Sergey Mavrodi is the founder of the Mavrodi Mondial Moneybox, popularly known as the MMM financial pyramid scheme that has suddenly become viral in Africa. The former politician and fraudster is the author of a banned book titled ‘Temptation’ in Moscow and is known to have initiated the scheme that left millions bankrupt in the 1990s AFP/Getty in Russia before being convicted. The estimated loss at that time summed up to $100 million USD.
However, of recent, this scheme has subtly been reintroduced to several parts of Africa including South Africa, Zimbabwe, Nigeria and some east African countries. The MMM Global investment scheme promises returns on investment of 30% a month. Although members claim that this scheme is quite straightforward and absolutely transparent, most government authorities condemn and disclaim such schemes.
The case of Zimbabwe is somewhat pathetic. The country is currently facing an economic crisis that affected its financial institutions and this led several to seek solace in the MMM Global as an investment, which was not influenced by the government. Sometime in September 2016, it was reported that thousands of investors were alleged to have lost their money after a pyramid scheme masterminded by the Russian fraudster had crashed.
Amidst warnings from the RBZ (Reserve Bank of Zimbabwe) which publicized vivid analyses of the scheme as a fraudulent one in which existing investors were “paid money not from genuine market investment of their funds, but from contributions made by new investors, until a point when the scheme can no longer attract new investors”; many individuals took the plunge.
Unfortunately, it got to a time when subscribers were reportedly unable to withdraw their funds and the waiting elongated beyond expectation. Quoting one of the victims, he said, “What it simply means is that the number of people in need of help has outnumbered the number of people joining. Right now we have nowhere to get our money which we invested.”
The subtle approach to this scheme is that they claim to provide a platform where new members get help by paying a fee to join whilst older members can cash out after a stipulated period and thereby qualify for bonuses based on their referrals. These cash-outs and assistance are real bank transactions, which hit the beneficiary’s account directly.
Apparently, MMM Global is not the only scheme of its kind. The same Mavrodi went into hiding after masterminding another recently failed ‘Republic of Bitcoin’ which also got liquidated in April this year.
The recent failures of MMM Global in Zimbabwe immediately sparked off a governmental criminal investigation into its South African office. Now, most banks in South Africa and Zimbabwe as well as some mobile money transfer companies like EcoCash have put up measures to curb the scheme and discourage further enrollments by shutting down accounts suspected to be involved in such schemes. EcoCash has issued a disclaimer on any loss resulting from engaging in illegalities such as the Ponzi schemes.
Cautionary tales of Zimbabwe and South Africa and even the original MMM scheme, notwithstanding, a branch is still thriving in Nigeria. The Central Bank of Nigeria, like every other country, has intervened and cautioned patronisers of the dangers of investing into any organisation that is not authorized by the Government via the Nigeria Deposit Insurance Company (NDIC).
Yet, MMM Global subscribers across Africa have continued to advocate its legitimacy and even publish proofs of cash-out by posting their bank payment slips. They maintain that it is a donation programme which connects the needy to their helpers thereby building a continued process of assistance for each member; a virtual community of mutual helpers.
The end, they say, justifies the means. More investors are still pouring in funds and it is still unknown at what point the pyramid would freeze or collapse in Nigeria but at the moment, the subscribers have high hopes of spending the holidays flamboyantly in spite of the pending recession.
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