| Hundreds
of charities and philanthropic donors were shocked
when they saw the front page of the Philadelphia
Inquirer on the morning
of May 16, 1995. The headlines read, “A
bankruptcy shakes world of charities.” The newspaper
article referred to the criminal investigation of John
G. Bennett, Jr. and his operation of the Foundation
for New Era Philanthropy.
Bennett had raised over $354 million from 1,400 donors
and generated fraudulent losses— calculated after
the return of funds from early recipients—of $135
million.
At the time of the collapse of New Era, it was considered
to be the largest financial scandal in the history
of American charities.
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New
Era logo and letterhead used on promotional documents
|
Bennett’s scheme started in 1989 as an attempt
to cover a bank kite. He used the original charitable
donations he solicited from philanthropists to cover
a series of bad checks he had written. He soon began
offering individual benefactors a chance to double
their gifts to charity. The funds to double their charitable
contributions allegedly came from a group of wealthy “anonymous
donors.” Bennett named the program New Concepts
in Philanthropy. Later in the scheme, ministry groups,
churches, colleges, museums, and small and major non-profit
organizations were also told that their funds would be
matched by the anonymous donors and returned after a
three-to-nine month holding period in a “semi-escrow” Prudential
Securities account. It was eventually revealed the anonymous
donors never existed and New Era was nothing more than
a nationwide Ponzi scheme in which Bennett paid original
investors with money from later investors and covered
shortfalls with his credit line. Bennett claimed brain
damage from a car accident had pushed his devout Christianity
into a state of “unchecked religious fervor” and
caused him to commit the crimes.
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Bennett’s
mug shot and New Era offices in Radnor, Pennsylvania |
On September 27, 1996, Bennett was charged in an 82
count indictment with mail fraud, wire fraud, bank
fraud, false statements to the government, filing false
tax returns, and money laundering. He pleaded no contest
and turned over $1.5 million of the approximately $7.7
million he had siphoned from New Era funds and used
for personal expenditures. He was sentenced to serve
12 years in prison.
Philadelphia home
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