Bonus: The Foundation (New Era Philanthropy)
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They bribed government officials
to clear violations of decades of state law and ethical.
And my return isn't money like it is in the profit-making world.
My return as a grant maker is your ability to impact the needs of people.
The Foundation for New Era Philanthropy was founded in 1989 by John G.
Bennett Jr., a former high school chemistry teacher, turned to drug counselor, who had become a successful consultant and businessman.
He was also a well-liked and upstanding member of the Christian community in the greater Philadelphia area, reportedly giving generously and regularly to various charitable causes.
Such philanthropy spawned the idea for what would become John Bennett's most famous brainchild.
The Foundation for New Era Philanthropy was built specifically for people like him, kind-hearted Christians who wanted to do good with their excess money, but in a less traditional way.
It was a new era, after all.
Here's how the foundation worked.
Bennett initially approached the people close to him, friends, colleagues, business and religious associates, and made them an offer.
Instead of giving money directly to a charity, he convinced them to give it to his new foundation, which would double their gift in three months before donating it to the charity of their choice.
For the philanthropic donors, this seemed like a no-brainer.
Giving twice the amount of money is, well, twice is good.
But how?
Money doesn't double in three months, unless you believe in miracles.
Apparently, John G.
Bennett Jr.
was a miracle worker.
He claimed anonymous, deep-pocketed benefactors would match the donations no matter the amount.
But why?
Couldn't these anonymous benefactors simply donate wherever, whenever, and however much they'd like on their own accord?
Sure, but according to Bennett, there was sound reasoning for funneling the funds through his foundation.
Giving only half of a large donation would help keep the anonymous donors well, anonymous, which would prevent charities from relying on their generosity year after year.
Plus, it limits their risk and negative publicity if something went terribly wrong.
And the private sector does not want to take too many risks and fund the wrong thing, because they sure don't want to see their name in the newspaper as having funded some organizations involved in fraud.
Okay, but why would the foundation need to hold the money for three months if they're just matching it?
That seems unnecessary, doesn't it?
John Bennett had a simple explanation for that, too.
Holding the funds bought time for due diligence, like an escrow account when purchasing a house.
It would also allow the foundation to pay for itself.
Overhead costs and administrative fees would be covered with the interest generated by the donations during that waiting period.
Makes sense, I guess, but the details were mostly irrelevant anyway, because John G.
Bennett Jr.'s reputation was the true secret sauce here.
People trusted him because they knew him to be trustworthy.
And sometimes, that's all it takes.
People loved John Bennett.
He had lots of friends, lots of people who respected him and admired him.
And
the people that came into this had the previous successes to look at.
Those successes validated everything that he was saying to them.
In the fall of 1989, the Foundation for New Era Philanthropy received its first round of donations, a series of $5,000 checks from people Bennett knew personally.
And as promised, the anonymous donors matched the funds.
Three months later, in January 1990, the foundation paid out $10,000 to various charities.
Everyone was thrilled, from his friends who gave money to the charities that received it.
With the successful matching of funds, the good word spread, and the pathway was set for more money to roll in.
And so it did.
People lined up to hand over the donations.
It's amazing.
Anybody who's significant in the evangelical community has been involved in this thing, said an accountant with several clients who gave money to New Era.
The foundation continued to match funds on time, like clockwork.
Churchgoers who donated small amounts, whatever they could afford, were eager to double their gifts.
Meanwhile, wealthy Christians and larger organizations lined up to join New Era in more substantial ways, some even offering to be those anonymous fund-matching donors.
Philadelphia's Esperanza Health Clinic entrusted $236,000 much-needed dollars to the Foundation for New Era Philanthropy and its charismatic president, John Bennett Jr.
The clinic got double its money back.
We've had nothing but the finest of relationships with New Era.
They've been very generous to us.
Even William Simon, who served as Secretary of the Treasury for Richard Nixon and Gerald Ford, was impressed by Bennett's work.
He too wanted to contribute anonymously and had deep pockets.
But the Foundation for New Era Philanthropy never returned his call.
Was New Era doing so well that they didn't have time to respond to wealthy wannabe investors?
Or was there another reason to keep a former cabinet secretary at arms length?
Turns out, the Foundation for New Era Philanthropy had a big secret to keep.
Those rich, anonymous donation-matching benefactors, they didn't actually exist.
John G.
Bennett himself was the anonymous donor, and he was doubling the early donors' money with the new money that rolled in.
The Foundation for New Era Philanthropy was a classic, unsustainable Ponzi scheme.
The New Era Foundation convinced charities charities to give it money, saying it would use that money to raise even more from wealthy benefactors who wished to remain anonymous.
The promise was that any charity that donated money would get double its money back.
But the allegation is there never were any anonymous donors, that it was a pyramid scheme.
John Bennett's foundation was a godsend for nonprofit organizations who were accustomed to spending a great deal of time and resources on fundraising.
In time, many of those organizations grew to depend on the matching funds, even factoring the anticipated surpluses into their budgets.
New Era's mission was a resounding success.
More than $300,000 had been contributed during the Foundation's first year of operation.
Less than three years later, the amount of donations exceeded more than $40 million.
From 1989 to 1993, Bennett and New Era received some $54 million in contributions and handed out some $43 million.
The explosive growth of New Era only accelerated, ignited by a $250,000 donation by the Philadelphia Academy of Natural Sciences, which Bennett's foundation matched and paid out three months later, as guaranteed.
Word of the enormous donation ring bells around Philly.
Almost immediately, even larger organizations began contributing, including the Philadelphia Public Library, the Philadelphia Orchestra, and the University of Pennsylvania.
John Bennett needed to find new money, and fast.
He increased the minimum donation to the foundation from $5,000 to $25,000.
This allowed him to pay off previous investors who got in on the ground floor.
But this was just a short-term band-aid.
As soon as those small dollar donors cycled out, New Era would need to find another new revenue stream to match significantly larger amounts than ever before.
To buy himself more time, Bennett changed the three-month payout period to six months, then readjusted it to nine months, and again to 10 months.
This should typically be cause for concern, but everyone involved seemed to trust John G.
Bennett implicitly, and he preyed on that trust.
Besides, his foundation had been matching funds successfully for years.
Soon, the Foundation for New Era Philanthropy raised the minimum donation again to $50,000 and set strict guidelines for who would be allowed in.
In addition to putting up $50,000 or more, new investors needed to be sponsored by one of the foundation's intermediaries or application screeners.
This newly imposed exclusivity would only create more demand.
And as the operation expanded, Bennett struggled to keep a leash on things.
In January 1994, John Bennett made a shocking announcement to the public.
New Era Philanthropy was ending its money-doubling program.
Charities and churches were stunned.
What would they do without the reliable flow of money from New Era?
But they need not mourn long, for New Era rose again.
Bennett reversed course almost immediately.
Instead of ending the program, he was extending it for now.
You don't know what you've got until it's almost gone.
So now that the foundation was back without ever even leaving, money poured in faster than ever.
Joe Webb, a financial and fundraising consultant in California who works with Christian organizations, collected all the money he could find, telling the Greensboro News and Record, quote, not only did we not pull our money out, we scraped together a bunch of money and sent it in.
The fraudulent aspect of the scheme is that at some point in time,
the money from Peter to pay Paul runs out.
There's no more Peters around.
This is the spot where John Bennett found himself.
He next hired a sales force to find more Peters, offering 10% of any money raised as a commission.
This is something Charles Ponzi himself did, and it's long been seen as highly unethical for many obvious reasons.
But Bennett was scrambling.
In a move that should have set off even more alarms, New era started allowing organizations to donate to themselves while paying themselves a finder's fee.
For example, a charity would send 50 grand to the foundation minus the the 10% commission and receive 100 grand back in a few months.
I'm sorry, what?
Exactly.
It took an outsider to recognize the obvious, that none of this made sense.
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He comes across as believable,
But I didn't believe him.
Albert Meyer moved to the United States from South Africa with his wife Melanie.
He said we wanted the excitement of being in another country, but not the excitement of being in 30 minutes of traffic jams.
So they settled in Spring Arbor, a sleepy town in Michigan with a devout Christian community.
The Baptist couple felt it was the perfect place to raise their three sons, but their adjustment would not come easy.
Meyer worked as an accountant for Deloitte and Touche in South Africa, billing clients $100 an hour for the global financial firm.
In his new life in America, the land of opportunity, he made $9 an hour working as a professor in the Spring Arbor accounting department.
And I was glad to have it.
I needed the money, he told the Wall Street Journal.
Meyer also lended his expertise to help manage the college's finances.
That's how he came across one transaction in 1994 that he could not stop thinking about.
A $296,000 wire transfer to something called the Heritage of Value Foundation.
Under what circumstances would this small community college need to wire that much money?
A wire transfer suggests urgency that doesn't add up here.
A donation of that amount need not be rushed.
Meyer dug deeper.
He discovered that the Heritage of Value Foundation was another name for John Bennett's Foundation for New Era Philanthropy.
A charitable foundation using a DBA isn't necessarily cause for concern on its own.
DBAs are used for a variety of reasons, most of them legitimate.
But in this case, it seemed to hide the true name of Bennett's organization, which only made sense once Meyer dug in deeper.
He found out that Bennett hated publicity for himself and for his charity, and that was, quote, a massive red flag.
And yeah, to me, it was just Ponzi scheme right from the beginning.
Albert Meyer was brought on to help expand a college department, and now he had seemingly stumbled upon what appeared to be a massive Ponzi scheme.
But the administrators at Spring Arbor weren't as convinced.
Look, they said, waving a check of New Era's matching donations in the accountant's face, everything is fine.
Some in the administration thought I was,
you know, pushing the envelope, and they wanted to build a new library.
And here's this accounting professor who is actually
going to get us kicked out of the whole scheme.
The honorable accountant, inside of Albert Meyer, couldn't let it go.
And the more he learned, the more convinced he became that fraud was occurring and that those personally invested were blinded to it.
Meyer could sense what should have been clear to any savvy investor.
An organization like New Era would need hundreds of millions of dollars under management to do what they claimed to be doing.
The foundation turned around donations in a matter of months.
Thus, there was no way it could generate a substantial amount of interest income on those donations.
Meyer wrote to the Securities and Exchange Commission, the American Institute of Certified Public Accountants, the Internal Revenue Service, and the Philadelphia Inquirer, laying out what he felt was a clear case of a Ponzi scheme.
I was just very concerned, and
I made 200-plus phone calls to various people and the Wall Street Journal.
Nobody took me seriously.
And I wrote letters to the Attorney General and the IRS,
but nobody wanted to take me seriously.
They all blew me off, Meyer said.
Not only did they blow him off, the Inquirer ran articles praising John Bennett and New Era philanthropy.
In a front-page story, the paper described Bennett as charismatic and deeply religious, and it praised his foundation for planning to give away $150 million that year alone.
Without a hint of skepticism, the newspaper said the foundation, quote, sounds too good to be true.
Albert Meyer's head was spinning.
If Jimmy Carter can raise only $30 million for the Habitat for Humanity, how could this organization with no assets raise more than $100 million?
He later asked the New York Times rhetorically.
Meyer was obsessed with finding definitive proof.
He went back to the beginning, that $296,000 wired transfer.
Meyer called New Era and asked to see evidence that the school's money was being kept.
They told him Prudential Securities held the money.
That was Meyer's next call.
Quote, I called Prudential Securities.
They had never heard.
of the Heritage of Value Foundation.
But still, nobody seemed to care.
I spoke to so many people who said, yes, yes, yes, you might be right, but they didn't do anything because of the burden.
The SEC said its hands were tied because New Era was a non-profit.
But that didn't slow down Albert Meyer.
His wife described him as a pit bull.
He never daydreams, she said.
He's always thinking about things and working things out.
After finally securing copies of the Foundation's tax returns from the IRS, Albert Meyer was able to confirm his suspicions.
The balance sheet revealed that New Era had virtually nothing invested.
And his overheads were maybe half a million dollars a year, and he said he uses the interest to pay his overheads.
So I figured he should have about $600,000 in interest income, but he had $33,000 in income, which again confirms my notion.
If the left hand's paying the right hand.
Meyer fed this irrefutable new information to reporters around the country.
And finally, one of them picked up the ball and ran with it.
Steve Steklow of the Wall Street Journal was ready to listen.
Stecklow used his Wall Street Journal resources to follow up on Meyer's investigative work.
Like Meyer, he encountered numerous people unwilling to help him.
Some of them were downright hostile.
How dare you question this wonderful organization that's helping out so many?
You should be ashamed of yourself, he was told.
Surprisingly, the next call came from John G.
Bennett Jr.
himself.
The founder had been tipped off that the journal was investigating New Era.
Bennett offered to sit down for an interview at the New Era offices.
He teased that he might even be willing to share the names of some of the foundation's super secret anonymous donors.
So on May 10th, 1995, journalist Steve Steklow visited the New Era philanthropy offices.
What happened next has been described as, quote, pandemonium.
As soon as Steklow walked through the door, he was approached by a foundation manager who proudly proclaimed that nobody's ever lost money with New Era.
It was at that moment, Steklow recalls, that he knew Albert Meyer's hunch was correct.
And the rest of the meeting only solidified that belief.
When I started asking him about the secret group of anonymous donors who he'd promised beforehand he would tell me, he told me that he couldn't tell me who they were.
And I said, well, you promised me, you said that you would tell me, and he said, I'm sorry, I can't.
Steve Steklow and Albert Meyer were onto something huge.
In fact, immediately after that meeting, John Bennett Jr.
traveled to Washington, D.C.
and flexed his power in an attempt to put a stop to the Wall Street Journal's looming expose about his foundation.
But there was nothing he could do.
Five days after the strange office visit, on May 15th, 1995, the Wall Street Journal published Steklow's report as the first in a series of articles exposing the foundation for New Era Philanthropy's widespread Ponzi scheme.
And the world of high finance, great foundations, and charities is stunned tonight by news out of Philadelphia.
What appears to be a huge con game that dazzled some very sophisticated investors.
He told them he had wealthy anonymous donors who would match their investments and return the entire amount.
But there were no anonymous donors.
It's the biggest financial scandal ever to hit evangelicalism.
The same week that Wall Street Journal article hit, New Era Philanthropy was sued for $44 million by Prudential Securities.
The foundation had a margin loan for that amount with the company that wasn't being repaid on schedule.
Prudential made a margin call, which gave them access to New Era's finances.
It was then discovered that the foundation owed creditors more than $550 million while only holding assets worth $80 million.
The Foundation for New Era Philanthropy quickly filed for Chapter 11 bankruptcy protection.
New Era's bankruptcy filing revealed that half a billion dollars may have just evaporated in a massive pyramid scheme.
New Era is run by John Bennett Jr., a former drug counselor who said today through his lawyers that he has has done nothing wrong.
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The amount of money the Foundation for New Era Philanthropy owed was staggering.
The list of people and organizations missing money was exhausting.
The Free Library of Philadelphia, the Detroit Institute of Arts, John Brown University, Wheaton College, the University of Pennsylvania, the Juvenile Diabetes Foundation, the United Way, the Salvation Army, the American Red Cross, to name a few.
Glenn Blossom, a bishop minister who raised money through his church in Dresher, Pennsylvania, was the individual owed the most money by the Foundation.
He was out $27.6 million.
Lancaster Bible College in Pennsylvania was the organization owed the most, at $16.9 million.
Even Lawrence Rockefeller and potato chip magnate Jim Hur were missing tens of millions.
Accountants are pouring over the Foundation's books trying to determine what happened to the millions of dollars.
Money that had been the lifeblood for neighborhood social, medical, and artistic programs, which now may be shut down.
Among the biggest losers, Philadelphia's Academy of Natural Sciences, which has to raise almost $3 million a second time to fund a series of scheduled research projects.
Mercy Corps International, which sent medical supplies to Rwanda and could lose $100,000, issued a statement saying, We are shocked and saddened if these charges are proven to be true.
Well-meaning, authentic humanitarian programs geared to the neediest of people people may not now happen.
Worse than the money is the credibility issue.
We don't know how deeply our donors are going to be disillusioned with us.
I don't think we have any idea of the number yet whose money is not going to be returned to them.
Not only not doubled, but they won't get the money back at all.
More than 1,100 individuals and organizations had egg on their face, forced to explain how they ignored years of warning signs to chase money that didn't add up.
Where was the due diligence?
Rather than admit that greed clouded their judgment, dozens of religious leaders tried to justify their actions.
For instance, David K.
Winter, president of Westmount College, an evangelical liberal arts school in California, said, My theory is our heritage believes in miracles.
Bennett promised something that sounded too good to be true.
Well, for Christians, That's what a miracle is.
Doug Shaw, vice president of resource development for world relief, said with a straight-face, quote, I think that evangelicals, by and large, are giving people.
Part of the basic beliefs of evangelicals is that God is calling us to share what we have.
That's right, getting ripped off was simply divine intervention.
Or was it manifest destiny?
We are gullible creatures, Colorado Securities Commissioner Philip Figan admitted to the Washington Post.
We like to trust, perhaps more so in America.
We are risk takers.
It's part of our frontier spirit.
John Shocky, special assistant at the Office of the Comptroller of the Currency, was unwilling to let the decision makers off the hook with their absurd explanations.
Quote, they're obviously not smart and sophisticated at all, or they wouldn't have fallen for such an obvious scam.
The red flags were so rampant, they were red flares.
There ought to be a lot of red faces.
Come on, Mr.
Shocky, let's try to be a little more forgiving.
It's not like the obvious scriptors were wearing red hats or something.
Nevertheless, John Bennett would try to make amends.
Immediately upon the collapse of the foundation, I pledged my deep desire and total commitment to do whatever I could within my power and God's grace to help make the charities whole, he said in a statement released through his lawyer.
Today, I have given the trustee everything I own, literally all of my assets, for that purpose.
This was no fraud, Bennett proclaimed publicly.
This was simply an act of mismanagement.
Management was never my talent.
Administration was never my expertise.
I was at the helm when the ship sank
and should have long before attacked those weaknesses and paid attention to other needed areas of responsibility.
Please hear me when I say I never intended to hurt any one of you.
The walls were closing in for John Bennett Jr., a new era philanthropy.
The Federal Securities and Exchange Commission opened an investigation, followed quickly by the Pennsylvania Attorney General.
On May 18, 1995, the FBI raided John Bennett's home, taking cartons of evidence with them in pursuit of potential criminal charges.
The FBI learned about this case from the newspaper.
That's retired FBI agent Jerry Williams.
She talked about her experience working this case on her podcast, FBI Retired Case File Review, back in 2018.
She said the investigation revealed that John Bennett was partly telling the truth.
He was, indeed, a terrible manager.
His portfolio of businesses were treading water, and Bennett, a man in control of hundreds of millions of dollars, even resorted to kiting checks on his overdrawn bank accounts to stay afloat.
It wasn't immediately apparent that the founder was stealing money from his foundation, but he had become accustomed to the high life.
During bankruptcy proceedings in court, John G.
Bennett told a judge that he and his wife needed almost $10,000 a month to live, citing expenses that included $1,200 per month for food, $975 for telephone lines, and $70 for a cable package that included HBO.
A big taxicab confessions fan, U.S.
District Judge Anita Brody must have presumed, telling Bennett in her refusal, quote, drive a cab if you have to.
In August 1995, a $39 million settlement was approved by Judge Bruce I.
Fox of the federal bankruptcy court.
Another judge said, it may not be perfect, but it's the nearest thing to perfect.
I think we'll see.
The Evangelical Council for Financial Accountability, whatever that is, stepped up to be the savior, helping their members recoup the remaining lost funds.
The ECFA worked with member organizations to track down and return as much money as they possibly could, a Herculean task.
Per the ECFA, 90% of all money was returned to original investors.
A job well done.
Or was it?
Accountant Albert Meyer says no way, telling the Wall Street Journal, quote, that's completely wrong.
First of all, nowhere near 90% was recovered.
Secondly, why should the ECFA take credit for that?
That money was stolen property.
It had to be returned with or without the ECFA.
The ECFA was embarrassed that they did not take early warning signs signs more seriously and tried to deflect attention from that mistake.
Ultimately, an estimated $135 million of the $354 million paid to the Foundation for New Era Philanthropy was never recovered, a chunk of which apparently went to John G.
Bennett Jr.
It was determined that the humble, God-fearing man had siphoned off as much as $8 million for himself.
Court-appointed trustees say Bennett diverted some $6.5 million from charities to companies he controlled.
He paid $620,000 cash last year to buy this new home.
He loaned his daughter $227,000 to buy her own home.
As a clue to his lifestyle, last month he spent $749 for just one room service dinner at this posh London hotel.
In September 1996, the Eastern District of Pennsylvania and the Securities and Exchange Commission indicted John G.
Binnett Jr.
on 82 federal counts, including 16 counts of mail fraud, eight counts of wire fraud, 1 count of bank fraud, 1 count of false statements to the government, 3 counts of filing false tax returns, 1 count of impeding the administration of the revenue laws, 15 counts of money laundering, and 27 counts of money laundering to promote an unlawful activity.
If that weren't enough, he also broke the eighth commandment, thou shalt not steal.
John Bennett pleaded not guilty, but claimed he was unfit to stand trial since a car accident in 1984 left him brain damaged.
U.S.
Attorney Richard Goldberg, who prosecuted the case, called this strategy, quote, worthless in theory and untrue for Mr.
Bennett.
Medical exams taken in 1984 after that car accident had shown no brain damage at all.
John Bennett's immoral actions were the result of his immoral character, not a brain injury.
Bennett's team then moved on to the next line of defense that their client was on a mission from God.
and simply trying to change the world.
Bennett's lawyer claimed he was not motivated by greed, but an unchecked religious fervor.
The prosecution shot this down too.
U.S.
Attorney Goldberg pointed out that Bennett only deposited $29,000 into what he called God's account while spending millions on himself.
John G.
Bennett ultimately pleaded no contest to all the charges in March 1997, and his defense turned its attention to limiting the time he would serve.
Once again, this is Jerry Williams.
His defense was that he was delusional and that when he said he met with the anonymous donors, he meant it.
He truly believed that he held meetings with them, that he saw them, that he knew them, that he was having psychotic episodes because he truly believed they existed.
What?
You don't find that believable?
Oh, ye of little faith.
On September 22nd, 1997, John G.
Bennett Jr.
was sentenced to 12 years in federal prison.
He spent 10 years at Fort Dick's Federal Correctional Institute before being released to a halfway house.
Six months later, at 71 years old, Bennett was born again.
Quote, that's history.
It's over.
I have a new life.
Swindled is written, researched, produced, and hosted by me, a concerned citizen, with original music by Trevor Howard and additional writing and research by Jordan Rosansky.
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