What is Bankruptcy Fraud, and How Can I Avoid Becoming Lenny Dykstra?

Former major league slugger and touted stock picking guru Lenny Dykstra fell on hard financial times after a number of his business ventures began to fail. Like many entrepreneurs in the later half of the past decade, Lenny filed for bankruptcy.

For many individuals, filing bankruptcy allows for a "new start." Unfortunately for the former Met and Phillie, the trouble that plagued him during much of his playing and post-playing career also followed him into bankruptcy. The center fielder nicknamed "Nails" for his tough style of play was arrested on charges of bankruptcy fraud after his bankruptcy trustee's claim that Dykstra improperly removed, sold, and destroyed property that was part of his bankruptcy estate.

Bankruptcy fraud is when a debtor falsely claims bankruptcy, attempts to conceal his assets, launches petition mills (schemes that claim to help financially-strapped tenants from eviction), or files multiple claims in different states. It is a felony, and carries a sentence of up to $250,000 and/or five years in prison.

The lesson here is... well... don't do that. It is important to understand that bankruptcy trustees can, and often do, investigate into the truth of someone's bankruptcy petitions. If they find something that they believe was deceitful, your bankruptcy petition could be denied, and you could face criminal charges. Be sure to disclose everything to your bankruptcy attorney.

If you would like more information about how to best prepare for bankruptcy, contact Attorney Matthew Trask or call 508.655.5980 to schedule a one-hour consultation.