Jim Cramer’s unfortunate defense of Bear Sterns was already noted in this space several months ago, but as The Daily Beast’s Randall Lane — author of the newly issued tome, ‘The Zeroes : My Misadventures In The Decade When Wall Street Went Insane‘ — points out, his association with former Met/Phillie Lenny Dykstra (above) wasn’t merely ill-advised, it was an total credibility-killer.

In the late winter of 2008, an entrepreneur named Richard O’Connor, who had become Dykstra’s favored adviser, introduced him to Shannon Illingworth, the founder of a publicly traded company called Automated Vending Technologies, or AVT, and the two quickly cut a deal. O’Connor told me that on March 25, 2008, Illingworth gave Dykstra roughly $250,000 worth of AVT stock in exchange for plugging the company on Cramer’s website, TheStreet.com, and promising to provide a personal introduction to Cramer.

O’Connor claims that Dykstra told him he knew the pay-to-plug arrangement was illegal. To avoid getting caught, O’Connor says, the former All-Star baseball player had a solution: “We can just put the stock in Keith’s name,” referring to his brother-in-law, Keith Peel.

And so it was done. O’Connor provided me copies of stock certificates showing that on March 25, 2008, Keith Peel was issued 250,000 shares of AVT stock, which traded at roughly $1 a share. “Keith didn’t know anything about it,” says O’Connor, maintaining that using Peel’s name was a way to stash the stock away from potential regulatory oversight.

The shares were held at Dykstra’s mansion, which is where O’Connor retrieved them. Just two weeks later, on June 6, 2008, Dykstra offered his premium subscribers a curious “bonus” recommendation: a plain old penny stock named AVT, “which gives investors a lot of potential upside.” Dykstra droned on endlessly about the stock, with all the conviction of a prisoner of war extolling the cause of his captors for the cameras.

Cramer, I am sure, had no knowledge of Dykstra’s “pay to plug” scheme”an arrangement that could well lead to a Securities & Exchange Commission investigation. He was just a dupe. But his relentless endorsements and promotion of the ballplayer’s stock-picking over the years must now surely rank as his most ill-conceived.

Elsewhere in the TDB article, Lane claims Cramer was warned by O’Connor of Dykstra’s pay-to-plug relationship with AVT, yet continued to allow the former NL MVP to write for The Street.com for another full year. Nor did Cramer respond to Lane’s accusations during the research for “The Zeroes”.