Mavrodi: A crook and shame­less fraud­ster

Lesotho Times - - Scrutator -

IAM this week reit­er­at­ing my ut­ter dis­ap­point­ment with the MMM pyra­mid scheme and my dis­dain for all Ba­sotho who have put their faith in this patently stupid scheme as a spring­board to quick riches.

Judg­ing from the neg­a­tive re­sponses my col­umn of last week gen­er­ated, I am truly sad­dened that there are mul­ti­tudes of Ba­sotho who see a lee­way to riches via this pyra­mid scheme.

The fact that MMM has been proven be­yond any doubt that it is a scam of gi­gan­tic pro­por­tions — as ex­em­pli­fied in its to­tal col­lapse in Rus­sia — were it left thou­sands pen­ni­less seems to be of lit­tle or no con­cern to many Ba­sotho.

The fact that its pro­moter, Sergey Mavrodi, is a proven crook, con­man and scum­bag, who re­cently went into hid­ing, seems to be of lit­tle or no con­cern to many Ba­sotho. The fact that Mavrodi, by his own ad­mis­sion, spent four and half years in a Rus­sian jail for fraud seems to be of lit­tle or no ef­fect to many Ba­sotho.

The fact that the ex­act MMM scheme, that Mavrodi has ex­ported to our part of the world, col­lapsed in Rus­sia in 1994 leav­ing thou­sands of Rus­sians pen­ni­less seems to be of lit­tle or no con­cern to most Ba­sotho.

The fact that Mavrodi was be­hind Stock Gen­er­a­tion, an­other pyra­mid scheme which col­lapsed in 2003, seems to be of lit­tle or no con­cern to most Ba­sotho. The fact that Mavrodi’s other pyra­mid struc­ture; the Repub­lic of Bit­coin has col­lapsed seems of lit­tle or no in­ter­est to many Ba­sotho.

The fact that all spe­cialised South African crim­i­nal in­ves­ti­ga­tions agen­cies are on the prowl against MMM and au­thor­i­ties there have al­ready warned South Africans to de­sist from par­tic­i­pat­ing in this crap seems to be of lit­tle or no con­cern to many Ba­sotho. All this dis­ap­points me greatly.

In a nut­shell, I am cha­grined by the qual­ity of our cit­i­zenry. How on this earth can any sane Mosotho surely be­lieve that a scheme in which peo­ple are en­cour­aged to make de­posits to one an­other with­out any un­der­ly­ing pro­duc­tion or value be­ing gen­er­ated can be sus­tain­able in the broader scheme of things?

How can any Mosotho be­lieve in a scheme pro­moted by a crook like Mavrodi who is both un­reach­able and un­ac­count­able? In­deed one Ed­ward Phiri, the so called head of char­ity co­or­di­na­tion at MMM ad­mit­ted in in­ter­views in South Africa that the MMM sys­tem re­lied on sus­tain­able new in­flows to sus­tain its promised 30 per­cent re­turn. There can be no franker ad­mis­sion that this is a pyra­mid scheme.

I there­fore in­sist that any in­di­vid­ual who be­lieves they can get rich through MMM is a full cir­cle moron. Pe­riod.

South African au­thor­i­ties, who have had their fair share of col­lapsed pyra­mid schemes, have re­peat­edly warned that any scheme that prom­ises sky high re­turns of 30 per­cent is a pyra­mid struc­ture. Why are we not tak­ing heed?

Most of those who emailed at­tack­ing me last week ac­cused me of dis­cred­it­ing a scheme which is paving them a path to fab­u­lous wealth.

Many said they had de­posited money on two or three oc­ca­sions al­ready and re­ceived their cap­i­tal back with the promised 30 per­cent re­turn.

But that’s ex­actly my point. That is how fraud­u­lent the scheme is de­signed to work. It pays you for your ini­tial in­vest­ments, then it en­tices you to part with more money be­fore it hits its zenith and even­tual crum­ble. That’s how it bankrupted many Rus­sians.

You will de­posit R2000 to­day and get your cap­i­tal with the promised in­ter­est. To­mor­row you will be tempted to de­posit more, say R5 000, and you will equally get your cap­i­tal back with the promised in­ter­est. Then you put in 10 000 and you get your money back with the req­ui­site in­ter­est.

By this time, the temp­ta­tion is so ir­re­sistible that you will then move to sell your goats, chicken, sheep and house (all the items you in­her­ited from daddy) and in­vest R100 000 or more in the hope that you will earn a cool R30 000 or more in in­ter­est over a short pe­riod of time. That is when your world will col­lapse around you and you do the in­evitable; com­mit sui­cide.

When enough peo­ple are en­ticed to in­vest more but there is no longer enough cap­i­tal to meet the promised un­re­al­is­tic re­turns, the en­tire ed­i­fice crum­bles. But the pro­mot­ers would have creamed it off. Their wal­lets would have be­come fat­ter.

The crooks be­hind MMM de­scribe is as a “plat­form for the ex­change of do­na­tions”. But since when have do­na­tions among strangers made any­one richer. Of course you can get filthy rich by in­her­i­tance or do­na­tions if your fa­ther is Bill Gates, Ru­pert Mur­doch, Car­los Slim, War­ren Buf­fet or Ntate Matekane. But not when you ex­pect a do­na­tion from strangers co­or­di­nated by MMM.

Most of the par­tic­i­pants of MMM are en­cour­aged by the fact that they are not de­posit­ing to one cen­tral ac­count but to iden­ti­fied in­di­vid­u­als through MMM’S fa­cil­i­ta­tion. But to me this even makes the sys­tem look worse.

The de­lin­eation of MMM is sim­ply aw­ful. How can you de­posit money to an ac­count of a holder you don’t know, have never met and you prob­a­bly never will in the hope that some sim­i­larly minded per­son shall also favour you with a higher de­posit to en­able you to ac­crue the promised 30 per­cent. What if no one comes to the party? The fact that you have to first reg­is­ter with MMM which then fa­cil­i­tates the in­ter­ac­tions among the donors con­firms the mon­stros­ity of this scam.

When the scheme fi­nally sweeps you off your feet and you de­posit a higher amount af­ter sell­ing your goats, sheep and roost­ers in the hope of be­com­ing a multi-mil­lion­aire, that’s when re­al­ity will check in. The crooks and thieves be­hind MMM and their as­so­ci­ates into whom the huge de­posits would have been made will sim­ply van­ish with­out a trace.

Some schemes backed by some prom­ise of pro­duc­ing real value and into which well-to-do ed­u­cated peo­ple, who should have known bet­ter, hap­pily par­tic­i­pated in, ended up col­laps­ing.

Take for in­stance Barry Tan­nen­baum’s Ponzi scheme. Tan­nen­baum roped in about 880 well-heeled South African in­vestors un­der the pre­text that their money would be used to source in­gre­di­ents re­quired to man­u­fac­ture anti-retro­vi­ral drugs for the treat­ment of HIV/ AIDS.

Th­ese in­gre­di­ents would be sold to phar­ma­ceu­ti­cal com­pa­nies man­u­fac­tur­ing ARVS at high re­turns. Tan­nen­baum’s pro­posal sounded quite futuristic.

With South Africa hav­ing one of the high­est num­ber of peo­ple liv­ing with HIV/AIDS in the world (one in ev­ery five South Africans), huge prof­its looked real.

Well ed­u­cated South Africans in­clud­ing busi­ness lead­ers like for­mer Pick n Pay CEO Sean Sum­mers poured mil­lions into Tan­nen­baum’s scheme. In re­al­ity, no drugs were be­ing im­ported.

Tan­nen­baum and his fel­low crooks raised R10 bil­lion and then van­ished to Aus­tralia and Switzer­land. In typ­i­cal fash­ion, pro­mot­ers of pyra­mid schemes never take re­spon­si­bil­ity for their ac­tions.

They blame the demise of their schemes on some­thing. To hide his ill-got­ten loot, Tan­nen­baum has posted patently false sto­ries that he is mak­ing a liv­ing as an Uber taxi driver in Aus­tralia. But in re­al­ity he re­treats to a plush man­sion and yacht ev­ery day.

The Uber story is ob­vi­ously a smoke­screen to hood­wink in­vestors into be­liev­ing that his Ponzi scheme was a good busi­ness that just went ter­ri­bly wrong.

When Mavrodi’s Repub­lic of Bit­coin col­lapsed last week, the fol­low­ing mes­sage was posted on its web­site; “We re­gret to in­form you that we have to close down the Repub­lic of Bit­coin. It was an ex­per­i­ment and un­for­tu­nately it failed.”

Equally, the ad­min­is­tra­tors of MMM South Africa’s Face­book Page told the Ci­ti­zen news­pa­per; “There are no prom­ises or guar­an­tees….mmm is just a plat­form and guar­an­tees noth­ing…”

With such bold ad­mis­sions of thiev­ing, how can any sane man or woman then in­vest their hard­earned cash in such an open swin­dle?

I go back to what I have re­peat­edly said. The Ja­panese are rich as a na­tion and as in­di­vid­u­als be­cause they used their brains and came up with such in­ven­tions as Nis­san, Toy­ota, Isuzu, Sony, Mazda among many oth­ers. They make gad­gets and sell them to the rest of the world.

The Ger­mans are rich be­cause they have BMW, Mercedes Benz, Audi, VW, among many in­ven­tions. They sell their prod­ucts to the whole world.

The South Kore­ans are rich be­cause they have Dae­woo, Hyundai, LG, and Sam­sung.

We are all con­sumers of their prod­ucts. Amer­ica is rich be­cause it has Cadil­lac and Ford, among many fa­mous brands.

North Korea is poor be­cause it pro­duces noth­ing ex­cept its bank­rupt, men­tally de­ranged, portly Kim fam­ily dic­ta­tors. Like North Korea, Africa is poor be­cause de­spite be­ing the sec­ond largest land­mass in the world and de­spite hav­ing nearly one bil­lion peo­ple, Africa pro­duces noth­ing. Even our raw ma­te­ri­als are ex­ported in their dan­ger­ous raw for­mat to Europe and China only for us to buy back our raw ma­te­ri­als in the form of fin­ished prod­ucts at a much higher price.

As Le­sotho, we are pro­duc­ing some of the most high qual­ity di­a­monds. But none of us have thought of cut­ting, pol­ish­ing and con­vert­ing th­ese into the glitzy rings for ex­port to Amer­ica at high cost. The Nige­ri­ans have the most oil of any Sub Sa­ha­ran country. But they suf­fer crip­pling fuel short­ages be­cause they can’t re­fine their oil. Money to build re­finer­ies was stolen by the Abachas of this world.

Africa is poor be­cause its citizens be­lieve in pyra­mid schemes. All the in­ter­na­tional brands that have made all the above men­tioned coun­tries rich did not just drop from the sky. They came about be­cause citizens of th­ese coun­tries are in­no­va­tors.

They don’t be­lieve in pyra­mid schemes. If an in­no­va­tive ci­ti­zen comes up with a new idea to pro­duce an item that com­petes in­ter­na­tion­ally and that gets on de­mand, it helps that ci­ti­zen’s en­tire na­tion. Ger­ald Ford’s in­no­va­tion in found­ing the Ford au­to­mo­bile trans­formed Amer­ica.

So when is Africa in gen­eral or Le­sotho in par­tic­u­lar go­ing to come up with an in­dige­nous African au­to­mo­bile that can out­com­pete Ford, Mazda, BMW, Mercedes, Fiat or Toy­ota. Only if Africans stop be­liev­ing in pyra­mid schemes and in­vest our brains in in­no­va­tion and pro­duc­ing value can we be­come col­lec­tively and in­di­vid­u­ally rich.

If you be­lieve that MMM can make you rich, then you might as well be­lieve that money grows on trees. And if that’s your men­tal dis­po­si­tion, then you can­not be helped. Keep on be­liev­ing and in­vest­ing in MMM un­til the day of the burst.

I feel sad, how­ever, to see my coun­try­men and fel­low Africans even­tu­ally los­ing their hard­earned cash on du­bi­ous schemes like MMM.

I now put for­ward one test case to prove that MMM is a scam. MMM founder Mavrodi is a crook, a scum­bag, a thief, a phony and fraud­ster.

Th­ese words are highly defam­a­tory. There is there­fore no op­tion for Mavrodi but to emerge from his hid­ing and sue me.

If Mavrodi re­ally be­lieves in him­self and his scheme, he must come out and we meet at the Palace of Jus­tice.

This will be the best op­por­tu­nity for Ba­sotho who have bought into his scheme to see him and his lawyers in per­son and gain all the nec­es­sary con­fi­dence that they are not deal­ing with a ghost.

If Mavrodi does not emerge to sue me and re­mains in hid­ing, then it con­firms that he is a phony. Please stop in­vest­ing in his scheme.

If you ig­nore my sound ad­vice and con­tinue in­vest­ing in MMM, please be as­sured that when you even­tu­ally com­mit sui­cide, I won’t be at your fu­neral. Nei­ther will I send any flow­ers nor con­do­lences. You would have paid for your an­thro­po­log­i­cal stupidity.


Ponzi scheme king­pin Barry Tan­nen­baum.

MMM founder Sergei Mavrodi.

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