October 27 1997

ARTICLE TOOLS

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John G. Bennett, Jr., head of the bankrupt Foundation for New Era Philanthropy, has been sentenced to 12 years in federal prison for carrying out what experts believe is the biggest charity fraud case in American history.

On September 22, Federal Judge Edmund V. Ludwig in Philadelphia sentenced Bennett, 60, to prison for 82 counts of fraud and related charges. He had pleaded "no contest" to the charges and is expected to appeal the judge's ruling.

The judge handed down the prison term after an intense week of testimony during the sentencing hearing in which an emotional Bennett testified under oath for the first time (see "Bennett Confesses 'Dream' Became 'Delusion,'" p. 90).

Bennett defrauded donors and charities of $135 million by means of a pyramid scheme. Under the ruse, Bennett promised to double the amount of a donor's gift in six months with funds from anonymous wealthy benefactors. But in reality, Bennett used incoming donations to pay off his outstanding double-your-money pledges, all the while diverting substantial amounts to personal use and his for-profit companies.

RELIGIOUS FERVOR DEFENSE: Pyramid schemes demand an ever-accelerating cash flow. When it collapsed in May 1995, New Era was liable for hundreds of millions of dollars (CT, June 19, 1995, p. 40). The scandal touched 1,100 individuals and charities, including more than 180 evangelical groups, colleges, and seminaries.

Bennett's defense team says he was driven not by criminal intent but by unrestrained "religious fervor," a defense strategy the judge did not allow.

More than $354 million passed through New Era's hands. Bennett siphoned off at least $5 million for personal use and $3 million for support of his for-profit companies, court documents reveal.

The ...