INVESTIGATION: MMM, the ponzi scheme that saved a thousand lives, then killed a thousand more

by Festus Iyorah

Charles Ibekwe (not real name) has lost everything: his school fees, his pocket money and the hope of getting money from his mother.

When the 20-year-old, second-year Combine Arts student of University of Nigeria first heard of the MMM (MavrodiMondial Moneybox) Ponzi scheme from his roommate he dubbed it a scam, refusing to invest his money. But he joined last month after concerted efforts from his roommate and lodge mates to make him see the benefit of the scheme.

In a bid to earn more money, Ibekwe had ‘provided help’ (invested) with N50,000 – his school fees – hoping to cash out more than N75,000 in coming weeks; but the news of MMM freezing all its accounts in Nigeria, on Tuesday, 13 December came as a bombshell.

Ibekwe is raised by a single parent. He dismissed the idea of asking his mother for another money stressing that the chances are slim, and in school, UNN will soon close the portal for school fees.

Just like Ibekwe, many Nigerians are currently reeling from the news that MMM had frozen their accounts till January in order to avoid a total collapse of the scheme that has registered about 3 million Nigerians since its launch in November 2015.

Close up: Opening the Moneybox

Ibekwe and many other Nigerians did not just dabble into the Ponzi scheme famed for its mouth-watering offers. Its mission of saving the world of the unfair financial system, coupled with the current economic crisis in the country had lured about millions of Nigerians into becoming faithful acolytes of the scheme.

It promises its clients 30 percent return on investment (ROI) for the money invested over a 30-day time span. In simple terms, the scheme prides itself as a mutual aid fund through which members contribute money to assist others.

mmm-nigeria“It’s a naked scheme, nothing more. People interact with each other and give money,” Sergei Mavrodi said when he re-launched this pyramid scheme in 2011.

He added that his goal for launching the scheme is to destroy the current financial system, which he regards as unfair.

“What is MMM? It’s just you and me helping each other,” Justice Nwafor, 23, an ardent member said, adding that the member-to-member donation thrives on mutual financial support.

The genesis of the MavrodiMondial Moneybox (MMM) can be traced to 1994 when it was established by Sergei PanteleevichMavrodi, VyacheslavMavrodi, his brother, and Olga Melnikova, a friend. The name MMM was taken from the initials of their surnames.

This trio had started several businesses in the past but it all failed, plunging them into bankruptcy. This led to the establishment of MMM pyramid scheme in Russia during the Russian Hyperinflation in the 1990s. At that time in Russia, things were pretty hard, just as it is presently in Nigeria with recession biting hard; people were desperate to get money by any means. MMM took advantage of this and got citizens investing heavily in the scheme.

Collen Cross in his book “Anatomy of a Ponzi scheme” reports that within six months, Mavrodi had accrued huge amount of money; he was taking in about 50 million dollars in a day, stacks of cash filled his office from floor to the ceiling; by July 1994, they recorded a dividend of 1,000 percent. When he was arrested in Russia for tax evasion, 17 trucks filled with cash was discovered by the SWAT Team.

This Ponzi scheme, according to analysts, is an investment operation where an individual or organization pays return to its investors from new capital paid to the operator by new investors rather than profit earned through legitimate sources.

These operators usually entice new investors by offering higher returns than other legitimate investments such as banks and stockbrokers, in the form of short-term returns that are strangely high or abnormally consistent.

Crash record

From Russia, China to South Africa, MMM, a Russian company that perpetrated one of the world’s largest Ponzi schemes in the 1990s, has been shrouded in controversy since 2011 when it was re-introduced.

Sergei Mavrodi, the founder, has been described as “a Russian criminal” responsible for the financial woes of over 40 million people. Wikileaks estimates between five and 40 million people lost up to $10billion.

In the aftermath of its (MMM) crash in Russia, about 50 investors reportedly committed suicide. In November, Okeke Tobechukwu, a final year student of Agricultural Economics at the University of Nigeria, committed suicide after he allegedly gambled with money he had borrowed.

Although the dark lanky student who hung himself with a rope in his Odenigwe off-campus room left a suicide note which has not been released by the Nigerian police, his friends suggest that his death might be in connection with MMM Ponzi scheme which he had promoted continually on his Facebook wall.

Wikileaks reported that in 2007, Mavrodi was found guilty in a Russian court of defrauding 10,000 investors out of 110m rubles ($4.3m).

Beyond Mavrodi’s bad track record, the Ponzi scheme has also witnessed series of setbacks from country to country.

In January 2016, the Chinese government banned MMM based on the fact that it is a pyramid scheme not registered in the country. The scheme had also collapsed in South Africa and Zimbabwe, hounding investors into financial difficulties.

Even though he got his N200,000 frozen in MMM account, Nwafor still believes in the fact that MMM will return to operation by January 2017, saying “as long as people will keep providing help, MMM will not crash.”

Financial deliverance

In Nigeria, MMM was established at a time Nigerians were haunted by harsh economic situations ranging from a high rate of unemployment to the current economic recession.

Against this backdrop, many Nigerians bought the idea and invested either huge sums of money into the scheme. Unemployed graduates and students started with as little as N20, 000, while others who can afford it invested far more.

Weeks turned into months, months into a year, a large chunk of MMM subscribers have been empowered from providing help coupled with the 10 percent referral bonuses they get for registering new investors.

Áccording to, an international ranking website MMM Nigeria website overtook Facebook and Jumia online to become the 5th most visited website in Nigeria.

Thousands have become millionaires courtesy of the scheme; many people have been financially free because they invested in MMM.

chuddyIn November, MMM Nigeria donated relief material worth of N5 million to internally displaced camps in the Federal Capital Territory, Abuja. This gesture was part of its humanitarian week tagged “MMM cares” to mark its first year anniversary.

Also, the story of Chuddy Ugorji, the man who reportedly brought MMM into Nigeria comes handy in public argument between MMM subscribers and non-subscribers; every investor prides in the fact that Ugorji made it big within the duration of one year.

Chuddy recently got married in style courtesy of the money made from MMM. Based on the pictures he uploaded on his Facebook account, the wedding was painted in MMM colors; the wedding cake was decorated in MMM logo, there was no need for Aso Ebi (a fabric chosen for an event in Nigeria) as the couples told their guest to dress in green and white with MMM Nigeria’s sash.

chuddy2His story is one out of thousands of Nigerians who had reaped millions from the Ponzi scheme that have turned their bank accounts from red to green. Every day, Nigerians provided and requested for help. This has resulted in investors thronging different banking halls and ATM galleries in order to make transactions.

This overwhelming success of the ponzi scheme among MMM subscribers has, however, garnered criticisms from government agencies and the Nigerian government who had cracked down on the scheme describing it as “fraudulent”

In August 2016, the Security and Exchange Commission (SEC), Nigeria warned the general public on its website:

“The Commission hereby notifies the investing public that the operation of this investment scheme (MMM) 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.”

Last month, the Nigerian parliament ordered a crackdown on MMM promoters in Nigeria. This development followed a motion of urgent national importance raised by Honourable Akinlade Fijabi. He described MMM as a “Rob Peter to pay Paul Scheme”. Speaker of the House, Yakubu Dogara adopted the motion and urged the committee on banking and currency to investigate the scheme and submit a report within four weeks.

The pulpit also is not left out in the crackdown on MMM. One of the popular pastors in Nigeria, Apostle Johnson Suleman described the scheme as “demonic”.

In one of his recent sermons posted on Instagram, he said: “If you’re involved in MMM, you’re demonic. It is satanic, go and check the founder of MMM, he was a fraudster in America. He defrauded people. And that’s what you are involving yourself in and you are a Christian, looking for easy way out.”

The clergy in the sermon added that any of his congregation involved in MMM should come for deliverance.

All these online criticisms, however, did not have a ripple effect on subscribers who see MMM as a solution and an answered prayer to the current economic crisis in Nigeria. The community has sprouted and flowered across Nigeria with the promise of financial freedom.

One month freezing: Two can play that (waiting) game

Social media was abuzz when Nigerians woke up to receive the news of MMM freezing the accounts of its investors for one month. The story trended on Twitter—positioned at the top of the trends with thousands of tweets and retweets getting posted.

When it broke some subscribers who had their money frozen wept like toddlers while many others were drenched in fear and pessimismIn this middle of this, some diehard investors remain clothed in confidence and hope—of MMM returning to operation as promised.

mmmIt was not all tears though, the news had comic strips, thanks to non-subscribers. A non-subscriber wrote: “MMM is doing mannequin challenge with their money.” Another one ran this way: “The best mannequin challenge of the year goes to MMM.”

But, does the one-month freeze signal the end of this scheme? And why were the accounts frozen at a time Nigerians supposedly need the money most?

“The reason for this measure is evident. The system needs to prevent any problems that might arise during this festive season and this measure will be cancelled once the festive season comes to an end. Frozen of mavros does not mean MMM has stopped operations or crashed rather the system has adopted this measure to avoid any mishaps,” Chuddy Ugorgi, top promoter of MMM Nigeria said in a Facebook post.

Another guider, Eze Sandra, said the accounts were frozen because the number of people withdrawing their monies had surpassed the number of new investors.

“They have to freeze all accounts that are available for withdrawal so that people can join, they will take time and match them,” she said, adding that this will prevent the system from crashing.

She believes MMM subscribers will withdraw their money by January 14. “It (MMM) will come back,” she told YNaija.

Although Ibekwe doesn’t have any other means of paying his school fees, he shares in Eze’s  blind optimism.

“Everything na January now, I go wait till January when dem go open the account,” he said in pidgin English. We shall all be wating.

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