Mavrodi: A crook and shameless fraudster
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.