TOO GOOD TO BE TRUE

Philanthropist Laurance S. Rockefeller believed in John G. Bennett Jr. So did singer Pat Boone, Philadelphia Mayor Edward Rendell and former Treasury Secretary William E. Simon, as well as an array of institutions ranging from the University of Pennsylvania to the Nature Conservancy to the National Museum of American Jewish History.

Albert Meyer, an accounting professor at Spring Arbor College in Michigan, did not believe in Bennett, however, and therein lies the tale of how an elaborate Ponzi scheme came unraveled, leaving Philadelphia, Wall Street and the cozy world of nonprofit organizations reeling in embarrassment.

Bennett, 57, is chief executive officer of the Foundation for New Era Philanthropy, a charity based in Radnor, Pennsylvania, which he began in 1989. A former drug-program administrator who advised nonprofits on management and fund-raising techniques, Bennett became a popular and influential figure in Philadelphia's philanthropic and cultural circles, thanks in part to the prayer breakfasts he often held. New Era soon became the answer to a lot of prayers: Bennett promised the organizations and individuals he approached a 100% return on their contributions within six months, thanks to anonymous donors who would match their gifts. New Era would keep only the interest earned during the search. It sounded too good to be true, especially since the mysterious benefactors were known only to Bennett. But when he delivered on his early promises, the news spread and investments in New Era increased exponentially; last year it rivaled the Rockefeller Foundation in its largesse (total: $100 million). Cathryn Coate, executive director of the Greater Philadelphia Cultural Alliance, says, "The word on the street was that Bennett was a super credible man, impeccable. You'd hear things like, 'Oh, I've known Bennett for 15 years.' It's not like a bunch of quick-fix guys duped a bunch of bozos."

Bennett was only doing what Charles Ponzi did in Boston back in 1919, paying back one wave of investors with money he received from ensuing waves. Like Ponzi, Bennett was something of a civic hero for a while, and like Ponzi, he was careful not to draw attention to himself with a flamboyant life-style.

Meyer, a 44-year-old South African who taught at one of the Christian colleges that gave funds to Bennett, became skeptical after reading a letter out-lining the matching fund-raising offer. He discovered New Era was not actually registered as a foundation. Then he wrote to the Internal Revenue Service office in Philadelphia, requesting New Era's return. He didn't like what he saw, so Meyer took his concerns to college administrators. "I was told it's tough raising funds, and they didn't need my meddling."

At that point, Meyer called Bennett directly. "He seemed bewildered and flustered," says Meyer. "He wasn't a smooth talker. There was an 'aw, shucks' atmosphere to it all. At the end of our conversation, when I put down the phone, I actually liked the guy." But when New Era tried to pressure the college into silencing Meyer, the professor sent letters detailing his suspicions to the Securities and Exchange Commission, the irs, the U.S. Attorney General's office and finally the Wall Street Journal.