The Poison That Is MMM
The Central Bank of Nigeria (CBN) recently warned citizens to beware of trading in virtual currencies such as bitcoin, ripples and litecoin. Its warning was in apparent response to the reappearance of Mavrodi Mondial Moneybox (MMM) Ponzi scheme on January 13, after it abruptly froze its account in December last year. CBN said, “The attention of the banks and other financial institution is hereby drawn to the above risks and you are required to take the following actions pending substantive regulation or decision by the CBN. Ensure that you do not use, hold, trade
and/or transact in any way in virtual currencies.”
Religious organizations also issued warnings against MMM. Islamic scholars for example said it is haram. The Redeemed Christian Church of God also warned its members earlier this month against participating in MMM. RCCG’s General Secretary Pastor Johnson Odesola wrote in a memo, “Please be informed that the doctrine of the church does not support get rich quick schemes, gambling, betting etc in any form. God is and remains our supplier by the application of biblical principles of working diligently with our hands.”
Despite these warnings from temporal and spiritual authorities, Nigerian participants in MMM are bent on trying their luck in the get rich quick scheme. When they gain money, they hold that up as a validation of the scheme. When they lose money, they find neat ways to explain it. This isn’t unconnected with the fact that MMM employs many ways to explain the dubious Ponzi scheme to the gullible. For example, when it returned to Nigeria, MMM claimed that it would now use bitcoin. The announcement was a clever tactic to piggyback on the rising profile of bitcoin, a virtual currency that was hitherto more popular among online pirates. But their main marketing technique is to get the participants - their victims - to take ownership of the scheme and sell it to more prospects with similar greed and emotional composition. It is the reason why they give extra points to members who create testimonial videos.
However, Nigerians may pay attention if they know the background of MMM’s founder, no matter their gullibility, appetite for quick cash or uncritical mindset. Sergey Panteleevich Mavrodi is a Russian criminal. Born in 1955, Mavrodi first established MMM series of pyramid schemes in 1989. Later, he became a fugitive and was finally convicted in 2007 by a Russian court for defrauding 10,000 people of 4.3 million dollars. The court sentenced him to four and a half years in penal colony and fined him 10,000 rubles ($390).
Mavrodi’s term in prison didn’t reform him as he returned in 2011 with another version of the pyramid scheme called MMM-2011. But he is wiser now; as pyramid schemes aren’t illegal under Russian law, he was more truthful. He declared that, “It is a Unclad scheme, nothing more ... People interact with each other and give each other money. For no reason!” Yet, a little over a year later, he froze the account and announced that there would be no more payouts! That didn’t stop him from branching into India, China and in September 2015, he forayed into South Africa where he promised 1% interest every day or 30% per month. In 2016, he opened shop in Zimbabwe and etched his footprints in Nigeria, sweeping his roving hands across the bank accounts of greedy Nigerians.
It would appear CBN is struggling to find the appropriate laws to use in declaring the scheme illegal and to also use for possible prosecution of the promoters. This is exactly the position the United States found itself in when Mavrodi ran Stock Generation in that country from 1998 to 2000. First, a district court found that U.S. Securities and Exchange Commission couldn’t establish that SG committed any securities violations. But in 2001, the United States Court of Appeals reversed that decision and in 2003, SEC obtained a permanent injunction against Stock Generation. Nigerian authorities should copy this example. Some Nigerians must be protected from themselves.
Source: DailyTrust
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