Weekend Argus (Saturday Edition)
Red flags up as Hawks probe MMM scheme
Millions of SA investors involved
THE HAWKS have set their sights on the local arm of an international investment scheme which has already collapsed in Russia and is apparently on shaky ground here after luring millions of South African investors.
A Russian fraudster is allegedly the mastermind of the operation, suspected to be a pyramid scheme. It left millions of Russian investors bankrupt.
But the probe by the Hawks, which also involves crime intelligence police officers, is being hampered by the magnitude of the scheme.
The so-called MMM scheme, founded by convict Sergey Mavrodi and known locally as MMM South Africa, entices investors by promising 30 percent profits every month.
This week, despite reports the scheme had collapsed, local recruiters denied this was the case. They were adamant that while two arms of MMM – MMM Global and MMM Extra – had closed to protect investors’ money, the South African branch was unaffected.
A recruiter said nearly two million South Africans had signed up to MMM since February last year.
Hawks spokesman Brigadier Hangwani Mulaudzi said an inquiry into MMM had been opened. “Our challenge is jurisdiction since everything is done through the internet. Despite that challenge, we have enlisted the help of Crime Intelligence, Sabric ( the South African Banking Risk Information Centre) and FIC (Financial Intelligence Centre of South Africa).
“Another challenge is there are no cases opened by investors.
“Therefore we call upon them to come forward. We are here to help.” Hangwani said investors could go to their local police stations.
The following note was posted this week on several MMM Facebook pages: “We regret to inform you that we have to close down the Republic of Bitcoin (otherwise known as MMM Global).
“It was an experiment and, unfortunately it failed. We turned out not to be able to pay 100 percent per month. We can easily pay 30 percent per month (and we proved it in practice in many countries), but 100 per- cent is too much even for us.
“This news is not very 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, Administration.”
Despite this, local MMM recruiters were still trying to persuade people to sign up.
One told Weekend Argus: “MMM is alive and stronger than ever with over 200 million members worldwide.”
The recruiter said members of the two arms closed down would be “transferred to platforms like we have in South Africa; furthermore their structure will work exactly like our with 30 percent growth…
“It was not a collapse, in fact, it was deliberately closed down to protect the members from imminent danger of not getting paid at all once the scheme got too large.
“We must always remember the purpose of MMM is to provide financial freedom for people and a standard of living people deserve.”
The apparent mastermind of the scheme is Mavrodi. He has appeared in weekly videos on MMM Global’s Facebook page, with the last video uploaded on March 21.
In that, he said: “News arises when there are some problems. If we don’t have any problems – there’s no news. Thus, from now on, I think that I won’t be recording video messages weekly.” In the middle of last year the Communist Party of the Russian Federation emailed a warning about Mavrodi to the SACP.
“We would like you to know that, as a result of such swindles in Russia, at least 15 million people suffered and went bankrupt.”
The National Stokvel Association of South Africa did not have records of MMM being registered.
Nine years ago The Moscow Times reported Mavrodi, who was at one stage a Russian MP, had been convicted of masterminding the initial MMM scheme.
A judge found he defrauded MMM investors “by deception, betrayal and abuse of trust”.
It was reported that MMM was the first and biggest in a string of pyramid schemes to hit Russia in the 1990s. It collapsed in 1994.
caryn.dolley@inl.co.za