How could they be so gullible?

The individuals who believed that the Foundation for New Era Philanthropy outside Philadelphia was going to double their money in six months included former treasury secretary William E. Simon, who gave the foundation $6.5 million, and Laurance S. Rockefeller, who gave $11.3 million.

The nonprofits that entrusted their money to be matched included the Nature Conservancy in Arlington, the University of Pennsylvania and numerous small Christian colleges.

The matching money would come from seven wealthy donors who wished to do good works but remain anonymous, New Era's president, John G. Bennett Jr., told them. The list of donors' names was so secret that Bennett said he kept it in a safe-deposit box.

But the safe-deposit box was empty and Bennett's organization was a giant Ponzi scheme, according to investigators. Yesterday, a federal bankruptcy judge ordered New Era, with assets of $80 million and liabilities of $550 million, liquidated. That may mean hard times, or even extinction, for some charities and universities that had placed money with New Era. Some were so tempted by the promises of matching funds that they borrowed the money to give New Era, and have nothing to show for it but their debt.

Bennett insisted that institutions seeking money, and individuals who wanted New Era to double their charitable contributions, had to turn the money they wanted matched over to New Era. A brochure that one institution received explained, "that's the way the anonymous donors want it." Bennett told others who expected matching funds that he needed to invest their money so that his organization could use the interest for operating expenses.

The New Era founder, a former drug counselor, was accused of fraud by the Securities and Exchange Commission this week. He has an unlisted phone number and could not be reached, but has said that he was not involved in any wrongdoing. His attorney did not return telephone calls yesterday.

The New Era case is just one in a long line of deals in which people or institutions who wanted to make big money fast were clobbered by their own lack of skepticism. Americans lost about $100 billion to white-collar fraud last year, according to government estimates.

One longtime investigator of securities fraud was mystified: "Why can this happen and happen on such a scale to people who should know better? You can only sit dumbfounded."

But others said the answer is simple -- simple greed that makes people trust when they should not.

After all, it's the American dream to get rich without work. That's why there are so many state lotteries, even though the players are 13 times more likely to be struck by lightning than to win, say the experts.

"We are gullible creatures," said Philip Feigin, Colorado securities commissioner. "We like to trust. Perhaps more so in America. We are risk-takers. It's part of our frontier spirit."

And those who think big institutions or money managers are too smart to be taken are wrong.

"I can cite case after case after case of financial planners and attorneys and dentists and university presidents, very astute people," being taken in schemes, said W. Steve Albrecht, director of the school of accounting at Brigham Young University.

Two universities called Albrecht within the last six months asking him to check out New Era for them. A large public university and a smaller, private one each wanted to put several million dollars from their endowments into New Era, which promised to double the money with matching donations in six months, he said.

One university took Albrecht's advice. The other did not. Albrecht declined to name them.

In addition to the organizations that gave money to New Era expecting matching grants, about 150 individuals -- people such as Simon, Rockefeller, potato chip heir James S. Herr and lumber magnate C. Davis Weyerhauser -- donated money. They were expecting their money to be matched by the anonymous donors and given to worthy causes.

Among the biggest losers who participated with New Era, according to bankruptcy documents, are Lancaster Bible College in Lancaster, Pa., which may be owed $16.9 million; Young Life International Service Center in Colorado Springs, $11 million, and Glenn Blossom of Dresher, Pa., a Baptist minister who raised money through his church and a seminary, who is listed as a creditor who's owed $27.5 million.

"They're obviously not smart and sophisticated at all or they wouldn't have fallen for such an obvious scam," said John Shockey, a special assistant at the Office of the Comptroller of the Currency, of both the individuals and institutions involved with New Era. He was contacted by several potential investors and warned them off. "The red flags were so rampant they were red flares. There ought to be a lot of red faces."

Among the red flags: Bennett ran New Era virtually alone. There were no audited financial statements. The donors were anonymous. The references were all word of mouth. And you could double your money.

"Preposterous," said Shockey. "These wise and rich people should have known you can't double your money unless it's a Ponzi scheme or money-laundering."

The Coalition for Christian Colleges and Universities, a Washington-based association of 90 Christian colleges and universities, was one of the groups that took a chance with Bennett's group. The association itself put $250,000 into New Era, while 14 of its member institutions contributed $20 million to $30 million, according to an estimate by Bob Andringa, president of the coalition.

"I don't know of any {colleges} that were dependent on this program for operating expenses," Andringa said. "None of the presidents I've talked to have suggested that this puts them at risk for survival."

One of the reasons Andringa and university presidents felt comfortable with New Era was that there were so many important people associated with it, he said. He heard about New Era at a dinner in California, where he was seated next to Weyerhauser and his wife, who had given money to it.

"I told him I was the new president of the association and he said we should look into New Era," Andringa said. Later, Weyerhauser agreed to nominate the coalition for a matching grant.

"We were told we were one of the last to be accepted in the program," Andringa said. "We felt very fortunate to get in."

One local organization that came out well in the New Era scheme was Charles Colson's Washington-based Prison Fellowship Ministries. Colson and Bennett met in October, and Bennett offered Colson's group the matching funds deal.

But the chief financial officer and board of the Prison Fellowship Ministries was suspicious, according to Paul Edwards, senior vice president for development of the group, which ministers to prisoners, ex-prisoners and their families.

"Our board of directors said, You can't get something for nothing. This is too good to be true,' " Edwards said. "We were also worried about these anonymous donors. Bennett wouldn't tell us who they were. What if they were Colombian drug lords?"

What was even more troubling for the board was that they would be taking money given to them by their donors and placing it in someone else's hands.

So Colson's board turned Bennett down flat.

Bennett, surprised, came back with a counter-offer. Prison Fellowship could set up their own escrow account, so they'd be in control of the money, and New Era would still match it.

Colson's group raised $500,000, which it put in six-month certificates of deposit. New Era was to match it on July 15. Although it won't get the matching funds, it has lost no money.

The giant Arlington-based Nature Conservancy, which received total support of $237 million in 1994 to help it protect plants and animals, had given $2 million to New Era with the understanding that it would be in a segregated account.

John C. Sawhill, former deputy energy secretary and now president of the conservancy, said yesterday that his organization thought it had taken every possible precaution. It investigated New Era's programs, talked to 10 prominent institutions, including the University of Pennsylvania, that had been involved with them, visited New Era's offices, asked for their IRS forms and financial statements, and talked to Prudential Securities Inc. and the bank where New Era had accounts. Today, they're scratching their heads. "We're really asking ourselves what else we could have done," said spokesman Larry Carpman.