Russia probes revived MMM pyramid scheme

Moscow police said Thursday it had launched a criminal probe into a pyramid scheme launched by a notorious fraudster of the 1990s, who claims his latest plan has more than 35 million participants.

Police opened a probe into attempted fraud, carrying a maximum sentence of 10 years, over the Internet-based scheme called MMM-2011. Its founder Sergei Mavrodi was convicted for fraud over his original MMM pyramid of the 1990s.

“The chief investigation department of Moscow police opened a criminal case over unidentified persons who created the MMM-2011 financial pyramid,” the police statement said.

Although Mavrodi launched his pyramid scheme in January 2011, the authorities have struggled to prosecute due to the nebulous nature of the scheme, with participants paying using virtual Internet money.

Several regional authorities have launched separate probes into the scheme, which Russia’s Federal Anti-Monopoly Commission recognised as a pyramid last year.

Mavrodi, an eccentric mathematician, claims that 35 million people have registered in the scheme. He is currently in hiding and only communicates via statements and videos posted on the scheme’s website.

On June 1, Mavrodi announced that due to a “panic” that he blamed on media, he was freezing payouts on MMM-2011 and starting a new scheme called MMM-2012.

An estimated 15 million people soon after the break-up of the Soviet Union put savings into buying notes decorated with Mavrodi’s face. At the height of the scheme, he paid for the Moscow metro to be free for a day.

But the scheme crashed in 1994, with huge lines of people standing outside his offices in a vain attempt to claim refunds. Around 50 people reportedly committed suicide over their losses.

Mavrodi managed to evade jail by being elected as an MP with immunity from prosecution. He later went into hiding and was finally rearrested in 2003 and jailed for fraud until 2007.