Now we know the financial bubble is really over

I guess that when Jim Cramer called Lenny Dykstra a natural in a segment done byh Bernard Goldberg, that should have been our first clue:

Now it seems that the House of Nails was a house of cards:

The house of cards finally came down Wednesday on former New York Mets and Philadelphia Phillies centre fielder Lenny Dykstra.

For those who aren't familiar, Dykstra parlayed a successful car wash chain into a career as a supposed stock-picking wizard — touted by CNBC's own embattled guru Jim Cramer — and started a much talked about magazine for pro athletes (The Players Club), before one business associate after another started noticing that Lenny wasn't actually paying for anything.

Dykstra filed for Chapter 11 bankruptcy on Wednesday. The filing claims he has assets of no more than US$50,000 while claiming debts of between $10-million to $50-million. There are estimates that the actual figure is much closer to the latter.

I admit it: I was one of those people charmed by the Lenny Dykstra saga. You have to realize what it was like to be a 4'10" person in 1986 and watching this little fireplug of a guy play his heart out for the then-cocky, swaggering, fun-to-watch Mets. That Lenny Dykstra, who stayed married to his first wife and never struck anyone as being the sharpest knife in the drawer, should find a second career as a financial genius, had a certain Capra-esque charm that was very seductive. Many of us wanted to believe the Cinderella story of Lenny Dykstra. But like much of the events of the last eight years, it was a ll a mirage, and Dykstra instead of being a Capra hero, appears to have been more of a mini-Madoff:

Just in the past two years, Dykstra has been the subject of at least 24 legal actions, including 18 since November. Three suits hit the courts on Jan. 29. He's been sued by publishers and print companies, by three different groups of pilots and by a Maryland-based financial and litigation consulting firm that offered expert testimony on his behalf in an earlier lawsuit. He's even been sued by a die-hard Mets fan who was the best man at his wedding 20-some years ago, though that New York investor claims there is no bad blood.

One of the angry souls is Dr. Festus Dada, a Nigerian-born gastric bypass specialist, who filed a fraud/breach of contract suit and alleges Dykstra kept a $500,000 deposit after a deal fell apart to purchase a Southern California car wash and retail center then owned by Dykstra. Dada walked away from the transaction, claiming in the suit that Dykstra had made significant changes to the final escrow agreement, including the insertion of a five-year contract for Dykstra's old Phillies teammate, Pete Incaviglia, to serve as general manager under the new ownership.

"We had a closing date, but the good doctor thought there were no rules in this country," says Dykstra, pointing out that Dada himself has been a defendant in dozens of civil suits since 2000. "You'll see a laundry list [of suits], dude. OK, so much for Dr. Dada's credibility, huh?"

Dada's side of the story, not surprisingly, is different. He suggests the ex-ballplayer set out to rip him off, saying he believes Dykstra was desperate for cash and rushed to close on the $27.5 million deal within 30 days. Dada's attorneys say the property was so encumbered by liens that it was impossible to close so quickly.

"He thought he could keep my $500,000 and nobody would have the resources to go after him," Dada says. "But in this case, I am going after him. General surgeons are not intimidated by professional athletes.

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Two Players Club vice presidents filed claims for unpaid wages after they quit in January. The Minneapolis-based firm hired to design his Players Club Web site alleges Dykstra stiffed it on a $1 million contract, and then bounced two separate $125,000 checks.

In a particularly curious hunt for cash, Dykstra borrowed $250,000 from New York literary agent David Vigliano last May with an agreement to repay him $300,000 in November -- a robust 40 percent annual percentage rate. Vigliano filed suit after Dykstra didn't come up with the money.

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Even members of Dykstra's family are lined up on the list of those to whom he owes money. His older brother, Brian, has yet to collect a $12,000 judgment awarded by the California Labor Relations Board. His younger brother, Kevin, alleges Dykstra cheated him out of $4 million on the sale of the family-run car washes, though Kevin hasn't filed suit.

On April 16, Terri, Dykstra's wife of more than 20 years and the mother of their three boys, filed for divorce. Through her attorney, she declined to comment for this story.

The family rift runs so deep that until recently, Dykstra had spoken to his mother only once in the past three years, according to his brothers, and wasn't allowing her any contact with his sons, her grand children.

Last month, though, on March 23, Dykstra picked up the phone and woke up his mother with a call at around 6 in the morning, according to Kevin Dykstra, his younger brother. Lenny was stranded in Cleveland. He wanted to charter a jet so he could get to a business meeting on the West Coast, and his credit cards were maxed out. He needed nearly $23,000 and asked his mother for it, Kevin says.

His mother agreed to let him use her credit card.

Kevin Dykstra says she has yet to be repaid.