MMM Global

MMM Global (also known as МММ-2011 / МММ-2012) is a Ponzi scheme launched in 2011 by Sergei Mavrodi, with subsidiaries in up to 110 countries; it became widely popular in various African countries like South Africa, Nigeria, Zimbabwe, Kenya and Ghana with some attributing this popularity to poverty and poor government regulation or law enforcement.[1]

History

South Africa

In 2015, MMM began operating in South Africa with the same business model as MMM-2011, claiming a "30% per month" return through a "social financial network".[2] The group was identified as a possible pyramid scheme by the National Consumer Commission and accounts of clients were later frozen by Capitec Bank.[3] In response to mounting criticism and official investigations by state authorities in 2016, supporters of the South African MMM scheme staged a protest march in Johannesburg.[4] and had started up again in late November 2016.

Nigeria

In November 2015, MMM launched a website targeting the Nigerian audience, also claiming a "30% per month" return including other acquirable bonuses.[5] The entity was self-described as a "mutual aid fund where ordinary people help each other."[5] 2.4 million people had signed up by late 2016, with the country's unemployed as primary targets.[5] Nigeria's Economic and Financial Crimes Commission confirmed that it was monitoring the scheme.[6]

On December 13, shortly after celebrating its first anniversary amid a festive mood from some members, MMM Nigeria announced the freezing of all members' accounts due to what it called "systems overload and the negative attention brought on by the Government and mass media".[7] This led to wide spread panic in the nation and even attempted suicides.[8] On December 14, LASEMA (Lagos State Emergency Management Agency) of Lagos State pleaded with Lagosians to dial their emergency number if they spot anyone trying to commit suicide. LASEMA took this action due to the number of suicides MMM caused in Russia[9]

In 2017, the Redeemed Christian Church of God (RCCG) in Nigeria warned all members against participating in MMM[10] It was said that some RCCG church pastors were promoters of the scheme from the beginning more than one year ago when MMM made its entry.[11] By January 2017, hundreds of other similar Ponzi schemes jumped into the ever-widening Ponzi industry in Nigeria, amid reports that MMM had crashed in December 2016. Some of these schemes include ABCDonor, Twinkas, Ultimate Cycler etc., with rates offered soaring anything up to 200%.[12][13][14] All these imitators seek to outdo MMM Nigeria by offering extremely generous rates, creating a cascading effect on the sector.

MMM Nigeria reopened on January 13, 2017, but has been plagued by grievances from participants concerning delayed or unfulfilled payments. This has been attributed to spiraling fear sweeping amongst participants, some of whom have moved to new Ponzi schemes.[15]

On February 11, 2017, MMM Nigeria announced the lifting of withdrawal limits on the 2017 mavro (i.e. mavros paid for in 2017 could be withdrawn without limits) while no specific limit for 2016 mavro was stated.[16]

This aimed to encourage new participants to enter, giving old members some assurance of getting back their money. However, this has not allayed the fears of some old members especially after MMM told them that to get back their pre-2017 money they should add new money and the more money they add the better the chances of recovering their old money. In its tweet releases, MMM claimed that programmers will be working towards implementing the release of 3x the amount paid in as new contribution from the old mavros. The tweets however don't say when this will be done.

MMM Nigeria has made some charity and humanitarian donations to the Nigeria Society like donations to internally displaced people's camps and hospitalized patients,[17] but critics hold that this is a stunt to regain credibility after disappointing existing investors whose money got stuck in the scheme. This strategy of image-cleaning, according to critics, seeks to hoodwink and attract new unsuspecting recruits and use their money to pay off the stranded existing investors.

Ponzi schemes rely on new contributions to pay existing contributors which make them unreliable since it cannot continue attracting new contributions forever in the required numbers and rates (numbers which actually accelerate quickly at exponential rates with every new level of recruitment). Even if the whole population becomes participants this shows there is a limit beyond which no further recruitment is possible or recruitment begins to slow down sharply enough to cripple the scheme's paying ability. Therefore, the scheme is ultimately doomed to fail and it is only a matter of when, not if.

Some believers in MMM however adopt varying responses to critics; "After all nothing lasts forever","MMM is an insurance company without guarantee or insurance" hence sighting many public listed companies, pension/mutual funds that did not pay back anything to investors,"it is a gamble,so no guarantees", "It is a Communist ideology the capitalist won't understand".

In view of the rumored suicides of victims and financial losses to victims of up to 18 billion Naira (or $60m as of March 2017), questions have been raised why there has not been a serious media or government effort to push back against the faceless new schemes multiplying willy-nilly in Nigeria on a daily basis, as most of these barely last more than 3 months with consequent heavy distress to many. It is still not clear to many participants how the media come about the figure of losses. Many old participants still believe that all contributions were made to and fro fellow participants. hence it should not be counted as a loss as the terms of association is clear, "Mutual Donation Aid". On 22 February 2017 MMM Nigeria released a news through personal Office, that all the suggestions of the participants will be considered for implementation: all bonuses acquired in 2016 will be frozen and the growth of 2016 30% mavro stopped.

Zimbabwe

In July 2015, MMM East Africa, launched subsidiary "MMM Global Zimbabwe" targeting the Zimbabwe population. MMM offered its participants "30% per month" return on all investments.[18] It soon became widely popular in urban areas of Zimbabwe. The Reserve Bank of Zimbabwe warned its citizens to stay clear of the program as it could be a fraudulent scheme. [19] On September 2016, MMM Global Zimbabwe issued a freeze on all accounts, speculations suggest that this occurred due to a fall in number of participants. On 5 September 2016, all MMM accounts were unfrozen, and members were encouraged by MMM to continue "investing" their money, however the MMM unfreeze came with a catch; Members would get an 80% loss of their available funds should they decide to withdraw their funds.[20] This made some participants let their funds remain in the program while others withdrew their funds to suffer an 80% loss of their money "invested". [21] This affected 66,000 Zimbabweans and caused some economic instability.[22]

China

The scheme began in China in 2015 and collapsed in early 2016.[23] In January 2016, the Chinese government banned MMM on the grounds that it was a pyramid scheme and was not registered in the country (since a fraudulent scheme cannot be registered).[24]

Ghana

In November 2016, MMM was launched in Ghana.[25]

Kenya

In October 2016, it was reported that MMM entered Kenya and opened a local subsidiary. MMM Kenya offers similar terms to participants as in other countries, including a monthly 30% interest rate to contributors to the scheme.[26]

In December 2016, the Central Bank of Kenya (CBK), without mentioning MMM Kenya, issued a warning that "virtual currencies such as bitcoins are not legal tender in Kenya" It further said "no protection exists in the event that the platform that exchanges or holds the virtual currency fails or goes out of business."

The entry of MMM Kenya has raised fears of a replay of misfortunes that hit Kenyans in 2007 when 148,784 investors lost 8 billion Ksh to 270 fraudulent pyramids and ponzis. A parliamentary report indicated that there was a spate of suicides, stress-related illnesses and family breakups as a result of the losses and directors of the companies stashed some of the proceeds in tax havens such as in Panama.[27]

In April 2017, CBK warned the public against investing money in pyramids and unlicensed financial institutions, noting that there was a big comeback of new creations of pyramids. It said " “Such entities entice members of the public to place money with them and promise quick and abnormally high returns on their money or acquisition of non-existent properties.”

Brazil

In December 2015, it was reported that MMM entered Brazil and opened a local subsidiary. MMM Brazil offers similar terms to participants as in other countries, including a monthly interest rate of 50% for contributors to the scheme.[28]

Other countries

MMM has also been reported to been operating in several other countries until 2016, such as India[29] Thailand, Philippines, Japan, Australia, Turkey[30] and Indonesia.[31]

See also

References
  1. "MMM Global: Russian 'Ponzi scheme' from 1990s reborn and now 'spreading like wildfire' in Africa". September 27, 2016. Archived from the original on December 19, 2016. Retrieved December 16, 2016.
  2. "Russian fraudster hits S Africans - IOL News". Archived from the original on 2016-03-12.
  3. "Russian 'Ponzi scheme' raises fraud flags at SA bank". Archived from the original on 2016-04-02.
  4. "MMM is here to stay, say marching 'Mavrodians' | IOL". IOL. Archived from the original on 2016-04-29. Retrieved 2016-04-28.
  5. Kazeem, Yomi (2016-11-18). "Millions of Nigerians are falling for a 27-year old Russian Ponzi scheme". Quartz Africa. Archived from the original on 2016-11-24. Retrieved 2016-11-24.
  6. Azubuike, Victor (2016-11-15). "MMM under surveillance – EFCC". Daily Post. Archived from the original on 2016-11-24. Retrieved 2016-11-24.
  7. "Nigerians groan as MMM suspends further payments to subscribers". December 13, 2016. Archived from the original on December 14, 2016. Retrieved December 13, 2016.
  8. "Man drinks insecticide as MMM 'crashes' two weeks to wedding". December 14, 2016. Archived from the original on December 13, 2016. Retrieved December 14, 2016.
  9. "LASEMA sends out emergency number as suicide fears increase". December 14, 2016. Archived from the original on December 13, 2016. Retrieved December 14, 2016.
  10. "RCCG warns Pastors, members against participating in MMM, other ponzi schemes - Vanguard News". Vanguard News. 2017-01-24. Archived from the original on 2017-01-24. Retrieved 2017-01-25.
  11. http://www.financialwatchngr.com/2016/10/31/outrage-rccg-induce-church-members-register-mmm-nigeria/%7Ctitle=Outrage as RCCG Induce Church Members to register for MMM Nigeria
  12. "#Twinkas, another #Ponzi scheme emerges - News Agency of Nigeria (NAN)". News Agency of Nigeria (NAN). 2017-01-21. Archived from the original on 2017-01-24. Retrieved 2017-01-25.
  13. PageOne (2017-02-16). "AbcDonor ponzi scam is same of the same". PageOne.ng. Archived from the original on 2017-02-22. Retrieved 2017-02-21.
  14. Abimboye, Michael. "Forget MMM, these 5 Ponzi schemes are the new deal". Naij.com - Nigeria news. Archived from the original on 2017-02-22. Retrieved 2017-02-21.
  15. "MMM Nigeria reopens 24 hours before promised date". January 13, 2017.
  16. http://www.vanguardngr.com/2017/02/mmm-nigeria-coming-back-normal/%7Ctitle= MMM nigeria coming back to normal
  17. "MMM Nigeria Goes Into Charitable Activities, Donates Relief Materials Worth N5m To IDPs". November 19, 2016.
  18. "About MMM Global Zimbabwe". August 26, 2016. Archived from the original on December 20, 2016. Retrieved December 15, 2016.
  19. "RBZ issues stern warning against participating in Ponzi/Pyramid schemes, points finger at MMM Global Zimbabwe for misleading the public!". August 30, 2016. Archived from the original on December 20, 2016. Retrieved December 16, 2016.
  20. "MMM Zimbabwe Froze Withdrawals, Old Members Lost 80% Of Funds". September 16, 2016. Archived from the original on December 20, 2016. Retrieved December 16, 2016.
  21. "MMM reacts to public scrutiny, re-opens accounts, existing members lose 80% of their money". September 6, 2016. Archived from the original on December 20, 2016. Retrieved December 15, 2016.
  22. "66,000 Zimbabweans affected by MMM Zimbabwe collapse". October 3, 2016. Archived from the original on December 20, 2016. Retrieved December 15, 2016.
  23. "MMM China collapses, govt issues warning". behindmlm.com. Archived from the original on 2017-08-27.
  24. "Gov't Warns Public about Websites Running 'Ponzi Schemes'..._英文频道_手机财新网". m.english.caixin.com. Archived from the original on 2016-09-21. Retrieved 2016-08-24.
  25. Kazeem, Yomi. "After suspending operations in Nigeria, a controversial Russian Ponzi scheme has set up in Ghana". Quartz. Archived from the original on 2017-02-02. Retrieved 2017-01-25.
  26. http://www.nation.co.ke/news/Russian-fraudster-sets-up-pyramid-scheme-in-Kenya/1056-3428676-mksht9/%7Ctitle= Russian fraudster sets up pyramid scheme in Kenya
  27. http://www.nation.co.ke/news/1056-3146138-73v4hsz/index.html%7Ctitle=How the masterminds of pyramid schemes duped thousands into parting with their money
  28. "MMM Brasil o que é? Como funciona?". 3 August 2017. Archived from the original on 13 August 2017.
  29. "MMM India scam: Couple arrested for multi-crore fraud". Times of India. Archived from the original on 2016-12-16.
  30. Egorova, Kira (25 January 2017). "How the Mavrodi financial pyramid scheme operates in Asia and India". Archived from the original on 24 July 2017.
  31. Intan Sari, Novita (16 April 2015). "MMM ditutup OJK, bagaimana nasib uang 'nasabahnya'? (MMM shut down by OJK, what would happen to its investors' money?)". Merdeka.com (in Indonesian). Retrieved 12 September 2020.
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