New ERA: New Era's Bennett Pleads 'No Contest' to Fraud

Two weeks before his trial was to begin, Foundation for New Era Philanthropy founder John G. Bennett, Jr., pleaded no contest to 82 federal fraud charges.

Bennett's attorney claimed at the March 26 hearing that a judge's ruling against Bennett's "religious fervor" defense made it impossible for Bennett, 59, to prevail in a trial. Until New Era's abrupt demise two years ago, Bennett promoted it with double-your-money promises to hundreds of churches, charities, and foundations.

"And whose decision was it to plead nolo contendere to this 82-count indictment?," U.S. District Judge Edmund V. Ludwig asked at the Philadelphia hearing.

"It's mine, Your Honor," replied Bennett.

In March, Bennett's attorneys told Ludwig that Bennett suffered from an "unchecked religious fervor" that caused him to believe that his promise to double investors' money with matching funds from nonexistent "anonymous donors" was not fraud but his "mission from God to change the world." Defense witness Robert L. Sadoff, director of forensic psychiatry at the Hospital of the University of Pennsylvania, said Bennett, though sane, suffered from a "kingdom focus" and believed that God talks to him "telling him what he must do."

Bennett's anticipated religious fervor defense made many evangelicals uncomfortable. David Powilson of the Christian Counseling and Education Foundation in suburban Philadelphia cautioned that "the logic of Bennett's type of defense could excuse all crime."

Sadoff testified that Bennett suffered from a mixed personality disorder that involved narcissism, obsessive-compulsive behavior, and mood cycles aggravated by brain damage—which the defense said Bennett received from two auto wrecks. Martin Kelley, prosecution psychiatrist from Harvard Medical School, replied that a barrage of tests over four months showed that Bennett faked his mental illness. The judge ruled against allowing the defense's line of reasoning because it amounted to trying to argue that Bennett was both sane and insane at the same time.

The no-contest plea is the legal equivalent of a conviction, though easier to appeal than a guilty plea or jury verdict. Assistant U.S. Attorney Richard Goldberg said he believed federal guidelines would call for a 22- to 27-year sentence at Bennett's sentencing on June 26.

Bennett may appeal the judge's ruling. Gregory P. Miller, Bennett's lead attorney, had argued that the religious fervor defense is "consistent with Mr. Bennett's deep religious convictions and his unwavering intentions … to accept responsibility for any damage caused by the unfortunate collapse of New Era."

Meanwhile, in federal bankruptcy court, New Era trustee Arlin Adams announced on April 2 that a $35 million distribution to creditors would be made from money returned by charities and religious groups that profited from New Era. Last December, Adams had announced distribution of about $30 million to New Era creditors (CT, Jan. 6, 1997, p. 68). Organizations that have not returned their New Era profits will risk being sued.