Some call it money making machine, others say it is "making many mighty". whatever the name is, have you ever asked this question: WHERE IS THE 30% INTEREST COMING FROM? Have asked the same question too. Let's find out
According to wikipedia,MMM was established in 1989 by Sergei Mavrodi,
his brother Vyacheslav Mavrodi, and Olga Melnikova. The name of the
company was taken from the first letters of the three founders'
surnames.
It is obvious that many Nigerians are getting aware of this current Pyramid scheme trending in Nigeria called MMM Nigeria which promises 30% Return on Investment after 30 days (how on earth!!)
The business is a Pyramid/Ponzi scheme
According to financial watch, "A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources. 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 will pay out high returns to attract more investors, and to lure current investors into putting in additional money. Other investors 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 the deception that the scheme is an investment with high returns."
MMM grew rapidly when launched. In February 1994, the company reported dividends of 1,000%, and started an aggressive TV
ad campaign. Since the shares were not quoted on any stock exchange and
the company itself determined the share price, it maintained a steady
price growth of thousands of percent annually, leading the public to
believe its shares were a safe and profitable
investment says wikipedia
investment says wikipedia
BEWARE!!!
When a Ponzi scheme is not stopped by the authorities, it sooner or later falls apart for one of the following reasons (financial watch):
- The promoter vanishes, taking all the remaining investment money.
- Since the scheme requires a continual stream of investments to fund higher returns, once investment slows down, the scheme collapses as the promoter starts having problems paying the promised returns (the higher the returns, the greater the risk of the Ponzi scheme collapsing). Such liquidity crises often trigger panics, as more people start asking for their money, similar to a bank run.
- External market forces, such as a sharp decline in the economy (for example, the Madoff investment scandal during the market downturn of 2008), cause many investors to withdraw part or all of their funds.
MMM PAST RECORDS (WIKIPEDIA)
- On July 22, 1994, the police closed the offices of MMM for tax evasion. For a few days the company attempted to continue the scheme, but soon ceased operations. At that point, Invest-Consulting, one of the company's subsidiaries, owed more than 50 billion rubles in taxes (USD 26 million), and MMM itself owed between 100 billion and 3 trillion rubles to the investors (from USD 50 million to USD 1.5 billion). In the aftermath at least 50 investors, having lost all of their money, committed suicide.August 1994 Mavrodi was arrested for tax evasion.
- Mavrodi was believed to move from russia to U.s after going bankrupt. With the help of a distant relative he started Stock Generation Ltd., another pyramid scheme based around trading non-existent companies' stocks in a form of the "stock exchange game" on the company's site, stockgeneration.com. Despite a bold-letter warning on the main page that the site was not a real stock exchange, between 20,000 and 275,000 people, according to various estimates, fell for the promised 200% returns and lost their money. According to U.S. Securities and Exchange Commission, losses of victims were at least USD 5.5 million
- Mavrodi was found and arrested in 2003. He was released on May 22, 2007. He later went on to creating yet another pyramid scheme called MMM-2011.
- The MMM scandal led to increased regulation of the Russian stock market, but the legacy of the fraud led many to become extremely suspicious of any joint stock companies.
- 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". 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 2016, MMM launched a website targeting the Nigerian audience
- In January 2016 the Chinese government banned MMM on the grounds that it is a pyramid scheme, (Ponzi scheme), and it is not registered in the country (and as a fraudulent scheme cannot be registered)
Why do FINANCIAL WATCH believe that MMM Nigeria is a pyramid/Ponzi scheme?
- The promise of a 30 % ROI is outrageous and not in terms with standard rates of investment (Example one makes a profit of 30,000 naira for every 100,000 naira invested in the system in 30 days , excluding additions that comes from referral, signing up and testimonial bonuses)
- No legal financial company can offer you that investment plan.Such “Return on Investments” been paid to older clients are money received from new clients and the circle continues, the 30% is never made from company profits. That is why there is aggressive ad campaign from the company(MMM Nigeria) paying massive additional bonuses to recruiters that they call guiders to conduct seminars and deceive gullible Nigerians into joining the scheme to keep the system alive.
- The CEO of the company(MMM Nigeria) Seigei Marvrodi is a convicted fraudster and had run similar fraud schemes in Russia where hedefrauded investors over a hundred billion dollars.
- 30% interest after 30 days is quite outrageous
- interest of 30% is paid not from profit made but from the money others put into MMM.
- past records of founder shows how much people have been defrauded using MMM
- paying money to persons you never met or knew..(MMM calls it "rendering help")
Sharing the sentiments of financial watch, take note of this:At this point it is pertinent to be weary of these kind of Ponzi scheme which promise too much to be true.It may pay now, but just like every other fraud, it strikes at a moment the investors express much confidence in their venture. So Nigerians should be wise and avoid unrealistic business ventures like MMM Nigeria
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