MOSCOW, June 7 (RIA Novosti) – A criminal case has been opened into the MMM-2011 Ponzi scheme on fraud charges, the Russian Prosecutor General’s Office said on Thursday.
The Federal Antimonopoly Service has come to the conclusion that “the MMM-2011 scheme is a financial pyramid,” the PGO said in a statement.
MMM-2011 (the three letters stand for “We Can Do a Lot” in Russia), founded by Sergei Mavrodi, uses the WebMoney online payment system to allow investors to buy tickets which work like shares, but have no real value. The project’s mastermind has promised investors returns of 20-30 percent per month.
Lithuanian law enforcement agencies have halted operations of the MMM-2011 pyramid scheme after finding its activities violate laws, the local Delfi news portal reported late on Wednesday quoting law enforcement officials.
Amid rumors about the collapse of MMM-2011, Mavrodi announced last week he would create the MMM-2012.
A former mathematician, Mavrodi was released from prison in 2007 after serving a sentence for offenses relating to the collapse of the original MMM. He described the new project as a “financial social network.”
While his 1994 scheme used an aggressive TV and radio advertising campaign to attract investors, the new project relies solely on the Internet, a move which many see as a bid to attract Russia’s technologically-savvy youth.
Mavrodi’s 1994 swindle, which came to be regarded as a symbol of the lawlessness of the chaotic 1990s in Russia, was one of the largest among hundreds of other such schemes in that era. The pyramid schemes took advantage of the ignorance of a nation still learning the basics of a new capitalist system. Ponzi schemes became so commonplace that their prices were quoted on the front pages of newspapers.
According to estimates, the MMM scam attracted between two and five million investors, including a number of high-profile celebrities, who lost around $1.5 billion when it collapsed.