Mavrodi's Ponzi comeback seeks
financial apocalypse By Claire
His company once raked in millions of
dollars a day. He owned enough cash to pack
several rooms full with banknotes. He was elected
to the Russian State Duma and even attempted a run
Today, Sergei Mavrodi, the
man behind the infamous MMM financial pyramid that
cheated millions of Russians out of their savings
in the 1990s, is broke and in prison for
non-payment of a 1,000-rouble ($33) fine.
A Moscow court jailed him for five days on
March 14 after he failed to pay the fine, slapped
on him for an unspecified administrative offense.
A court representative said he faced 10
For many, the jailing of a figure seen as
Russia's biggest con man marks just another tumble
in his spectacular fall from grace. But several
years on the run and a four-and-a-half year stint
in prison have not tamed Mavrodi.
system must be destroyed' On the contrary,
the trained mathematician last year launched a new
pyramid scheme, MMM-2011, which he claims will
eventually bring down the entire global financial
"My goal is a financial
apocalypse, a destruction of the global financial
system," he told RFE/RL just hours before his
March 14 arrest. "I consider the current financial
system unfair; it's not fair that some people own
billions while others have nothing. The system
must be destroyed and something else must be built
in its place. That's precisely what I'm working
The principle behind MMM-2011 is the
same as in any Ponzi scheme - earlier investors
receive their profits from subsequent investors.
Mavrodi promises fantastic returns of 20% to 75% a
month, as well as lotteries and bonuses for
What sets this new scheme apart
is that unlike the original MMM, which was
presented as a financial institution with offices
selling vouchers bearing Mavrodi's picture, the
new version is entirely Internet-based. Investors
have their money converted into a virtual currency
called the "mavro dollar" that is supposed to
increase in value.
MMM-2011 as a "financial social network" in which
citizens give each other money.
followers The scheme is also more up-front
than its predecessor - the website warns investors
of the risks, and its founder openly admits it is
a pyramid scheme.
Mavrodi says his new
brainchild already has 20 million members, a claim
that is impossible to verify due to the scheme's
opacity. One thing is for sure: his charisma and
his efforts to portray himself as a modern-era
Robin Hood are earning him devout followers.
Aleksei Muratov, a former legislator in
the Russian city of Kursk, abandoned his political
career to devote himself exclusively to promoting
MMM-2011. He firmly believes in Mavrodi's stated
mission to bring about a new financial era.
"He isn't doing it for money," Muratov
says. "I believe that his intentions are noble.
Will he succeed? Considering the speed with which
MMM-2011 is growing, I think I will see this new
life. I think it will happen soon. Even if I go
bust, I will have invested my money in his
project, I will have supported him as a strong
Authorities reluctant to
act So far, MMM-2011 has been able to
operate largely unhindered, largely because Ponzi
schemes and financial pyramids are legal under
Russian law. And despite numerous pledges to crack
down on the pyramid after its creation in January
2011, federal authorities appear reluctant to take
Russia's financial ombudsman,
Pavel Medvedev, is one exception. He has written
to the prosecutor-general's Office but he claims
prosecutors are in no rush to look into Mavrodi's
"The prosecutor-general told
me that measures will be taken if violations are
committed," he said. "Why aren't prosecutors
acting against him? Because the
Prosecutor-General's Office is not interested, it
has a life of its own.
"If a big, big boss
gives orders then it will act, otherwise it won't
bother. It will take the trouble if there's a
serious disaster, of course, if someone is
murdered. That's its sensitivity threshold."
Medvedev doesn't believe MMM-2011 has
millions of members. If this were the case, he
says, he would long have been flooded with
complaints from defrauded investors. In his
opinion, MMM-2011 probably operates on a very
"MMM no longer exists," he
says. "What we have here is a wretched person,
Mavrodi, who has always been very active. Even in
Soviet times he traded jeans, which was a very
"Now he is idle, he
must pay the court and defrauded citizens
fantastic amounts of money, which he doesn't have,
so he can't start any business. I think he's
success Mavrodi, however, is confident of
his success and is now seeking to export MMM-2011
to Western Europe, Canada, and Latin America. His
website is currently available in 17 languages,
including English, French, Spanish, Czech, Greek,
Turkish, Swedish, and Hebrew. It also lists phone
numbers of representatives in a dozen countries.
Mavrodi says he is about to launch a
massive advertising campaign in Europe. His agents
have already been spotted in London distributing
Russian-language leaflets promoting MMM-2011. His
foray into the West, however, may prove tricky.
Russia's porous legislation and the
population's inexperience with capitalism at the
time enabled MMM to defraud millions of Russians
in the early 1990s. Western citizens,
well-seasoned in the principles of a market
economy, may prove tougher to persuade. Western
laws could also be an obstacle.
biggest prospective foreign market, the European
Union, bans all types of financial pyramids on its
territory. Running such a scheme is punishable by
a fine, a ban, and in some countries with a prison
According to Mavrodi, that's a risk
he's willing to take.
will stop me - not threats, not intimidation,
regardless of whom they come from, even from the
very top," he says.
"Of course I don't
want to go to jail. But I'm doing what I have to
do, and what will be will be."
(c) 2012, RFE/RL Inc. Reprinted with the
permission of Radio Free Europe/Radio Liberty,
1201 Connecticut Ave NW, Washington DC 20036.
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