Over the next few months, Penney rejected the proposed emergency liquidation. In a daze, he maintained the agricultural and religious philanthropy until the last dollar was gone. Still, adroit maneuvering by his attorneys and accountants managed to protract his fall over another year, during which time, of course, the market and the economy sank lower and lower until there was no way for anyone to dodge reality. And the Hard Times resonated outwardly in ever-wider concentric circles of gloom. Unless you were a civil servant, a schoolteacher, or extremely lucky, the 1930s would mark your life forever.
The banks sold out Penney, his dividend income disappearing with his stock. Almost worse , the little stiff- backed formal man that former paragon of rectitude and virtuesuffered severe damage to his personal reputation. The sensational Miami fiasco caused him to be cited for gross fiduciary negligence in bank matters, a federal court order eventually demanding that he make restitution in the amount of $1.5 million to the bank he once controlled for good works.  His misfortune was widely publicized, especially in New York, and the reactions were often sarcastic or even vicious. He was an easy target. One was likely to hear or see commentary like, "Where is Penney's ˜Golden Rule now?" or, "Does ˜The Man with 1,000 Partners have as many creditors today?" A tabloid screamed, "J. C. Penney: Deadbeat Do-Gooder!"
Now Penney was virtually broke, his spirit crushed. His bearing of polite but cool confidence changed to a look of dismay or pitiful humility . People averted their eyes when he approached.
Penney had lost their 17-room New York City co-op , the Belle Isle mansion in Miami, the farms, land, commercial property, and businesses. The great model farm cooperative in Florida disappeared, and the vast charitable endeavors ceased. The Penney family took up residence at Whitehaven, the small estate in White Plains where half the house was closed off to save expenses. Chickens were raised and vegetable gardens planted to further economize. To pay his attorneys, accountants, and modest household expenses, Penney cashed in his last available asset, an expensive insurance policy. So the possessions, position, and influence of the Penneys' former lifestyle came to an end, with trappings like cars , jewelry , servants, and club memberships vanishing into the sinkhole of the Great Depression.
 "However well-intentioned, most of the bank's directors were ˜mere dummies," said the court. Penney had loaded his board with like-minded religious and charity activists whose qualifying bank stock was actually owned by him. This put the bank in violation of national banking law requirements. The restitution was finally paid in 1943.