At Spring Arbor College, they used to call Prof. Albert Meyer an alarmist. Today, he is something of a hero for his persistent efforts at questioning the now-bankrupt dealings of the Foundation for New Era Philanthropy.

A professor of accounting at Spring Arbor College, Meyer became concerned when the college began channeling large sums to a charity that promised to double those contributions in less than a year. When Meyer voiced his concerns to officials at Spring Arbor, in Michigan, and other Christian organizations funneling sums into the Radnor, Pennsylvania-based Foundation for New Era Philanthropy, "They said, 'You're biting the hand that feeds us,' " Meyer says.

Now that New Era has gone belly-up, and those groups-like the dozens of others that sent funds to New Era-stand to lose millions, they may wish they had listened more carefully.

Last month, in a move that sent shock waves through the nonprofit community, New Era's chairman, John G. Bennett, Jr., announced to his board that a pool of anonymous donors, ostensibly the source of tens of millions of dollars in matching grants, did not exist. On May 15, the group filed for bankruptcy, listing $551 million in liabilities and $80 million in assets. The next blow came when the Securities and Exchange Commission accused New Era of selling unregistered securities and Bennett of diverting at least $4.2 million from New Era donors to companies under his control.

Law enforcement officials are calling New Era's matching grants program a Ponzi scheme, an illegal business practice in which initial investments are paid off with extremely high returns, using the contributions of later investors. The scheme may continue to pyramid until there is insufficient new money coming in, ...

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