U. downplays New Era

Generally when things appear to be to good to be true, they are. And the University, like the 300 other organizations that stand to loose millions from the Foundation for New Era Philanthropy "ponzi" scheme, have also learned their lesson. Currently the University has a total of $1,550,000 invested in New Era, according to a letter written by Vice President for Development and Alumni Relations Virginia Clark to alumni over the Alumni Weekend. The $1,550,000 is awaiting matching funds, which the University will never see since New Era filed for bankruptcy on May 15. Although the University, stands to loose over $1 million, compared to other institutions, the University sustained little damage. The University did not even appear on a list of New Era's twenty largest creditors. "From the beginning, it was clearly recognized that the New Era program was out of the ordinary," Clark wrote in the letter. "On a continuing basis, the University reviewed the foundation's track record with other institutions, its tax returns and available financial statements. "The experience of other institutions was quite positive," she added in the letter. "Even so, Penn's involvement was strictly limited – as was intended." In a new development, the Philadelphia Inquirer reported on Sunday that some of the money meant for charity went to the family of the organization's founder, John Bennett Jr. Bennett loaned his daughter and future son in law $227,000 less than a month before the bankruptcy so they could buy a new home, the newspaper said. And Bennett owned a $57,000 Lexus and took home about $27,000 a week this year in consultant fees, money that was earmarked for charity. New Era, which is based in Radnor, Pennsylvania, and has offices in London and Hong Kong, promoted itself as an innovative new charity capable of doubling nonprofit institutions' money by soliciting matching funds from a pool of anonymous wealthy donors who supposedly relied on the charity to find worthy causes. Along with the University, thousands of nonprofit organizations deposited their money with New Era, which said it would hold the funds for six months in brokerage accounts – rather than in escrow – and claimed to be investing it in certificates of deposit or treasury bills while finding matching donors. But according to New Era's attorneys, Bennett admitted to his staff that the anonymous wealthy donors, which were supposed to act as the source of funds for the charity, do not really exist. Bankruptcy Trustee John Carroll III verified last week that the anonymous donors never existed, estimating that the foundation had debts of $175 million to $200 million and assets of $30 million. The Pennsylvania Attorney General Office, the U.S. Attorney's Office in Philadelphia and the U.S. Securities and Exchange Commission are now investigation whether New Era is anything more than an elaborate pyramid scheme. Pyramid or "Ponzi" schemes promise victims huge returns on their investments and produce the illusion of financial success by paying off early investors with the money donated by later victims. The scheme eventually collapses when no more investors can be found – or the operator disappears with the pooled funds.

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