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Book Claims Lenny Dykstra Received Secretly Issued Stock In Exchange For Recommendation

Jun 28, 2010, 4:30 PM UTC

Correction: According to TheStreet.com, Dykstra’s newsletter was never purchased by the site. TheStreet.com published the newsletter and split the revenue from it with Dykstra.
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â†µLenny Dykstra’s meteoric rise and precipitous fall as a post-baseball financial adviser has been well chronicled. He presently finds himself in bankruptcy, wrangling with the courts over how best to satisfy creditors’ claims. Now, however, comes an allegation that could land the former star in a situation that is somehow worse than destitution.â†µ

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â†µâ†µAccording to a new book by The Daily Beast’s Randall Lane, the retired ballplayer received $250,000 in secretly issued stock so that he would brazenly recommend Automated Vending Technologies, a then little-known stock referred to as ATV, in his regular column at Jim Cramer’s website, TheStreet.com. Lane also alleges that Dykstra promised the company access to Cramer in exchange for the stock. â†µ

â†µâ†µThe book, “The Zeroes, My Misadventures in the Decade Wall Street Went Insane”, puts forth the idea that Cramer was entirely responsible for Dykstra’s post-career status as a financial expert. Lane says, however, that Cramer was likely unaware of Dykstra’s secretly issued stock arrangement, which might soon lead to an ATV investigation by the Securities and Exchange Commission.â†µ

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â†µCramer, as many were later, was duped by Dykstra's status and bullish alacrity to make a name for himself. Lane goes on to recount how in 2007 Dykstra sent him an unsolicited proposition, much as he did in 2005 with Cramer to begin a career at TheStreet.com, to have Lane's publishing company, Doubledown Media, produce The Player's Club, Dykstra's now failed financial advice magazine for professional athletes. Lane proceeds to explain how Dykstra then used the publishing company's money to produce a personal financial newsletter that he later sold for millions to TheStreet.com (see above correction) without compensating Doubledown.â†µ

â†µâ†µWhile the extensive damage has already been done to Dykstra’s attempted career in finance, his relationship with Cramer stands to damage the Mad Money host, who for years, according to the book, was the only reason anyone paid attention to Nails’ recommendations. That he was willing to betray his benefactor will be as bad as the reneging on business deals.â†µ

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This post originally appeared on the Sporting Blog. For more, see The Sporting Blog Archives.

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