New Era Philanthropy - Notorious Frauds and Schemes

New Era - Same Con

One of the all-time monster frauds was the Ponzi scheme which revolved around the Foundation for New Era Philanthropy. Drawn by the promoter's charismatic personality, his Christian evangelism and promise of doubling donors' money within six months, hundreds of religious, educational, cultural and charitable organizations gave more than $551 million to the foundation.

And for a time, groups actually did get two dollars back for every buck they put in. Jack Bennett used the money from later contributors to pay the earlier ones double what they put in. But he couldn't keep doing that indefinitely. When he couldn't meet the margin calls on his account used to buy U.S. Treasury bills, that is, repay the loans, Prudential checked out New Era.

Determining it to be a Ponzi scheme Prudential closed down New Eras credit line, bringing on the foundation's collapse and his subsequent arrest and indictment on 82 counts of fraud, money laundering and tax code violations. His impassioned pleas for forgiveness were accompanied with the excuse that he was simply poor at management and administrative duties. The fact that no mysterious benefactors existed to fund the payoffs was not mentioned.

It was only the goodness and charity of the earlier recipients who, after forming a coalition to undo the harm, returned their gains which allowed latter participants to recover about 90% of their potential losses.