You may want to call it one of Jim Cramer’s worst Wall Street picks.
Financial talking head Cramer has been ensnared in an alleged stock-picking scam by bankrupt Lenny Dykstra, whom he billed as one of the great minds in business.
Former Forbes bureau chief Randall Lane, in a new book “The Zeroes: My Misadventures in the Decade Wall Street Went Insane,” alleges that Dykstra — a former baseball centerfielder with the New York Mets cum Wall Street analyst — agreed to accept payment from a tiny Corona, Calif.-based vending company AVT, Inc. in exchange for touting its shares on a stock-picking newsletter published to premium subscribers on Cramer’s Web site TheStreet.com.
Such an alleged agreement runs afoul of securities law that prohibits compensation in exchange for promoting a publicly traded company’s stocks.
A former Mets and Philadelphia Phillies leadoff hitter — nicknamed “Nails” — during the 80s and 90s, Dykstra became a protégé of the boisterous “Mad Money” host on CNBC and was hired to pen a newsletter for his Web site around 2005 that charged subscribers $995 a year to receive stock advice from the former baseball player.
According to Lane’s book, Dykstra struck a behind-the-scenes agreement with AVT founder and board member Shannon Illingworth and company consultant Richard O’Connor to accept 250,000 shares in the $1 stock under the name of Dykstra’s brother in-law Keith Peel in exchange for promoting the company on Cramer’s site.
Illingworth told The Post that he denies that he made any illegal arrangements with Dykstra to market the company in his newsletter. Of Lane’s allegations, he said, “It was totally taken out of context. It’s totally wrong.”
The AVT executive told The Post that though he hoped that he could leverage Dykstra’s contacts with MLB or Wall Street, none of that ever panned out. “I actually bought into [Dykstra’s] newsletters,” said Illingworth, adding that he was a subscriber and also personally handed Dykstra $15,000 to invest, which he says has disappeared.
Although the Dykstra accusations don’t directly implicate Cramer, critics are pointing to the allegations as another sign of poor judgment by the high-profile stock-picker and Goldman Sachs trading alum. “I think Cramer owes [people] an apology,” Lane told The Post, adding that Dykstra’s newsletters on Cramer’s site boasted $1 million in sales.
Dykstra, who filed for personal bankruptcy in July 2009, still owes Lane some $200,000 related to his work on putting together a glossy magazine for the one-time All-Star called “The Players Club,” which was meant to offer financial advice to wealthy athletes.
“[Dykstra] was a cancer on everything he touched — I’m sure Cramer finally recognizes that,” Lane added.
Lane also says in the book that he believed that Cramer was unaware of Dykstra’s arrangements.
“I have no comment on the allegations made against Lenny Dykstra, other [than] to say that if true, it is very sad,” Cramer said via a spokesman. “While I have not read the book that is the source of the allegations, I can confirm as the author clearly concludes that I knew nothing about the issue,” he added.