra kept the half million down payment and walked away.

Along the route to this train wreck there were plenty of signs that Nails might have not be the best of investing partners. He occasionally responded to critics or questioners with profanity-laced tirades that might have once sounded charming directed at a home plate umpire, not when aimed at people with legitimate concerns about the cost of buying into Nails' ideas. And those he hired to work with him told tales of his strange work habits which included an often distracted lack of focus on the task at hand.

I hadn't heard anything about what Dykstra was up to after he left baseball. His rise and fall as a financial guru demonstrates the extent that greed and willful blindness drove people who should have known better to make irrational decisions during the heyday of the housing bubble.

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