You Can't Cheat an Honest Man - James Walsh [110]
I sympathize with the charities that have invested their people’s money with the foundation. They were victimized. They were victimized in a very sophisticated scheme that took in some of the most sophisticated financial investors in the country, people like Lawrence Rockefeller and William Simon, but I think that they should be directing their anger at the people who are responsible, which is the foundation and Jack Bennett.
In August 1996, the bankruptcy judge presiding over the New Era case approved a partial settlement—with the understanding that the lawsuit against Prudential would continue. The brokerage began negotiating a settlement.
In March 1997, facing 82 criminal counts of fraud, filing false tax returns and related offenses, Bennett pleaded nolo contendere and turned his focus toward convincing the federal judge hearing his case to be lenient.
In an ill-advised move, he tried to argue that, having grown up in povery with an alcoholic father, he had a delusional mental disorder which limited his responsibility for his actions. Aside from outraging burned New Era investors, this tactic had little effect.
In September, he was sentenced to twelve years in prison.
This satisified some of participants. As one group had written the court: “...the tremendous negative impact of Mr. Bennett’s actions on hundreds of non-profit organizations...and on the image of those associated with philanthropy in general warrants severe punishment.”
Contrary to this sentiment, some of the most observant of the people affected by the New Era debacle doubted that the non-profit sector would recognize another Ponzi scheme—if it were executed as carefully as New Era.
“It’s hard to say what everybody learned,” said Kathryn Coates of the Greater Philadelphia Cultural Alliance. “There weren’t any groups that participated in this that didn’t check [Bennett] out thoroughly. So I don’t know what’s changed. What else do you do? The only recourse is that, if you feel nervous about something, don’t do it.”
In the wake of New Era’s collpase, the Pennsylvania Joint State Government Commission considered changing state laws regulating NFPs. But it concluded...rightly...that the laws weren’t the problem:
[New Era] continued as long as it did due to the combination of its ostensible performance as promised, exceptional references, inadequate regulatory and enforcement efforts, and careless practices by boards of directors or some of the contributors....
CHAPTER 17
Chapter 17: www.ponzischeme.com
The Internet is undoubtedly a commercial marketplace, which means it attracts gamblers, hustlers, Ponzi perps and other crooks.
“We are seeing a number of pyramid schemes taking to the Internet,” says Andrew Kandel of the New York State Attorney General’s Office. “One of the reasons this poses a particular problem for regulators is that they can reach an increasingly large number of people.” “[We’ve] established an Internet surveillance program.”
For most of the people who turn to the Internet for business or personal reasons, it is a useful tool for sending and collecting information. Some people get more intensely involved, however, spending long hours communicating with other people.
This split approach to Internet use is part of the reason that the thing has been such a challenge to businesses looking for commercial applications. The technology exists to buy and sell just about everything on the net. But only a few people trust it enough to use it to the full capacity.
“The comparison you keep hearing is to VCRs,” says an executive for a big West Coast Internet Access Provider. “Though a lot of people in this business don’t like the comparison.”
What he’s talking about is the familiar—and partly true—story that the application which made video cassette machines truly