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Plea changed to no contest in charity fraud

The charismatic head of a failed foundation pleaded no contest Wednesday to bilking museums, universities and other non-profit groups of more than $100-million in the biggest charity fraud in U.S. history.

John G. Bennett Jr., 59, who promised contributors they could double their money through his Foundation for New Era Philanthropy, withdrew his innocent plea and said he would not challenge all 82 money laundering and fraud counts against him.

Bennett had planned to argue that a personality disorder and brain damage from two car accidents turned him into a religious zealot who did not believe his scheme was wrong. But a judge restricted use of that defense. If he wins an appeal of that decision, he will be allowed to withdraw his plea.

Bennett, who said in court he is undergoing psychiatric treatment and takes the antidepressant Prozac, is free on bail pending his sentencing June 26. He faces up to 907 years in prison and $28-million in fines.

Bennett founded New Era in 1989 and persuaded hundreds of charities to invest $354-million over the years. The foundation collapsed in May 1995.

Prosecutors said Bennett operated what amounted to a pyramid scheme, promising contributors he would double their money in six months with matching funds from anonymous benefactors who did not exist. They also accused him of diverting $5.7-million to his own use.

Philanthropists as prominent as Laurance Rockefeller also invested under the belief the foundation would match their donations and forward the money to the investors' favorite charities.

The collapse of the Radnor, Pa., organization affected groups ranging from small religious organizations to the United Way of Southeastern Pennsylvania, which lost $1.9-million.

In November, the bankruptcy case stemming from New Era's failure moved closer to being resolved when Prudential Securities, Bennett's security broker, agreed to pay $18-million to settle four lawsuits filed by dozens of non-profit groups.

Under a separate settlement approved by a bankruptcy judge in August, groups that made money or were given grants by New Era agreed to return their profits to groups that lost money.