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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 federal bankruptcy court has recovered more than 60 percent of the lost $135 million and through negotiation and lawsuits is attempting to recover as much as 90 percent of the money. Bennett's assets of $957,000 have also been used to reduce the losses.

The FBI has called the Foundation for New Era Philanthropy operation the largest financial scandal in the history of American charities. Nonprofit experts have made comparisons to Jim Bakker's PTL Club scandal in the late 1980s, but the New Era case entangled many more individuals and groups.

Behind every act that propelled the Foundation for New Era Philanthropy were strongly held moral and spiritual convictions. Spiritual enthusiasm led Bennett to exercise his entrepreneurial bent. It fostered the excitement of dedicated ministry leaders eager to expand their work for the cause of Christian evangelism, education, relief, and development. But New Era's failure sent a financial tidal wave across unsuspecting religious and charitable groups, devastating some ministries and weakening the bonds of trust with their donors.

In-depth interviews with dozens of individuals who knew Bennett at different times of his life revealed the hopes and aspirations that drove New Era's founder and president and showed him to be a gifted but troubled individual.

Bennett's life story bears the hallmarks of evangelical conviction, but something went terribly amiss when he moved into full-time ministry. Bennett still asserts that he never stole anything, and he says he retains a sincere Christian faith.

MODEST BEGINNINGS: Bennett was born in 1937 in Olney, just north of Philadelphia's business center. His Presbyterian father, who had a penchant for cigars and whiskey, struggled for survival in the midst of the Great Depression as a laundry-truck driver and part-time door-to-door insurance peddler.

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October 27 1997, Vol. 41, No. 12