Nailing the Dude: Criminal Prosecution of Sports Heroes

At the end of last week, news reports carried the story of the indictment of baseball legend Lenny "Nails" aka the "Dude" Dykstra (pic) the former Mets and Phillies outfielder.  With Dykstra batting in the lead-off spot, the 1986 Mets coasted to the division crown, outlasting the Phillies by 21 games, en route to a 108–54 season. The Mets made it to the World Series after a hard-fought victory over the National League West Champs Houston Astros in the NLCS.  Dykstra will forever be remembered for his walk off home run in Game 3, which is considered one of the biggest hits in Mets franchise history and the definitive moment of Dykstra's career. Dykstra would bat .304 in the 1986 NLCS and later hit .296 in the World Series against the BoSox. However, it was Dykstra's lead off home run in Game 3 of the World Series at Fenway that served as the spark for a Mets team that had fallen behind 2 games to none.  Following Dykstra's home run, the Mets rallied to defeat the Red Sox in seven games in one of the most memorable World Series of all time.

Dykstra went onto to a brilliant career with the Mets and then the Phillies retiring in 1996 except for a Spring Training comeback abandoned in 1998.  Off the field, Dykstra's business acumen and personal conduct repeatedly brought him to the attention of the authorities.  He was arrested by U.S. Marshals and it is said that he'll be prosecuted by the feds for bankruptcy fraud.  This is the LA Times account:

"Former baseball star Lenny Dykstra was indicted by a federal grand jury Friday on charges including bankruptcy fraud and obstruction of justice, for allegedly sneaking away more than $400,000 in property that should have gone to his creditors, then lying about it under oath.  Dykstra, 48, a former Mets and Phillies outfielder known to his fans by the nickname “Nails,” is accused of stealing, hiding and destroying items such as chandeliers, artwork, sconces and sports memorabilia about himself from his $18-million Ventura County mansion, according to the indictment.  He later filed declarations under oath and lied in bankruptcy court about having received money from selling off the items, the indictment alleged.

Dykstra’s attorney, Mark Werksman, accused the government late Friday of 'using an indictment to punish a debtor,' and said the criminal charges were 'heavy-handed and overbearing.  This is payback by the U.S. government to Lenny Dykstra’s resistance to the trustee’s dismantling of his property and assets in the bankruptcy,'  Werksman said. 'When all the facts come out, we’ll show that Mr. Dykstra acted in good faith and behaved properly.'

If convicted of all 13 counts in the indictment, Dykstra could face a maximum of 80 years in prison, according to the U.S. attorney’s office.  Dykstra, who fashioned himself as a financial guru and entrepreneur after retiring from his baseball career, filed for bankruptcy protection in July 2009 when business ventures started failing and debt began piling up. He was soon pushed into court-ordered liquidation by his creditors.

Bankruptcy trustee Peter C. Anderson called Dykstra’s alleged crimes 'an egregious abuse of the bankruptcy system,' and said they would 'not be tolerated,'  according to a statement released by prosecutors. Dykstra’s bankruptcy case remains pending."
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Lance in Maglia Rosa

 As many followers of this blawg know, the Bad Lawyer is an avid fan of professional road cycling and an amateur cyclist himself.  The Giro d' Italia (tour of Italy) began it's 3 week round-about Italy.  I follow this wonderful bike race every year--until realtime coverage came along online, I ordered VHS tapes, and subsequently DVDs (usually arriving months after the race was complete.)  But the delay to see this race, even when the outcome was known was almost always be worth the wait.  In recent years each edition of the Giro featured some drug or cheating scandal effecting the outcome and careers of the participants and race teams.  I believe I wrote about the cheating scandals and ultimately the premature death of the great Italian cyclist, Marco Pantani, Il Pirata.

Largely because of the astounding physical demands on the cyclist, professional bicycle racing is the breeding-ground for all sorts of cheating.  Now, with the confession of cycling cheat and liar, Floyd Landis, many of us who follow cycling are waiting for the indictment (or, perhaps the decision not to pursue charges) against Lance Armstrong.  Some well-placed observers believe that federal charges of wire and mail fraud are imminent.  Allegations against Armstrong relate to hundreds of millions of dollars perhaps involving his ubiquitous Livestrong Cancer foundation  with its iconic rubber yellow bracelet.  The bottom line is the accusation that Lance Armstrong was a "doper," fraud, and perjurer--that millions of dollars changed hands from sponsors and insurance carriers relying on the material representation that Armstrong rode clean. 



Prosecutions of our sports heroes fall into several categories.  There are the offenses connected to the sports performance:  "blood doping" or steroids.  There's sports betting, for example Pete Rose.  Recently there are revelations of sports cheating, gambling and fixing in Sumo wrestling and international cricket matches.  Then there are the non-sports offenses which can be neatly divided into criminal conduct during the playing years and criminal conduct after retirement.  In addition to the drunken and drug-fueled episodes,  there's domestic violence, and sexual misconduct.   Then, there are the financial crimes in which we see guys like Art Schlichter, and now Lenny Dykstra. 

Sports gives men and women who have little else that they can agree on, something to talk about without killing one another.  Until recent years it was possible to follow sports without wishing you had a law degree or lawyer on retainer to explain it all to you.  Well, maybe we should dig into this a little more.  Barry Bonds, Lenny Dykstra, Floyd and Lance....there's just so much to mull over.  Here's is a category of law awash in testosterone and greed--it's almost as bad as politics.

Let's talk sports!

Call Pavilack Today!

Reporter David Wren at the Myrtle Beach Sun reports on the local personal injury lawyer caught in Titanic debt.  The lawyer Harry Pavilack is also one of the regions big time advertisers.  He is reportedly causing major headaches for creditors and bankruptcy examiners trying to assess what remains of assets.  In one remarkable moment described by reporter Wren, Pavilack who was being examined by the bankruptcy investigator in Pavilack's office.  Attorney Pavilack goes "off the record" to collect nearly a million dollars he hid in an office closet.

Wren's original story is quite detailed and is presented below, in excerpt:

"Harry Pavilack - the Myrtle Beach lawyer perhaps best-known for his television commercials and billboards urging potential clients to Call Pavilack Today!' - is $72.5 million in debt and is facing allegations in bankruptcy court that he could be hoarding cash and hiding assets from creditors, court records show. The allegations were raised in a report last week by George DuRant, a court-appointed examiner from Columbia who said Pavilack has been taking cash out of his corporations, transferring some of his assets to relatives and friends and opening bank accounts in Peru.

Pavilack, 70, initially told The Sun News he would schedule an interview through his lawyer, William McCarthy of Columbia. Pavilack did not schedule the interview and McCarthy did not respond to requests for comment.  Court records show a Myrtle Beach attorney well known for his television commercials and highway billboards is almost $73 million in debt. 
[Bankruptcy examiner] DuRant, in his report, said Pavilack has been conducting mainly cash transactions since February 'in order to frustrate the collection efforts of a creditor.'

That creditor is Shaul and Meir Levy, the owners of the Wings beachwear stores, according to court records. The Levys obtained a $2.5 million judgment against Pavilack and others this year over a failed condominium project.  Pavilack - who has refused to say how much cash he has on hand, according to DuRant's report - handed the examiner three stashes of cash totaling $1.1 million this month after another court-appointed investigator stressed to Pavilack the importance of disclosing assets.

Pavilack retrieved one of those stashes - totaling $994,400 - from the closet in his law office, DuRant said. DuRant told The Sun News that he did not want to comment on his investigation. 'The report will have to speak for itself,' he said.  In his report, DuRant said Pavilack's financial records are in such disarray that it might be impossible to determine how much money exists and where it all is.

Among the problems, according to DuRant's review of 39 general ledgers for Pavilack's businesses: Deposits and withdrawals are incomplete, inaccurate and lack documentation; asset transfers between Pavilack and the entities he controls are poorly documented and remain unaccounted for; real estate transfers are not recorded; and at least $3 million in certificates of deposit have been unaccounted for since the end of 2007. In addition, a court-appointed accountant said she is not able to complete Pavilack's 2009 personal tax return because 'his income and expenses could not be determined,' the report states.  'At this stage, it is impossible for the examiner to determine if the cash turned over to date is all or only a portion of the total amount of cash held by [Pavilack],' DuRant said in his report.

'Unfortunately, the trail for [Pavilack's] cash transactions is cold, and accurately reconstructing the trail from [Pavilack's] memory and from third parties seems a pipe dream,' DuRant stated.
Pavilack - a W.Va. native who grew up in Pittsburgh and earned his law degree in 1966 at the University of South Carolina - initially estimated that he had assets totaling $50,000 or less, according to a bankruptcy court petition he filed in September.  Less than two months later - after disclosing at least some of the cash he was holding to the examiner - Pavilack filed another court document showing about $8.9 million in assets.

Those assets include a condominium in New York City; two homes in Myrtle Beach, one along the oceanfront and another along the Intracoastal Waterway; and eight automobiles, including three Bentleys and a Lexus. Although Pavilack's vocation was the law, property records and court documents show he also was one of this area's most prolific real estate investors.

Pavilack says in court documents that he owes about $72.5 million to creditors, most of it mortgages and personal guaranties on real estate loans. DuRant estimates that Pavilack has created more than 60 corporations that own more than 400 homes, commercial buildings and real estate parcels in at least six states.  Some of those corporations are empty shells that have no purpose other than to provide an entity for a bank account, DuRant said." [ . . . ]
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Do not screw around with the bankruptcy court.  Pavilack's retrieval of the $994K from his closet during his bankruptcy deposition is documented acknowledgement of fraud.  He's screwed.

By the way, my take on this story is that Pavilack was running a classic "legal services brokerage," while actually trying to make and protect his real estate fortune.  Things must have been rockin' for him for a long time--that is, until the real estate market collapsed.  I wonder what culpability the creditors had in terms of due diligence prior to making he loans that provided the structure for this house of cards?