MMM....... Saw this article on Guardian newspapers..Read,its very interesting;
With the current high rate of unemployment, job losses and pressing financial needs in the country, it is not surprising that the youth are embracing questionable get rich quick schemes and opportunities.
For instance, the number of Nigerians that now patronise the popular lottery games is on the increase. Some youths are also deeply involved in sport betting through such platforms as Nairabet, Merrybet and Bet9ja, among others.
It is against this backdrop that the MMM Federal Republic of Nigeria made a grand entrance into the Nigerian investment market in 2016. MMM stands for Mavrodi Mondial Moneybox and takes its name from its founders, Sergei Panteleevich Mavrodi, Vyacheslav Mavrodi, and Olga Melnikova.
The outfit was established in 1989 by these three Russian nationals, and promises its clients 30 per cent return on investment (ROI) for money put into the system for 30 days. The scheme prides itself as a mutual aid fund through which recruited members contribute money to assist others. The founders claimed they are not into banking, online business, investment company or a multi level marketing (MLM) programme. The scheme structure, however, indicates otherwise.
For instance, members can have multi-level structures under them and receive bonus from each donation of every participant in their structures.
The company has been able to persuade many Nigerians to buy into its idea. Many Nigerian big online Business coaches and entrepreneurs with vast subscriber base are encouraging their followers to key in to the MMM opportunity. Thus, some Nigerians have invested millions of Naira into this scheme and are enjoying their newfound wealth.
This reporter has seen screenshots of money many claimed to have earned from the scheme. According to one such subscriber, Babajide Abayomi, MMM ensures a level playing ground for all. And with it, people don’t have to be under the yoke of the banking system, which demands that huge interest be paid on loans. He said MMM is real and safe.
However, the question some have asked is: How long would it take to sustain the profits? Many still remember vividly the mad days of the Wonder banks in the early 2000s. Then, many lost their hard-earned money to the likes of Pennywise and such other scammers.
To really grasp the risk involved in investing in this type of scheme, a study of the founders’ backgrounds provides good insights into the viability of their outfit.
According to Wikileak, the online information library, МММ was a Russian company that perpetrated one of the world’s largest Ponzi schemes in the 1990s. By different estimates, between five and 40 million people lost up to $10b. The website said the exact figures of money lost are not known, even to the founders. The site described Sergie Mavrodi as a Russian criminal and a former deputy of the State Duma in Russia. According to it, he is the founder of the МММ series of pyramid schemes. Wikileak reported that in 2007, Mavrodi was found guilty in a Russian court of defrauding 10,000 investors out of 110m rubles ($4.3m).
Wikileak reported: “In January 2011, Mavrodi launched another pyramid scheme called MMM-2011, asking investors to buy so-called Mavro currency units. He frankly described it as a pyramid, adding, “It is a Unclad scheme, nothing more … People interact with each other and give each other money. For no reason!” Mavrodi said his goal for launching MMM-2011 is to destroy the current financial system, which he considers unfair, and form something new to take its place.
“In 2011 he launched a similar scheme in India, called MMM India, again stating clearly that the vehicle is a pyramid. He has also launched MMM in China. He was reported to be trying to expand his operations into Western Europe, Canada, and Latin America.
“In 2015, MMM began operating in South Africa with the same business model as MMM-2011, claiming a “30 percent per month” returns through a “social financial network.”
“The group was identified as a possible pyramid scheme by the National Consumer Commission and accounts of clients were later frozen by Capitec Bank.”
In January 2016, the Chinese government banned MMM on the ground that it is a pyramid scheme, (Ponzi scheme), and not registered in the country. Earlier this year, the scheme crashed in South Africa. MMM Global only gave South Africans the bad news with a post on its website saying: “We regret to inform you that we have to close down the Republic of Bitcoin. It was an experiment, and, unfortunately, it failed. We turned out not to be able to pay 100 percent per month.” Also recently, the scheme collapsed in Zimbabwe.
One of the victims, Mrs. Rosemary Mawonde was quoted by Breaking Times, saying: “We never thought the scheme would end this way, as we believed that by using EcoCash to do the transactions, things were in order. I am surprised that EcoCash is also distancing itself from the scheme and it is clear that I will never recover the $300 that I invested.”
What then is a Ponzi scheme? The scheme (also a Ponzi game or a Ponzi) is an investment operation, where the operator, an individual or organisation pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate investments. Operators of Ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent.
Initially, the promoter would pay out high returns to attract more investors, and to lure current investors into putting in additional money. Other investors would begin to participate, leading to a cascade effect. The “return” to the initial investors is paid out of the investments of new entrants, and not out of profits.
Often, the high returns encourage investors to leave their money in the scheme, with the result that the promoter does not have to pay out very much to investors; he simply has to send them statements showing how much they have earned. This maintains a semblance that the scheme is an investment with high returns.
The Securities and Exchange Commission has warned the public about the activities of the scheme on August 30 of this year. According to its website, SEC said: “The attention of the Securities and Exchange Commission, Nigeria (SEC) has been drawn to the activities of an online investment scheme, tagged ‘MMM Federal Republic of Nigeria (nigeria.). The platform has embarked on an aggressive online media campaign to lure the investing public to participate in what it called “mutual aid financial network” with a monthly investment return of 30 percent.
“The Commission hereby notifies the investing public that the operation of this investment scheme has no tangible business model, hence it’s a Ponzi Scheme, where returns are paid from other people’s invested sum. Also, the Commission does not register its operation.
“The general public is hereby advised to distance itself from this online scheme. Please note that anyone that subscribe to this illegal activity does so at his/her own risk.”
Managing Partner, Two-Edge Partners Global Limited, Olajide Alex-Oni said such scheme is usually targeted at the extremely poor, greedy and desperate people of the society.
He said: “The get rich quick scheme usually comes out looking so attractive to the populace, but like what is, it is robbing Peter to pay Paul!
“When a company encourages existing investors to invite other potential investors by rewarding them with money from these new comers, then what do you call that? Such a model is not sustainable and is a highly risky investment, because once the flow of investors and their funds stop flowing into the scheme, the investors will most definitely suffer unimaginable losses.”
Speaking on MMM operations, he said a number of countries around the world have banned this scheme and Nigeria should equally do the same. He said since SEC has warned Nigerians on the activity of this group, it is, therefore, illegal to invest in them, because their model is a typical pyramid scheme. He explained that the scheme was not licensed to operate in Nigeria, noting that its operations are online based, which can crash or get closed down unannounced. He said it’s designed to attract huge traffic and promises unconventional high returns on investment.
Speaking further, Alex-Oni warned: “People have to be careful of such schemes, because they claim to be foreign investor driven with amazing success stories, thus the attraction for the ignorant. The ignorant in this case are usually aware of the risk involved, but the greed in them let them take such risk with the hope to exit before the scheme crashes.
“It is also quite sad that in some extreme cases, some investors actually commit their entire life savings into these kinds of ponzi schemes. People should learn to get creative and innovative through hard work and smart thinking and start creating values and ideas that money will chase. That way, you may start small, but you will think big to grow big the proper way. A warning is enough for the wise.”
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