wfn.org | New Era Case Settlement

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"UNITED METHODIST DAILY NEWS" by SUSAN PEEK on Aug. 11, 1991 at 13:58 Eastern,
about FULL TEXT RELEASES FROM UNITED METHODIST NEWS SERVICE (3151 notes).

Note 3151 by UMNS on Sept. 5, 1996 at 16:29 Eastern (4045 characters).

SEARCH: settlement, New Era, investment, money, organizations
Produced by United Methodist News Service, official news agency of
the United Methodist Church, with offices in Nashville, Tenn., New
York, and Washington.

CONTACT: Linda Green                             437(10-71B){3151}
         Nashville, Tenn. (615) 742-5470              Sept 5, 1996

Unprecedented settlement
reached in New Era case
      
                 by United Methodist News Service

     An "unprecedented" settlement has been reached by United
Theological Seminary, Dayton, Ohio, and other non-profit
institutions against New Era Philanthropy, the Pennsylvania
charity that ran an investment scam that went bankrupt last year.
     U.S Bankruptcy Judge Bruce I. Fox approved a $39 million
settlement on Aug. 22 to allow the organizations that lost money
with New Era to receive as much as 65 cents on every dollar they
invested. Much of the money in the settlement is to come from the
hundreds of agencies and groups that received returns on their New
Era investments. 
     The Foundation for New Era Philanthropy sought investments
from schools, colleges and nonprofit institutions on the promise
investors would double their money in six-months with matching
funds from anonymous donors. New Era was charged by federal
investigators with running a Ponzi scheme -- an investment swindle
that pays off some earlier investors with money from later
investors. 
     The philanthropic organization's founder, John G. Bennett
Jr., is being investigated but no charges have been brought
against him.   New Era filed for bankruptcy protection last May
after a lawsuit demanded repayment of a $44 million loan. In
filing, the foundation stated that its assets were worth $80
million with liabilities of $551 million.
     According to wire service reports, the landmark settlement
allows institutions that lost money to New Era to get more of
their investment returned to them than normally would  be in a
bankruptcy case, and get it sooner.
     "The fact that a settlement was reached this quickly is good
news," said Janine Armitage, United's vice president of
administration and its treasurer. "We would not have been
surprised if the case had dragged on into the next millennium." 
     Rollin A Van Broekhoven, a federal-agency judge who
represented a consortium of 195 Christian groups and churches,
told Religion News Service that bankruptcy cases usually last four
to five years when settlements are not reached and that creditors
involved in the cases often receive 10 to 15 cents on every dollar
lost.  
     Broekhoven told Religion News Service that the "marvelous"
and "economically sound" and  "magnificent legal document, was
agreed to by creditors representing 80 percent of the dollars
lost. He said those who profited from New Era will save money in
the legal fees they would have incurred  through a longer process.
     Armitage said, that the case was settled after 15 months "is
a fine reflection" on the organizations and attorneys who were
able to work with the bankruptcy trustee to conclude the matter
expeditiously. "It's a miracle that it was done so quickly," she
said. "This was an extremely complex situation." 
     Although United will receive money from the New Era
bankruptcy case, its litigations are far from over. The seminary
entered a $90 million civil racketeering lawsuit last May against
Prudential Securities, the brokerage firm that handled the
accounts of the Foundation for New Era Philanthropy.
     United joined 30 other non-profit institutions to sue the
brokerage firm for "their part in perpetuating the New Era fraud,"
Armitage said.
     Prudential Securities has filed an appeal of the bankruptcy
judge's decision, delaying the process for the affected agencies,
charities and organizations to receive some money by the end of
the year.
     "We may not get a nice Christmas present," Armitage said.
"But we may get an Easter present instead."
                              #  #  #

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