MMM fights Ponzi la­bel

Banks freeze ac­counts, so mem­bers file court ap­pli­ca­tion in bid to get it to rule that the money-mak­ing out­fit is le­git­i­mate

CityPress - - Business - XOLANI MBANJWA xolani.mbanjwa@city­

Some mem­bers of the con­tro­ver­sial in­ter­net-based MMM South Africa (MMM-RSA) have had their bank ac­counts frozen by var­i­ous banks on sus­pi­cion that they are par­tic­i­pat­ing in a Ponzi scheme. They have ap­plied to the high court for it to de­clare that the scheme does not con­tra­vene con­sumer law. Deon Janse van Ren­sburg, a mem­ber of MMM-RSA, has filed an ap­pli­ca­tion in the North Gaut­eng High Court against the com­mis­sioner of the Na­tional Con­sumer Com­mis­sion (NCC), the com­mis­sioner of the SA Po­lice Ser­vice (SAPS) and the Na­tional Prose­cut­ing Au­thor­ity (NPA). He wants the court to de­clare that the MMM for­mat is le­git­i­mate and does not have the char­ac­ter­is­tics of a Ponzi, pyra­mid, mul­ti­pli­ca­tion or chain-let­ter scheme.

Ac­cord­ing to the ap­pli­ca­tion, par­tic­i­pants in the scheme took a de­ci­sion on March 18 to take the mat­ter to court af­ter some of their mem­bers’ ac­counts were frozen due to “un­sub­stan­ti­ated” state­ments about the scheme made by the Na­tional Con­sumer Com­mis­sion.

In court pa­pers, Janse van Ren­sburg said that “par­tic­i­pants are hav­ing their bank ac­counts frozen on the ba­sis that pro­ceeds from a Ponzi scheme are re­ceipted into these bank ac­counts”.

“These par­tic­i­pants were left un­able to meet their ba­sic fi­nan­cial obli­ga­tions as a re­sult of their bank ac­counts hav­ing been frozen with­out any con­clu­sive ev­i­dence that the money so re­ceived con­tra­venes any act or reg­u­la­tions, but on the mere whiff of a me­dia ru­mour.”

The scheme, which has dubbed it­self a “do­na­tions” and fi­nan­cial-as­sis­tance com­mu­nity, wants the court to grant them ac­cess to the NCC’s in­ves­tiga­tive re­port af­ter an al­leged probe be­tween Septem­ber 2015 and Jan­uary. It claims the NCC con­ducted a ra­dio in­ter­view where it said it had in­ves­ti­gated MMM-RSA and asked the SAPS to in­ves­ti­gate fur­ther, with a view to pros­e­cu­tion. In the ap­pli­ca­tion, Janse van Ren­sburg at­trib­uted the freez­ing of mem­bers’ bank ac­counts to “reck­less” com­ments by the NCC about MMM-RSA.

The scheme, which prom­ises growth of 30% a month on de­posits by new par­tic­i­pants, is the brain­child of Sergei Mavrodi, a Rus­sian who was ar­rested for fraud and tax eva­sion af­ter the Rus­sian equiv­a­lent of MMM col­lapsed in 1994.

In an in­ter­view with the Fi­nan­cial Times, Mavrodi con­firmed that he was charged with fraud and im­pris­oned for four and a half years. How­ever, Janse van Ren­sburg and lo­cal MMM par­tic­i­pants are con­vinced the scheme does not con­tra­vene the Con­sumer Pro­tec­tion Act. They want the court to force the NCC to pro­vide rea­sons for the in­ves­ti­ga­tion and the in­ves­ti­ga­tion re­quest to the SAPS.

They want the court to com­pel the SAPS to pro­vide “full find­ings of the in­ves­ti­ga­tion it in­sti­tuted at the be­hest of the NCC, in­clud­ing the ba­sis on which those find­ings were ar­rived at”. The court pa­pers have, for the first time, re­vealed how the com­pli­cated scheme claims to work. They claim that MMM-RSA “con­sists of a com­mu­nity of par­tic­i­pants vol­un­tar­ily in­volved in a mu­tual do­na­tion ex­change known as MMM-RSA, which func­tions by way of a com­put­erised plat­form ac­ces­si­ble through the in­ter­net on com­put­ers and other elec­tronic de­vices with in­ter­net ca­pa­bil­ity”. Janse van Ren­sburg said that, de­spite sev­eral at­tempts, they were un­able to ver­ify the SAPS in­ves­ti­ga­tion and the con­tents of the NCC’s find­ings. Un­like the il­le­gal schemes ad­ju­di­cated un­der the Con­sumer Pro­tec­tion Act, their sys­tem warns mem­bers “not to of­fer as­sis­tance from money that they may re­quire to sus­tain them­selves, but to do so only from sur­plus funds which they may have avail­able”. Janse van Ren­sburg said that, un­like pyra­mid schemes or mul­ti­pli­ca­tion schemes, their sys­tem of­fered “no guar­an­tees what­so­ever that re­quests for as­sis­tance will be met”. “It is equally pos­si­ble that sit­u­a­tions may oc­cur where the re­quests for as­sis­tance ex­ceed the of­fers to pro­vide as­sis­tance while, on the other hand, sit­u­a­tions may oc­cur where of­fers to pro­vide as­sis­tance ex­ceed the re­quests for as­sis­tance.” NCC spokesper­son Trevor Hat­tingh said they were not served with the ap­pli­ca­tion. He con­firmed that the com­mis­sion had asked the SAPS to in­ves­ti­gate the scheme. “Aris­ing from the out­comes of our as­sess­ment of the MMM scheme, the NCC de­cided to ap­proach the SAPS to con­duct a crim­i­nal in­ves­ti­ga­tion into it,” said Hat­tingh. How­ever, the NCC would not pro­vide de­tails of its own in­ves­ti­ga­tion into MMM-RSA, “be­cause it will most likely com­pro­mise the in­ves­ti­ga­tion of the SAPS”. NPA spokesper­son Lu­vuyo Mfaku con­firmed they had re­ceived civil lit­i­ga­tion pa­pers from MMM-RSA mem­bers. He said they would study the ap­pli­ca­tion be­fore is­su­ing a re­sponse. The SAPS was un­avail­able for com­ment.


FLUSH About 2 000 MMM mem­bers re­it­er­ated their sup­port for the scheme and the money they had made by tak­ing part in a fi­nan­cial free­dom aware­ness march from Thokoza Park to Mo­lapo in Soweto

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