You might not have known it at the time, but in March 2008, circa the same month Jim Cramer called him the greatest mind on Wall Street, Lenny Dykstra was going through some money trubs. This was just prior to Dykstra putting his beloved Thousand Oaks home on the market, at a selling price that indicated he believed it possible to see a 33% return on the place, after having bought it from Wayne Gretzky for $18.5 million in August 2007 and owning it for ten months. As you are probably aware, despite LD’s streak of crazy spot on the money calls, this one did not pan out as he’d predicted, and the home was foreclosed on, though not before Nails ripped out the bathroom fixtures, left “unfit to print” items on the walls and floor (knowing Dykstra, one must assume feces), and blamed the whole thing on JPMorgan née WaMu. This was also prior to the former car wash king of California being forced to live out of his car and auction off phone calls with himself on Craigslist. But we’re getting ahead of ourselves.

In March 2008, our boy, likely due to the brain damage inflicted by seeing how far he could push a Twizzler into his ear and not stopping when he felt resistance, just thought he need a little cash. Two-hundred and fifty thousand would probably do the trick, and as luck would have it, someone was offering him that exact amount!

In the late winter of 2008, an entrepreneur named Richard O’Connor, who had become Dykstra’s favored adviser, introduced him to Shannon Illingworth, the founder of a publicly traded company called Automated Vending Technologies, or AVT, and the two quickly cut a deal. O’Connor told me that on March 25, 2008, Illingworth gave Dykstra roughly $250,000 worth of AVT stock in exchange for plugging the company on Cramer’s website, TheStreet.com, and promising to provide a personal introduction to Cramer. O’Connor claims that Dykstra told him he knew the pay-to-plug arrangement was illegal. To avoid getting caught, O’Connor says, the former All-Star baseball player had a solution: “We can just put the stock in Keith’s name,” referring to his brother-in-law, Keith Peel.

And so it was done. O’Connor provided me copies of stock certificates showing that on March 25, 2008, Keith Peel was issued 250,000 shares of AVT stock, which traded at roughly $1 a share. “Keith didn’t know anything about it,” says O’Connor, maintaining that using Peel’s name was a way to stash the stock away from potential regulatory oversight. The shares were held at Dykstra’s mansion, which is where O’Connor retrieved them. Just two weeks later, on June 6, 2008, Dykstra offered his premium subscribers a curious “bonus” recommendation: a plain old penny stock named AVT, “which gives investors a lot of potential upside.” Dykstra droned on endlessly about the stock, with all the conviction of a prisoner of war extolling the cause of his captors for the cameras.

When I contacted him shortly before The Zeroes printed, AVT founder Illingworth admitted that he hired Dykstra as a consultant for his “relationships with TheStreet.com, Cramer,” and that the idea for Dykstra to tout his company’s stock was “mutual.” (Despite the certificates, Illingworth denied ever giving Dykstra or Peel $250,000 worth of stock; instead he claims the only money he gave to Dykstra was $15,000 to trade on his behalf, a sum that disappeared.)

O’Connor claims that Illingworth was angry that he didn’t get more plugs from Dykstra, or a meeting with Cramer. O’Connor also says while advising Dykstra in the first half of 2008, he saw multiple other offers from small company CEOs offering Dykstra cash in exchange for access to Cramer, though he does not know if Dykstra ever cashed in on those opportunities.

Lenny Dykstra Stock Scandal [TDB]

48 comments (hidden to protect delicate sensibilities)
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Comments (48)

  1. Posted by Anonymous | June 28, 2010 at 11:35 AM

    What sort of car does he live in?

  2. Posted by Anonymous | June 28, 2010 at 11:39 AM

    The thing I like about global finance is that it is a pure and honest realm in which to have an honorable career.

  3. Posted by Bess Levin | June 28, 2010 at 11:40 AM

    @1 a Chevelle

  4. Posted by Bike | June 28, 2010 at 11:40 AM

    You sleep with dogs; you get fleas. Considering this involves Cramer, why should anyone be surprised about the outcum.

  5. Posted by Anonymous | June 28, 2010 at 11:42 AM

    I’ve invented an inflatable anchor. What’s his number??

  6. Posted by abe frohman | June 28, 2010 at 11:47 AM

    Can I get a quote on Beecher Tool and Die?

  7. Posted by Anonymous | June 28, 2010 at 11:49 AM

    @1 A white BMW 5-series with Louisiana plates

  8. Posted by Anonymous | June 28, 2010 at 11:50 AM

    What are the chances the SEC misses this one……Mary Shapiro where are you?

  9. Posted by The Ghost of Greg Michaels | June 28, 2010 at 11:51 AM

    Boo, assholes.

  10. Posted by Anonymous | June 28, 2010 at 11:51 AM

    He lives with Kouwe in a van, down by the river.

  11. Posted by Denny Deckshoes | June 28, 2010 at 11:52 AM

    “In looking for someone to hire, you look for three qualities: integrity, intelligence and energy,” said Buffet. “But the most important is integrity, because if they don’t have that, the other two qualities, intelligence and energy, are going to kill you.”

    What if they just have a lot of energy?

  12. Posted by Anonymous | June 28, 2010 at 11:54 AM

    Everyone knows my fascination with numbers, finance, baseball, and statistics. SEC Chairwoman maybe you should look at this one. I could do the analysis and meet with your staff, but this one is too easy, hopefully you will find it.

    - Harry Markopolos

  13. Posted by Anonymous | June 28, 2010 at 11:55 AM

    @10, very funny!

  14. Posted by NakedShort | June 28, 2010 at 11:57 AM

    Look at the size of that Twizzler. The guy’s a Size King.

  15. Posted by Anonymous | June 28, 2010 at 12:00 PM

    The bottom line is if you take investing advice/ideas from Lenny Dykstra you deserve to be broke. Cramer as well, he is a hack. Enough with Gasparino, lets focus our vitriol on Cramer, he is far more dangerous

  16. Posted by Anonymous | June 28, 2010 at 12:00 PM

    Beginning in the T-ball years, one is taught to cheat successfully in the game of baseball. Is it any wonder that is migrates to other forms of industry?

    ~Mark M
    St. Louis, MO

  17. Posted by Anonymous | June 28, 2010 at 12:05 PM

    @15 Agreed, Dealbreaker should heed its true calling to become and activist website. Next we should organize meetup groups throughout the world, then coordinate a Bess-led tour/protest/march on Wall Street, and then finally a mass JO&C suicide.

  18. Posted by NakedShort | June 28, 2010 at 12:09 PM

    @17 tell me more about the logistics of the mass JO&C suicide. Consider my interest piqued.

  19. Posted by Anon | June 28, 2010 at 12:26 PM

    AVT’s got upside? Just like I heard Farrow Tech had upside? Am I too late? Buy buy buy!

  20. Posted by 17 | June 28, 2010 at 12:28 PM

    @18/NS,

    We rent out the facilities at the Best Western Convention Center Hotel Midtown (special rate of $500/night for participants) and finance it by writing protection on BP. Bess delivers the final keynote speech. This will be enough for most commenters/activists to JO&C on their own. Convention center staff will provide dry erase markers to everyone else.

    Charlie Gasparino and Dennis Kneale wait anxiously backstage for the Kool-aid distribution. Dennis Kneale is severly disappointed upon learning that no dogs are allowed into the convention center.

  21. Posted by NakedShort | June 28, 2010 at 12:40 PM

    @20 RSVP for 1

  22. Posted by OHHHHYEAAAAHHH!!! | June 28, 2010 at 12:42 PM

    i will sell you one half-chewed-by-me twizzler for $100 and an HJ…

  23. Posted by EvilBuzzard | June 28, 2010 at 1:00 PM

    Where have you gone, Joe DiMaggio?

  24. Posted by Guest | June 28, 2010 at 1:44 PM

    After reading this I think I have fibromyalgia.

  25. Posted by plang | June 28, 2010 at 2:40 PM

    dykstra is far more believable than cramer who has cost the foolish people who listen to him billions in losses….

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