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CARYN DOLLEY
A RUSSIAN fraudster convicted ofrunning one of that country’sbiggest pyramid schemes in the1990s in which millions of peoplelost their life savings is now incharge of an operation with thesame name in South Africa.
The MMM scheme, founded byconvict Sergey Mavrodi and knownlocally as MMM South Africa,entices investors by advertisingthat in a month they will make a 30 percent profit.
This week the CommunistParty of the Russian Federationsent an e-mail to the South AfricanCommunist Party (SACP) warningabout the scheme.
Thousands of South Africansare believed to have registered asinvestors in the intricate money-exchange scheme, and a consultantat MMM South Africa claimed138 million people from 107 coun-tries had signed up.
This week the scheme set offalarm bells and even affected thehead of the National ConsumerCommission Ebrahim Mohamed,who yesterday received an SMSfrom MMM offering him 30 per-cent monthly return on invest-ments.
National Consumer Commis-sion spokesman Trevor Hattinghsaid Mohamed would refer the mat-ter to the commission’s enforce-ment and investigation division assoon as possible.
“The matter needs to beassessed by the (commission) toestablish the origins of MMM, andto study their business practices.
“In the meantime consumersare strongly advised to not partici-pate in what could very well be anoutlawed pyramid scheme wheretheir monies could in all probabil-ity be lost,” Hattingh said.
The apparent mastermind ofthe scheme is Mavrodi.
Videos of him talking about thescheme in Russian, subtitled inEnglish, are posted on the scheme’s
South African Facebook page.In the latest video uploaded six
days ago, he says: “The develop-ment in South Africa is just mar-vellous…
“But nevertheless, you mustkeep developing the system. Don’trest on laurels. Tell people howgood and kind this system is andthat everyone gets paid here.”
This week the CommunistParty of the Russian Federationwarned about schemes it saidMavrodi was running in SouthAfrica, India and the Philippines.
In an e-mail to the SACP onWednesday it said: “We consider itour duty to warn our fraternalpeoples that this activity mayresult in bankrupting millions ofpeople. We would like you to knowthat as a result of such swindles inRussia at least 15 million peoplesuffered and went bankrupt.”
Eight years ago The MoscowTimes reported that Mavrodi, whoat one stage was a Russian MP, wasconvicted of masterminding theinitial MMM scheme. A judgefound he defrauded MMMinvestors “by deception, betrayaland abuse of trust”.
“MMM was the first and thebiggest in a series of financial pyr-amids that hit Russia in the 1990s.Mavrodi was found guilty ofdefrauding 10 000 investors out of110 million roubles, though in real-ity millions of people lost moneyin the scheme,” the article said.
“Some two million to 10 millionpeople lost their savings when thepyramid scheme folded in July1994.”
Mavrodi was sentenced to four-and-a-half years in jail.
Yesterday Financial ServicesBoard spokesman Lesego Mashigosaid it was aware of the SouthAfrican scheme, but because it hadno mandate to investigate pyramidor Ponzi schemes, it had referredthe matter to the National Con-sumer Commission.
Hawks spokesman HangwaniMulaudzi said officers knew of theoriginal MMM scheme, but wereunaware of a South African version.
The MMM South Africa websitedescribes the scheme as “a commu-nity where people help each other”.
Investors could be awarded var-ious bonuses, including a referralbonus. “Inviting new members intothe community is your additionalcontribution to its development.But nobody forces the members ofthe community to invite new participants,” the website said.
According to the Consumer Pro-tection Act, a scheme is a pyramidscheme if participants are prima-rily compensated for recruitingothers, rather than from sellingany goods or services.
More than 23 000 people haveliked the Facebook page for MMMSouth Africa and about two weeksago a message was posted on it hit-ting back at those calling it a scam.“MMM is a community of dona-tion exchange. MMM cannot beregarded as an illegal Ponzischeme or pyramid scheme.”
Weekend Argus spoke to a con-sultant on the MMM South Africawebsite. The consultant saidMavrodi had founded the scheme.
Another consultant said therewas no way for Weekend Argus toreach Mavrodi and would not giveany contact details for him.
The consultant eventually pro-vided his own work e-mail address.
Queries about the scheme andMavrodi, including where he was,were not answered by last night.
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UP AND OVER: Gareth Taylor soaks up the warm spring rays and the waves while skimboarding at Clifton Beach yesterday. The weather is sunny todaywith a forecast maximum of 29ºC. Skimboarding makes use of a board that is smaller than a surfboard and has no fins. It is used to glide across the surfaceof the water. PICTURE: LEON LESTRADE
Notoriousfraudstertargets SAMillions of Russians left destitute
IF THE MMM scheme is to bebelieved, it simply involvespeople helping each other.
Yesterday a consultant forMMM South Africa said aminimum investment was R100.Once registered on the websitean investor could log on andenter what is known as an online“personal office”.
An investor could request to“give help” and the system wouldpair the investor with someonewho needed “help”.
Once an investor transferredfunds, the investor was then
given “Mavro”, the system’sinternal currency, to match theamount they invested.
This was then expected togrow by 30 percent a month.
The MMM South Africawebsite said: “Participantstransfer each other moneydirectly, without intermediaries.
“In fact, MMM only regulatesthe process and nothing more.The system completely belongsto people.
“Without fools. It is a realmutual aid fund, where ordinarypeople help each other.”
NEW VENTURE: Sergey Mavrodi, convicted years ago in Russiafor running a pyramid scheme, has founded a similar operationin South Africa. PICTURE: FACEBOOK
MMM just lending a helping hand?
Boks must beat UK customs to play on home turfJAN CRONJE
THE SPRINGBOKS may be count-ing on the magic of home-grownturf for that edge in the World Cupgames, but before the grass canwork its spell, it needs to passinspection by UK customs officials.
The UK Border Force placesrestrictions on which plants, fruitand seeds can be brought into the
UK, especially from outside theEuropean Union.
Potato seeds, for example, arebanned, and there are many otherrestrictions on what can bebrought in and its quantity.
South African Rugby Union(Saru) spokesman AndyColquhoun said yesterday theunion had done its homework onthe legalities of transporting the
turf to the UK. “We have had theidea for a long time, so we have hadthe opportunity to really plan forit,” he said.
“As far as I understand, the turfhas been cleared as all safe.”
The piece of turf was unveiledat a celebrity-heavy event onThursday at the Springbok Experi-ence Rugby Museum in CapeTown. It was grown in soil drawn
from all 14 South African rugbyprovinces. Its seed will be taken tothe UK, where it will be plantedand grown in special trays toinspire players while kitting up.
“This will be a visible and phys-ical reminder of what they areplaying for and from where theycome,” SARU chief executive JurieRoux said this week.
Bringing plants into the UK
bedevilled the South African dele-gation to the Chelsea flower showearlier this year.
Some plants for the the SANational Biodiversity Institute dis-play got stuck at customs, andweren’t released in time to beincluded in the show. They had toborrow from competitors. But thescheme worked, as they won a Sil-ver Gilt Award. See pages 6 and 31
Spring break
SPORTSCARRA KEEN
FOR FRESHWP START
Page 32
INSIDEPUTTING ONTHE MATRICRITZPage 12
PEOPLEGETTING TOKNOWJACK PAROWPage 16
GARDENING, TRENDS, DECOR, PROPERTY
