Similarities in Madoff fraud case and a local one

John G. Bennett Jr. got out of prison in March. He had served almost 11 years for what authorities said was the biggest charity fraud ever.

"That's history; it's over," Bennett, now 71, said yesterday from his old home in Phoenixville, declining to discuss the Ponzi scheme for which he was sentenced in 1997. "I have a new life."

Reminders of his case have come up in light of what federal authorities in New York claim was a scheme by financier Bernard Madoff to defraud investment clients of $50 billion.

Bennett never handled as much money, not even close. But his pyramid-style methods of gathering funds were apparently similar.

Promising to return double for donations made to his Foundation for New Era Philanthropy, Bennett collected $354 million from a long list of churches, colleges and cultural institutions.

As federal authorities say Madoff did, Bennett paid his early contributors with part of the cash he got from the Johnny-come-latelys.

When the scheme collapsed in 1995, the latecomers were out $100 million.

Bennett, who pleaded no-contest to charges of fraud, tax evasion and money laundering, always said he was only trying to do good for the charities that were his clients.

"I think his attitude is that he never knew he was doing harm to other people," said Peter Goldberger, an Ardmore attorney who represented Bennett. "He came to see that wasn't true, and he felt very badly about it. He devoted himself in prison to helping other people."

Bennett is now back with his wife, who waited for him, Goldberger said.

"He served his whole sentence, and it was a long sentence," Goldberger said. "We tried many ways to get it shortened, but it didn't work out for him."

Goldberger said he saw one similarity in Bennett's case and what has been alleged as Madoff's conduct. That was in the targeting of affinity groups.

Bennett, an evangelical Christian, enrolled many like-minded people as clients. Madoff, who is Jewish, is said to have defrauded many Jewish individuals and organizations.

"If what I'm reading [of the Madoff case] is accurate, then people were trusting sums of money in part on a religious identification," Goldberger said. "And now they are disappointed that they trusted on that basis, rather than asking more questions on how that money was being handled and where it came from."

Federal authorities don't yet know where much of the Madoff cash went.

Arlin M. Adams, a Philadelphia attorney who was appointed by a judge to look for the lost money in the Bennett case, said that about 95 percent of it was eventually recovered.

He said that many of the early donors to the New Era foundation - the ones who reaped big returns - became convinced that it was right for them ethically to give back some proceeds.

Speaking of evangelical groups, in particular, Adams said: "They felt it was almost a religious duty to do the right thing."

He said it was important for all kinds of organizations that continue to raise money to appear on the right side of the issue.

In Philadelphia, Adams said, fund recipients that returned New Era money included the University of Pennsylvania, the Franklin Institute Science Museum, the Academy of Natural Sciences and the Philadelphia Orchestra.

Bennett himself was required to give up $1.5 million in personal assets, which amounted to almost all that he had.

Adams said that, like Goldberger, he was surprised at how easily so many people gave up so much money - in both the Bennett and Madoff cases.

"Both of the stories were amazing," he said. "But the New Era case was infinitely smaller."

Adams said that, over the years, he had come to like Bennett and has seen him since he got out of a minimum-security lockup at Fort Dix.

"This guy Madoff is a different kettle of fish," he said. "I think Jack Bennett was just misled, a deeply religious guy who thought he was doing the work of God."