Lenny Dykstra’s Sherwood Country Club estate sells at foreclosure auction

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More than a year and half has passed since Jeff Smith of Index Investors dreamed of taking possession of former pro baseball player Lenny Dykstra’s Sherwood Country Club estate.

Index Investors, a private equity firm, had loaned the financially troubled Dykstra about $600,000 to fix his jet’s engine. When Dykstra defaulted on his mortgage payments, Index sought to gain control of the 6-1/2-acre estate at the foreclosure sale to recoup their money.

“I’m ready to be the proud owner of the property on July 9,” Smith told The Times in an e-mail in summer 2009 about the compound that Dykstra purchased in 2007 from hockey legend Wayne Gretzky for $18.5 million, including some furnishings. “It’s an unbelievably beautiful estate.... I’m so excited I haven’t been able to sleep.”

But a lot happened on the journey to get the keys.

Dykstra filed for Chapter 11 bankruptcy protection, derailing the scheduled foreclosure auction. Chapter 11 evolved into Chapter 7. A trustee was appointed. Fixtures and appliances were removed from the main house as Dykstra filed a water damage claim with his insurer. The 12,713-square-foot mansion, once considered the crown jewel of the Sherwood development, fell into disrepair. The trustee put the house on the market but neglected to turn on the water and the once-manicured lawns turned brown.

The property, at one point listed at $25 million, was most recently priced at $9,999,000.

The opening bid Wednesday was $767,000. Index plans to work with Chase, which still holds a $12-million first mortgage, to fix up the property and resell it. Smith could not disclose what he paid for the property but in addition to his bid, Index is on the hook for the $12 million owed to Chase plus missed payments and taxes believed to total close to $13.5 million.

--Lauren Beale

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