August 1 1995

ARTICLE TOOLS

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Nonprofits take aim at securities firm.

Many ministries that trusted the Pennsylvania-based Foundation for New Era Philanthropy to double their money in six months have become shrewd financial managers themselves amid the legal maneuvering to recoup the millions lost in the alleged pyramid scheme.

Just weeks after Prudential Securities, which served as New Era's investments broker, sued to seize $44 million in secured loans made to New Era's founder, John G. Bennett, Jr., several ministries now are firing back at the giant firm.

Three of them (the Rescue Mission Alliance of Syracuse, New York; Sacred Works, Inc., of Lakeland, Florida; and philanthropist Wesley Skinner, also of Lakeland) in June filed a class-action suit against Prudential Securities to recoup more than triple the $1.7 million that they jointly lost to New Era.

The suit claims Prudential received money in escrow from charities and "wrongfully used those funds for unauthorized matters such as payment of credit cards, auto rentals, hotel stays, art purchases, and other activities" of New Era and Bennett.

It claims Prudential Securities fraudulently kept secret that charities' funds were not held in separate escrow accounts but rather were lumped together in one New Era account accessible by Bennett.

"Documentation uncovered since New Era filed for bankruptcy establishes that Prudential . . . and its employees acted inappropriately in using our funds to cover the exposure they had through their dealings with New Era and John Bennett," says John Benjamin Carroll, attorney for the three ministries.

Prudential Securities spokesperson Charles Perkins told ct the suit holds no merit. "I sympathize with the groups that were victimized by Mr. Bennett, but their grievances ...