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Sergey Mavro­di is dead: Top facts to know about late MMM founder

The founder of the finan­cial pyra­mid MMM­Sergey Mavro­di is dead. He passed away on the night of March 26. Until the end of his days the swindler was devot­ed to his work — by orga­niz­ing new finan­cial pyra­mids around the world. In the 90’s, he was a deputy and even ran for the pres­i­den­cy of Rus­sia.

Sergei Mavro­di died in the hos­pi­tal as a result of a heart attack. Accord­ing to one ver­sion, he felt bad at the bus stop and a ran­dom pass­er-by called the doc­tors. Oth­er ver­sion says that he was hos­pi­tal­ized from his own apart­ment. His name was a house­hold all over the world, so let’s remind inter­est­ing facts from Sergei Mavro­di biog­ra­phy.
Sergey Mavrodi’s life

The future genius of the finan­cial pyra­mids was born on August 11, 1955 in Moscow. Sergei Mavro­di said that at child­hood doc­tors diag­nosed him with bilat­er­al heart dis­ease and he was promised a max­i­mum of 18 years of life. After grad­u­at­ing from high school, Sergey entered the Moscow Insti­tute of Elec­tron­ic Tech­nol­o­gy at the Fac­ul­ty of Applied Math­e­mat­ics.
The uni­ver­si­ty awak­ened entre­pre­neur­ial tal­ent and excite­ment in Mavro­di. He became inter­est­ed in mak­ing and sell­ing copies of audio and video mate­ri­als. In 1983, he was detained for ten days for “pri­vate entre­pre­neur­ial activ­i­ties”. How­ev­er, the young busi­ness­man was lucky: thanks to the issued state decree, the crim­i­nal case was avoid­ed.
“I’m not a scam­mer! I’m a part­ner! ”

The famous finan­cial pyra­mid orig­i­nat­ed from the co-oper­a­tive MMM which Mavro­di found­ed in 1989. The abbre­vi­a­tion MMM is the first let­ters of the sur­names of the founders: Sergei Mavro­di, his broth­er Vyach­eslav Mavro­di, and Olga Mel­niko­va. The financier admit­ted that the oth­er two founders were nec­es­sary sole­ly for the reg­is­tra­tion of the com­pa­ny, their posi­tions were nom­i­nal.
MMM start­ed as an ordi­nary com­pa­ny — import­ing com­put­ers and spare parts. With­in five years, the enter­prise tried almost every­thing: resale of office equip­ment, pro­mo­tion and adver­tis­ing, orga­ni­za­tion of beau­ty con­tests, and vouch­er pri­va­ti­za­tion.
On Octo­ber 20, 1992, the com­pa­ny which lat­er became the famous finan­cial pyra­mid was reg­is­tered.
In 1993, MMM issued 991 thou­sand shares. Their sale start­ed on Feb­ru­ary 1, 1994. Against the back­drop of the pri­va­ti­za­tion and frankly weak finan­cial lit­er­a­cy of the pop­u­la­tion, Mavro­di man­aged to attract the inter­est of “investors” quick­ly. The shares were sold under the slo­gan “Today it’s always more expen­sive than yes­ter­day.” Peo­ple active­ly invest­ed their mon­ey increas­ing the demand.
MMM tried to orga­nize anoth­er project for the issue of company’s shares with a vol­ume of one bil­lion, how­ev­er, the Min­istry of Finance blocked it, which was not among Mavrodi’s plans. He issued anoth­er 991 thou­sand shares and sold them under a sim­i­lar scheme.
To cir­cum­vent the ban by the Russ­ian author­i­ties on the issue of shares, Mavro­di intro­duced the MMM tick­ets. They resem­bled the cur­ren­cy with a por­trait of Sergei Mavro­di. The MMM tick­ets had no real val­ue. But Mavro­di announced that the price of one tick­et was ini­tial­ly equal to 1/100 of the MMM shares.
Such activ­i­ties led to the fact that Mavro­di risked deal­ing with law enforce­ment agen­cies, so the scheme of the tick­ets sale was rad­i­cal­ly changed: they were issued as a sou­venir in exchange for a “dona­tion” to Sergey Mavro­di. Sim­i­lar­ly, this rule worked if one of the tick­et hold­ers want­ed to sell them: in this case, Mavro­di “donat­ed” his mon­ey to the sell­er receiv­ing tick­ets back.
The cost of MMM tick­ets grew at an insane rate: by the sum­mer of 1994 it had grown by 127 times. Mavro­di him­self earned about $50 mil­lion a day.
From the swindler to the pres­i­dent

The pop­u­lar­i­ty of Sergey Mavro­di and the rapid growth of depos­i­tors of the finan­cial pyra­mid irri­tat­ed the fed­er­al author­i­ties. Mavro­di frankly ignored the demands of finan­cial bod­ies and con­tin­ued to take mon­ey from ordi­nary cit­i­zens. The tax ser­vice tried to exact about 50 bil­lion rubles from MMM, but the financier claimed that all tax­es are paid by his com­pa­ny. Then the author­i­ties decid­ed to con­duct an anti-adver­tis­ing cam­paign which pro­voked a pan­ic and a sharp out­flow of depos­i­tors from the MMM.
Mavro­di had to react quick­ly: on July 29, 1994, the MMM announced a 100-fold decrease in tick­et price and an increase in its growth by half. Restart­ing the pyra­mid allowed Mavro­di not only to save the old depos­i­tors but also to attract new ones.
As a result, the author­i­ties had to use the force method: on August 4, 1994, Mavro­di was arrest­ed in his apart­ment for non-pay­ment of tax­es. The arrest of the swindler was shown live on the fed­er­al chan­nels. At the same time, law enforce­ment offi­cers stormed the MMM head­quar­ters and con­duct­ed a search. Mavro­di claimed that 17 trucks with cash were removed from the head office. It is still unclear where the mon­ey went and who took the trucks.
Pic­ture from pageone.ng
After the arrest, Mavro­di sus­pend­ed the activ­i­ties of the finan­cial pyra­mid and announced his inten­tion to be elect­ed to the State Duma. The cit­i­zens demand­ed author­i­ties to release Mavro­di so that he could resume the work of the MMM and forced the tax col­lec­tors to return the depos­i­tors’ sav­ings. In Octo­ber 1994, Sergei Mavro­di was released. He became a deputy and all the offices of MMM turned into his invi­o­lable rep­re­sen­ta­tive offices.
A year lat­er, he was stripped of his man­date because of sys­tem­at­ic absen­teeism (Mavro­di did not appear at any meet­ing) and com­mer­cial activ­i­ties. How­ev­er, on Jan­u­ary 10, 1996, the financier sub­mit­ted the doc­u­ments for reg­is­tra­tion of his can­di­da­cy in the pres­i­den­tial elec­tions. Mavro­di did­n’t get into the pres­i­den­tial race: the elec­tion com­mis­sion reject­ed the list and Mavro­di with­drew his can­di­da­cy.
Game over

The attempt to become pres­i­dent of Rus­sia had a sim­ple expla­na­tion: Mavro­di tried to pro­tect him­self from crim­i­nal pros­e­cu­tion, which resumed in 1996. In Sep­tem­ber 1997, MMM was declared bank­rupt and Mavro­di dis­ap­peared. In 1998, the author­i­ties announced the inter­na­tion­al search, but this did not help. Mavro­di was detained only on Jan­u­ary 31, 2003 in a rent­ed apart­ment. Dur­ing the search, it turned out that he used forged doc­u­ments.
The fake pass­port added anoth­er case against Mavro­di: he was accused of fraud and orga­niz­ing doc­u­ments forgery. The first crim­i­nal case (about non-pay­ment of tax­es in the amount of about 50 bil­lion rubles) was closed after the expi­ra­tion of the statute of lim­i­ta­tions.
Pho­to from thewillnigeria.com
On 2 Decem­ber 2003, the court found Mavro­di guilty of pass­port forgery and sen­tenced him to 13 months in prison. Lat­er, on April 28, 2007, he was sen­tenced to 4.5 years in a gen­er­al regime colony for fraud. A month after the ver­dict, on May 22, Mavro­di was released. The court ordered him to pay a fine of 10 thou­sand rubles and to return the debt of 20 mil­lion rubles to the for­mer MMM depos­i­tors. Lat­er the court decid­ed to give up the fine in favor of the state.
Mavro­di in Africa

In 2014, Mavro­di aban­doned the usu­al mar­ket and trans­formed his project into MMM Glob­al posi­tioned as a “finan­cial social net­work”. Ini­tial­ly, the scheme of the new pyra­mid was based on cryp­to cur­ren­cy Bit­coin.
The finan­cial social net­work began oper­at­ing in almost 100 coun­tries around the world, includ­ing South Africa, Nige­ria, Zim­bab­we, Chi­na, Ghana, Kenya, Brazil, India, Thai­land, Philip­pines, Japan, Aus­tralia, and Turkey. MMM Glob­al promised its depos­i­tors a sta­ble 30% return per month.
Depend­ing on the coun­try, the sys­tem of rais­ing funds was slight­ly dif­fer­ent, but the essence was as fol­lows: MMM attracts mon­ey promis­ing an aver­age month­ly return of 30%; the received mon­ey is placed on accounts of investors and con­vert­ed first in Bit­coins and then in Mavro — the elec­tron­ic ana­logue of the MMM tick­et from the 90s. Income also was received by depos­i­tors in Mavro. Peo­ple who man­aged to con­vert them back into Bit­coins or local cur­ren­cy were lucky, oth­ers lost their mon­ey.
Mavro­di achieved the great­est suc­cess in Nige­ria, where the pop­u­lar­i­ty of the pyra­mid as well as the con­se­quences of its col­lapse was com­pa­ra­ble to the Russ­ian expe­ri­ence. About 2.4 mil­lion depos­i­tors were reg­is­tered in the sys­tem by the end of 2016, most­ly unem­ployed cit­i­zens and peo­ple with low incomes. As a result, MMM once again made ene­mies: local media, blog­gers, and pub­lic author­i­ties who began to check the work of the project.
The scale of invest­ment in Nige­ria was unprece­dent­ed: in March 2017, MMM raised N18 bil­lion. In addi­tion to the author­i­ties, even local reli­gious orga­ni­za­tions opposed the pyra­mid. The rea­son was the mass suiсide of those who did not man­age to with­draw their funds from the MMM Glob­al.
We do not know whether you will grieve about Sergey Mavro­di death. Will you?

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