Russia's top pyramid schemer makes comeback

10th January 2011, Comments 0 comments

The man who created the biggest pyramid scheme in Russia's history announced Monday that he was making a comeback with a new investment vehicle that brings in monthly returns of 20 to 30 percent.

Sergei Mavrodi said in a message on his website that he was creating an international "financial network" called MMM-2011 -- with the three Russian letters standing for "we can do anything."

"You all know my situation," the man who created the original MMM investment pyramid in 1994 said in the video message.

"I do not have the right to perform any transactions with any valuables -- with any sorts of securities," said Mavrodi.

"But we can still employ a good old principle from judo: using the opponent's strength against him," he added.

"All the transactions will only be performed between the investors themselves. I will not lay a finger on this money."

Mavrodi became a Russian celebrity in the 1990s by flooding television with ads in which a middle class couple watched their MMM investment make millions as the months wore on.

The brief but omnipresent spots made a particularly strong impact because they were some of the first to be aired on Russian television as it welcomed advertisements following decades of Soviet rule.

Hundreds of thousands of Russians -- including a few high-profile celebrities -- bought "shares" of a company that unravelled once the first flood of investors tried to cash in their winnings.

A pyramid -- or Ponzi -- scheme is based on people investing increasing amounts of money in a fictitious investment mechanism that leaves them empty-handed once it eventually collapses.

Mavrodi was arrested for tax evasion in 1994 but then elected to parliament later that year by a groundswell of support from investors who saw him -- and their quickly-vanishing money -- as a victim of a corrupt state.

But parliament stripped Mavrodi of his immunity the following year and his 1996 bid to run for the presidency was rejected by the central election commission.

Mavrodi was arrested on fraud charges after avoiding the authorities in 2003 and released in 2007 with instructions to pay off millions of dollars in debt to investors and not involve himself in finances again.

© 2011 AFP

0 Comments To This Article