Home » MMM’s Ponzi Scheme: To Russia, With Love (Part1)

MMM’s Ponzi Scheme: To Russia, With Love (Part1)

the-greatest-scams - MMM’s Ponzi Scheme: To Russia, With Love (Part1)

“MMM” is the biggest Ponzi scheme of all that ever existed in the Soviet Union and then in the Russian Federation. According to various experts JSC “MMM” damaged up 10 and 20 million depositors, of which 50 committed suicide.

“Russia’s Bernie Madoff”

However, in 1989 MMM was registered in Moscow as a cooperative, which dealt with purchasing and selling foreign computer equipment and other gear. Then this business was considered among the most promising, and the company was actively engaged in it until 1991. It is worth noting that in 1990 JSC MMM was one of the leaders in the Russian computer market.

The name “MMM” is derived from the first three letters of the founders’ names: Sergei Mavrodi, his brother Vyacheslav Mavrodi and Olga Melnikova. However, according to S.Mavrodi, it was him alone who took all decisions relating to MMM.

the-greatest-scams - MMM’s Ponzi Scheme: To Russia, With Love (Part1)

Sergei Mavrodi, grandmaster of Russia’s pyramid cult

MMM became widely known for the first time on July 31, 1991, when the cooperative held a sensational advertising campaign to provide free travel for all passengers in the Moscow underground during the day, which cost 1 million dollars for MMM.

In 1992, MMM began issuing its own shares, and went public on 1 February 1994.

It should be noted that the shares were sold on the principle of ” today is always more expensive than yesterday”. The value of shares and further MMM tickets depended only on Mavrodi’s opinion. Most often, of course, the share price only rose, and the growth rates reached 100% a month. Such a trend led to the need to issue a second lot of shares, but the Ministry of Finance of the Russian Federation did not give a permit for the issue of securities.

MMM Tickets

Then Mavrodi started issuing MMM tickets, which were equated to the securities, with the only difference being that the cost of one ticket was one-hundredth of the value of the shares, ie a decimal monetary system. This proved to be a very profitable step, because investors could no longer buy shares due to their high cost. MMM tickets were printed on the same factories, where US dollars were printed and had a high degree of protection against forgery.

the-greatest-scams - MMM’s Ponzi Scheme: To Russia, With Love (Part1)

The queue of MMM depositors

Note that S.Mavrodi’s business was not just very profitable, but even more: MMM and its leader overtook monetary functions of the state. So, in early 1990s, the ruble was not very stable and could not provide the Russian population with a decent life level. S.Mavrodi offered a quick and convenient way out. It even led to the fact that a large number of companies preferred to keep their surplus funds in MMM shares, and in some cases they even paid its employees in so-called “Mavrodiki.”

Thanks to the competent PR campaign on TV and in mass media, literally for the first six months the value of the company’s shares increased more than by 120 times, and the number of depositors, according to various estimates, was 10-15 mln people.

According to the recollections of eyewitnesses and participants in those events it was almost impossible to calculate how much MMM was earning, because the money was not counted, but approximately evaluated by the number of not packs or cartons, but entire rooms “13 rooms … 16 rooms.” There is evidence that in Moscow alone Mavrodi earned at least 50 million dollars a day.

Continue to the Part 2

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