Mmm

Ponzi scheme

Joint stock company "MMM"

Native name	Акционерное общество «МММ»
Industry	Role Equipment importer (1989-early 1990s) Ponzi Scheme initiator (1992 onwards)
Founded	1989
Founder	Sergei Mavrodi
Defunct	2004
Fate	Close downwardly by Russian police in 1994, declared bankruptcy in 1997, reopened in 2011 every bit MMM Global
Headquarters	Russia
Key people	Sergei Mavrodi

МММ was a Russian company that perpetrated ane of the world'southward largest Ponzi schemes of all fourth dimension, in the 1990s.^{[one] [2]} By dissimilar estimates from 5 to 10 one thousand thousand people lost their savings.^[3] According to contemporary Western press reports, most investors were aware of the fraudulent nature of the scheme, but still hoped to turn a profit from it by withdrawing coin before it collapsed.^{[iv] [5]}

In 2011, MMM re-opened as "MMM Global".

History [edit]

MMM was established in 1989 past Sergei Mavrodi,^[ii] his brother Vyacheslav Mavrodi, and Olga Melnikova. The proper noun of the company was taken from the first messages of the three founders' surnames.

Initially, Mavrodi operated a network of computer-importing cooperatives.^[6] In Jan 1992, tax law accused MMM of tax evasion, leading to the collapse of MMM's internal bank, and causing the company to take difficulty obtaining financing to support its operations.^[7] Faced with difficulties in funding its foreign trade, the visitor switched to the financial sector. Information technology offered American stocks to Russian investors, just met with niggling success. In Dec 1992, MMM-Invest was created equally a voucher investment fund, a type of entity created to collect privatization vouchers.^[viii] Information technology was renamed Russ-Invest in May 1995, to distance it from the MMM scheme.^[8]

The MMM Ponzi scheme was launched in February 1994,^[ix] promising annual returns of up to 3000%.^[10] The company started an aggressive Television advertising campaign, spending 330 million rubles in March 1994.^[9] The ad entrada appealed to the general public by using "ordinary" characters that viewers could identify with. The most famous of them, a "folk hero" of early 1994, was Lyonya Golubkov.^[four] Another notable marketing effort was a giveaway of free Metro trips to all Moscow citizens on a particular day.^[11]

At its peak the visitor was taking in millions of U.s. dollars each day from the sale of its shares to the public.^[12] Mavrodi reportedly endemic enough greenbacks to pack several rooms full with banknotes.^[12] The success of MMM in alluring investors led to the creation of other similar companies, including Tibet, Chara, Khoper-Invest, Selenga, Telemarket and Germes. All of these companies were characterised past aggressive television receiver ad and extremely high promised rates of render. One company promised annual returns of thirty000 %.^[thirteen]

Regular publication in the media of the ascent MMM share price led President Boris Yeltsin to issue a decree in June 1994 to protect investors from imitation advertising.^[14]

On 22 July 1994, the Ministry of Finance issued a argument listing MMM amid a number of investment firms which had illegally issued unregistered securities.^[fourteen] Thousands of investors protested in front of the company headquarters, prompting the intervention of anarchism police.^[14] By the adjacent day, the firm was no longer operational.^[14] The visitor attempted to continue the scheme for a few days, and even issued new shares.^{[half dozen]} As Russian federation did not have whatever laws against Ponzi schemes, the regime decided to seek tax evasion charges.^[6] At that betoken, Invest-Consulting, i of the company's subsidiaries, owed more than than 50 billion rubles in taxes (Usa$26 million), and MMM itself owed between 100 billion and 3 trillion rubles to the investors (from US$50 one thousand thousand to United states of america$1.5 billion). MMM shares savage from 115,000 rubles to 1,000 rubles.^[15] In the aftermath, some investors reportedly threatened to set themselves on fire.^[16]

Several organisations of "investors" made efforts to recover their lost investments, but Sergei Mavrodi manipulated their indignation and directed information technology at the government. Mavrodi was arrested on tax evasion charges, unrelated to the MMM scheme, on iv August 1994.^[fifteen] Well-nigh shareholders blamed the regime for their losses.^[17] A 'Union of Defense of the Rights of MMM Shareholders' emerged, attempting to collect the 1 million signatures required to concord a no-confidence referendum against Yeltsin'due south government.^[17]

In October 1994 Mavrodi managed to win a by-election to supervene upon Andrey Aizderdzis in the Land Duma, and with it amnesty from prosecution.^[18] Mavrodi claimed to be the victim of jealous bureaucrats, and that MMM shares would regain their value if he was elected.^[19] During the entrada he was supported by Vladimir Zhirinovsky, who hoped that Mavrodi would provide him with futurity fiscal backing.^[xx] Later on beingness elected he appeared in the State Duma simply in one case, to vote against an try to strip him of parliamentary immunity.^[21]

Mavrodi launched his ain political political party, the Party of People'due south Majuscule, merely it was barred from registering after violating ballot laws.^[21] He decided to stage a protest confronting a decision, only this time just 200 people showed up.^[22] In October 1995, the Duma cancelled Mavrodi'due south right to amnesty as a deputy.^[23] In 1996, he tried to run for Russian federation'due south presidency, but his bid was rejected after officials ruled that virtually of the signatures he submitted had been forged.^[24] MMM declared bankruptcy on September 22, 1997.^{[ citation needed ]}

The original investigation was closed in 1997 for lack of show.^[25] The Prosecutor General'due south Role reopened the case in 1998, when Mavrodi was investigated for fraud and placed on an international wanted list.^[25] While it was believed that Sergei Mavrodi fled to Greece, he was ultimately arrested in Moscow, and investigators concluded that he probably never left the city.^[25]

Mavrodi was plant and arrested in February 2003.^[25] While in custody, Mavrodi was given until 31 Jan 2006 to read the documents in his fraud case against him (the criminal case consisted of 650 volumes, each 250-270 pages long).^{[ commendation needed ]} At the cease of April 2007, Mavrodi was bedevilled of fraud, and given a sentence of 4-and-a-one-half years. Since he had already spent over iv years in custody, he was released less than a month afterward, on 22 May 2007.^[26]

Though no longer electric current, MMM Bilets share certificates, which bear a resemblance to banknotes and formerly issued in 'denominations' of varying amounts, have gained some interest as collectors items.

The MMM scandal led to increased regulation of the Russian stock market, just the legacy of the fraud led many to go extremely suspicious of any joint stock companies.^{[ citation needed ]}

Fraud scheme in developing countries [edit]

From 2011, Mavrodi started targeting developing countries in Asia and Africa, promising xxx% monthly returns and other promotional offers. Information technology claimed that this was not a high-yield investment program (HYIP). Rather it was mentioned on the website that a community of people were "selflessley helping each other" in a class of "Global Fund of mutual aid." Participants were asked to send financial help to fellows with the hope that they would exist helped when in need by returning a sum more than what they had sent. In India, for instance, many victims of this scheme reported that once they sent the "help", they received letters maxim that the system has restarted and they could no longer admission their investments.^[27]

Encounter too [edit]

• Caritas (Ponzi scheme)
• Lyonya Golubkov
• Pyramid schemes in Albania
• The PyraMMMid
• Stock Generation
• European Kings Club

References [edit]

1. ^ Transitions Online Archived 2007-04-12 at the Wayback Machine accessed Apr 12, 2007
2. ^ ^{a b} Bigg, Claire (March fifteen, 2012). "Jailed For Non Paying A Fine, Ponzi Scheme Founder Plots 'Financial Apocalypse'". RFE/RL. Archived from the original on March 16, 2012.
3. ^ "MMM's Mavrodi Voted Into Duma". The Moscow Times. November 1, 1994. Retrieved three December 2017. MMM collapsed in July, swallowing the savings of an estimated 5 million to 10 1000000 investors
4. ^ ^{a b} "Russian Investors Go Burned". Christian Science Monitor. xi August 1994. Archived from the original on 26 September 2015. Retrieved iii December 2017. People were perfectly enlightened that MMM was not a honest company. Their motive was that they idea they could withdraw money before it complanate
5. ^ "Russian Investors Entered Stock Scheme With Eyes Wide Open up". Chicago Tribune. July 31, 1994. Archived from the original on July 26, 2013. But like gamblers [...], MMM's players thought they were smart enough to win big before the inevitable bosom occurred
6. ^ ^{a b c} "Rouble trouble: Naive Russian investors accept had their fingers badly". The Independent. 21 August 1994. Archived from the original on 14 Oct 2016. Retrieved three December 2017.
7. ^ "MMM's Sergei Mavrodi: Backside the Hype". The Moscow Times. August 6, 1994. Archived from the original on 3 December 2017. Retrieved three December 2017.
8. ^ ^{a b} "File No. iii-9006". Securities and Exchange Commission. Retrieved 3 December 2017.
9. ^ ^{a b} Malkiel, Burton Thou.; Mei, J. P. (1999). Global Deal Hunting: The Investor's Guide to Profits in Emerging Markets . Simon and Schuster. pp. 84–87. ISBN9780684848082.
10. ^ "Accused In Fraud Case Wins Election". Chicago Tribune. November 1, 1994. Archived from the original on 3 December 2017. Retrieved iii Dec 2017.
11. ^ Tolstikova, Natasha (1999). "Mmm As a Phenomenon of the Russian Consumer Culture". East - European Advances in Consumer Inquiry. 4: 208–215.
12. ^ ^{a b} "Jailed For Not Paying A Fine, Ponzi Scheme Founder Plots 'Financial Apocalypse'". RadioFreeEurope/RadioLiberty. March xv, 2012. Archived from the original on fifteen Nov 2017. Retrieved three December 2017.
13. ^ "MMM Global Review: Sergey Mavrodi's MLM BTC Ponzi cult". behindmlm.com . Retrieved 2021-01-25 . {{cite spider web}}: CS1 maint: url-status (link)
14. ^ ^{a b c d} "House Offers Public Huge Returns, Merely Government Calls it Illegal". Christian Science Monitor. 28 July 1994. Archived from the original on vii September 2015. Retrieved 3 December 2017.
15. ^ ^{a b} "Mavrodi Charged, Could Face up 7 Years in Jail". The Moscow Times. August 16, 1994. Archived from the original on 3 December 2017. Retrieved 3 December 2017.
16. ^ "Russia watches pyramid scheme teeter". UPI . Retrieved 3 December 2017.
17. ^ ^{a b} "Russian pyramid victims hit government". UPI. August 28, 1994. Retrieved 3 December 2017.
18. ^ Erlanger, Steven (1 Nov 1994). "Russian Tied to Stock Scheme Gains Election to Parliament". The New York Times. Archived from the original on 26 May 2015. Retrieved 3 December 2017.
19. ^ Hiatt, Fred (ane November 1994). "Alleged Taxation DEFRAUDER WINS Election TO RUSSIAN PARLIAMENT". Washington Post. Archived from the original on iii December 2017. Retrieved 3 December 2017.
20. ^ Boudreaux, Richard (1 November 1994). "Russian Wins Parliament Seat and Immunity: Election: Sergei Mavrodi bilked thousands with his MMM pyramid scheme. But voters took him at his word once again". Los Angeles Times . Retrieved 3 December 2017.
21. ^ ^{a b} "Russian party barred from elections". UPI. September 28, 1995. Archived from the original on 3 December 2017. Retrieved three December 2017.
22. ^ Barker, Adele Marie (1999). Consuming Russia: Pop Culture, Sex, and Society Since Gorbachev . Duke University Press. p. 64. ISBN0822323133.
23. ^ WILLIAMS, CAROL J. (26 Oct 1995). "Criminality Taints Dozens of Russian Office-Seekers". Los Angeles Times. Archived from the original on 3 December 2017. Retrieved 3 December 2017.
24. ^ "Mavrodi'southward MMM Born Again". The Moscow Times. January 14, 1997. Archived from the original on 3 December 2017. Retrieved 3 December 2017.
25. ^ ^{a b c d} "Police Track Down MMM Fugitive". The Moscow Times. February three, 2003. Archived from the original on three December 2017. Retrieved 3 December 2017.
26. ^ "Mavrodi Walks Free Subsequently 4 1/2 Years". The Moscow Times. May 23, 2007. Archived from the original on 3 Dec 2017. Retrieved 3 Dec 2017.
27. ^ Thaker, Aria. "Promise and peril in the Indian bitcoin economy". The Caravan . Retrieved 2019-07-15 .

External links [edit]

• (in Russian) 1992 MMM Tv set Commercials

longtheltorither.blogspot.com

Source: https://en.wikipedia.org/wiki/MMM_(Ponzi_scheme_company)

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