Ba­sotho de­fi­ant over MMM

. . . as Ponzi scheme’s sub­sidiary col­lapses

Lesotho Times - - Front Page - Bereng Mpaki and Retha­bile Pitso

BA­SOTHO sub­scribers of MMM Global con­tin­ued to in­vest in the Ponzi scheme yes­ter­day de­spite the week­end col­lapse Repub­lic of Bit­coin — one of the pyra­mid schemes op­er­ated by MMM Global founder and con­victed Rus­sian fraud­ster Sergey Mavrodi.

MMM Global has taken Le­sotho by storm with thou­sands of Ba­sotho from all walks of life in­vest­ing in the scheme which of­fers 30 per­cent re­turns per month on “de­posits” or do­na­tions.

Although the Cen­tral Bank of Le­sotho (CBL) and Consumer Pro­tec­tion As­so­ci­a­tion (CPA) have warned the na­tion against in­vest­ing in MMM Global say­ing it is il­le­gal, Ba­sotho con­tinue to join the scheme and reap­ing hand­some re­wards on their do­na­tions, as the com­pany calls the de­posits.

How­ever, af­ter MMM Global’s Face­book page on Satur­day posted a mes­sage an­nounc­ing the Repub­lic of Bit­coin’s clo­sure be­cause the com­pany could not pay de­pos­i­tors the promised 100 per­cent re­turns, so­cial me­dia went crazy as lo­cal “in­vestors” tried to find out what was go­ing on and if their money was safe.

The Face­book mes­sage, which set so­cial me­dia ablaze, read: “We re­gret to in­form you that we have to close down the Repub­lic of Bit­coin (RB). It was an ex­per­i­ment and un­for­tu­nately, it failed.

“We are un­able to pay the 100% in­ter­est rate per month. We can eas­ily pay 30% per month (and we proved it in many coun­tries) but 100% is too much even for us. That’s why the RB will be closed down.

“All the par­tic­i­pants of Rb-mavro will be trans­ferred to the MMM struc­ture of the coun­tries where they come from. If there is no MMM struc­ture in a country, it will be cre­ated within two weeks from the date of this an­nounce­ment.

This news is not pleas­ant but there is noth­ing that can be done about it. It’s not the end of the world. We just have to wait a bit. We hope for un­der­stand­ing.”

How­ever, af­ter the week­end flurry of so­cial me­dia com­mu­ni­ca­tion on the fu­ture of MMM Global, the anx­i­ety ap­peared to have abated by yes­ter­day.

In­vestors could be seen mak­ing de­posits at one of the lo­cal banks and dis­miss­ing the po­ten­tial risks of MMM Global, whose founder was said to have gone into hid­ing af­ter an­nounc­ing BT’S clo­sure on Satur­day.

Ac­cord­ing to MMM Global mem­bers who spoke to the Le­sotho Times, Repub­lic of Bit­coin’s col­lapse had ei­ther been de­lib­er­ately blown out of pro­por­tion by ma­li­cious me­dia out­lets or there was gen­uine lack of un­der­stand­ing of the MMM sys­tem.

“I have been an ac­tive MMM par­tic­i­pant since it was in­tro­duced in Le­sotho last year and I am well-versed with the sys­tem. Here we have an MMM sys­tem which en­ables peo­ple to trans­act us­ing their nor­mal cur­ren­cies. There is also the Repub­lic of Bit­coin fea­ture which works a bit dif­fer­ently and that is the one which was closed, not the en­tire MMM sys­tem,” said one of the MMM Global mem­bers who re­quested anonymity.

An­other sub­scriber said MMM Global was safe and had helped many Ba­sotho reap hand­some prof­its which they would have never re­al­ized at reg­u­lar banks.

An­other mem­ber wrote on the MMM Le­sotho and South Africa Face­book page yes­ter­day: “Mavros are green...let’s do the Mavro dance and shame the me­dia and the banks.”

An­other en­try on the Face­book page read: “You frighten a per­son ONCE and frighten him the SEC­OND time. The THIRD time he won’t lis­ten to you if all your threats don’t ma­te­ri­alise.

“MMM has grown be­yond any one man’s con­trol. We are a com­mu­nity that serves and does not en­slave other peo­ple.”

How­ever, a lo­cal eco­nomic ex­pert said the clo­sure of MMM RB should serve as a warn­ing to those who had in­vested in the scheme.

“The fact that one of MMM’S prod­ucts has closed down sug­gests that all is not well within the group and the rest of its prod­ucts could soon fol­low suit.

“This should be a warn­ing to those who have in­vested money in MMM that they should with­draw the funds be­fore it is too late,” he said.

About MMM The scheme was named af­ter its Rus­sian founders, Sergei Mavrodi, his brother Vy­ach­eslav Mavrodi, and Olga Mel­nikova- the three Ms stand­ing for their sur­names.

It was founded in Rus­sia in 1989, orig­i­nally im­port­ing com­put­ers and of­fice equip­ment. Af­ter it was ac­cused of tax eva­sion in 1992, the scheme moved to fi­nan­cial oper­a­tions, cre­at­ing its suc­cess­ful ponzi scheme in 1994.

How­ever, af­ter fail­ing to pay the re­quired tax, the scheme col­lapsed in 1997, re­sult­ing in at least 50 sui­cides from peo­ple who had lost their for­tunes. It was one of the world’s largest ponzi schemes and led to stricter reg­u­la­tions on Rus­sia’s stock mar­kets.

In 2007, Sergei Mavrodi was found guilty of de­fraud­ing 10,000 in­vestors and jailed for four-and-a-half years.

How­ever, in 2011, he was back with a new pyra­mid scheme, MMM, which he de­scribed as such. “This is a pyra­mid,” Mavrodi said in his ap­peal to the na­tion on his blog. “It is a naked scheme, noth­ing more ... Peo­ple in­ter­act with each other and give each other money. For no rea­son!”

MMM founder Sergey Mavrodi

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