New Era charity founder pleads no contest to charges of fraud

John Bennett's New Era secured more than $354 million from investors. The man behind the infamous Foundation for New Era Philanthropy, John Bennett, has pleaded no contest to charges that he duped institutions into expecting to double their investments in the charity. From its inception in 1989 to its bankruptcy in 1995, New Era acquired more than $354 million from over 500 institutional investors, including Penn, the Philadelphia Orchestra, the Franklin Institute and many other colleges and universities. Bennett promised to recoup and double the initial investment from a pool of money that supposedly came from anonymous donors. But these donors never existed, and New Era only repaid a small portion of its investors. Although the University was one of the organizations that profited from the pyramid, or "Ponzi," scheme, the terms of a July 1996 settlement with New Era and its members forced officials to return the $2.4 million windfall. University officials said last July that the payback did not affect students because the money came from the schools rather than from tuition dollars. And University spokesperson Ken Wildes said this weekend that Penn has had no involvement in this matter since last summer's settlement. "My recollection is that the University -- like many other organizations -- settled," Wildes said, adding that the agreement was a final exit from the scandal. The University's settlement money went to the investors that were severely hurt by the scheme. Some small colleges and religious organizations invested nearly all their available savings in the scam -- losing everything when the foundation collapsed. Bennett, a religious zealot, promoted New Era as an innovative new charity that would double institutions' investments by soliciting matching funds from a pool of anonymous philanthropic donors. The foundation was based in Radnor, Pa., and boasted offices in London and Hong Kong. But like the anonymous donors, these offices were fictions. Bennett's plea, filed last Wednesday, allows him to fight the 82 counts of fraud, money-laundering and tax evasions in trial. Bennett's defense relies on the claim that he was motivated by "unchecked religious fervor" and not greed. He said that because he was moved by God, he saw nothing improper in the scheme of promising investors money from a pool of donors who did not exist. His no-contest plea is legally equivalent to a guilty plea. He is scheduled to be sentenced June 26.

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