•LASEMA urges despondent subscribers to dial 112 for help
By Adetutu Folasade-Koyi
About 3 million Nigerians who are participants of the Mavrodi Mondial Moneybox (MMM), a ponzi scheme, are in panic over suspension of payments for one month.
One man in Benue State, identified only as Adakole, attempted suicide yesterday night.
A report tracked on Daily Post indicated that Adakole had invested N300, 000 meant for his wedding, scheduled for this month, on the scheme.
When he learnt of the suspension of payments, Adakole drank insecticide, in an attempt to end it all. He was, thereafter, rushed to an hospital where he is reportedly battling for life.
A ponzi scheme is a fraudulent investment operation where the operator, an individual or organisation, pays returns to investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources.
Operators of ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent.
MMM website was launched in Nigeria in November 2015.
Displayed on the pages of participants of the scheme, its founder, Sergey Mavrodi explained that the reason for the measure was to ensure the sustainability of the scheme in the New Year and make it better.
Last week, Mavrodi wrote an open letter to the Federal Government explaining that the scheme was not a scam but has brought a lot of benefits to its citizens.
He also warned that should the scheme fail, millions of deposits by Nigerians would be lost.
A letter displayed on the pages of participants of the scheme cited “heavy workload on system” as reason for the freeze.
This means that members of the ponzi scheme, who are due to withdraw both their capital and 30 per cent return on investments, will no longer be able to do so until January 13, 2017.
According to the letter, the freeze on withdrawals is partly due to negative reports by the media on the scheme.
The letter, with the title, One-month freezing of confirmed Mavros, reads in part:
“Dear members, as usual, in the New Year season, the system is experiencing heavy workload. Moreover, it has to deal with the constant frenzy provoked by authorities in the mass media.
“The things are still going well; the participants feel calm; everyone gets paid – as you can see, there haven’t been any payment delays or other problems yet – but!..it is better to avoid taking risk. Moreover, there are just three weeks left to the New Year.
“On the basis of the above mentioned, therefore, all confirmed Mavros will be frozen for a month…”
An Abuja-based lawyer, Harriet Okpara, who has participated in the scheme for several months, told Premium Times, yesterday morning, that she “immediately lost appetite” upon realising that she won’t be able to cash out on her investment.
“I put money out to support other people last month and I expected that money to yield so I can request for my payment with interest from the community, but, now, I can’t do that. I don’t want to believe that we’re gradually getting to see the end of this business.”
Elsewhere, tweeting via @Lolami_Boo, one Reet Petite questioned Economic and Financial Crimes Commission’s role in sensitising Nigerians about the scheme.
“Where the hell was @officialEFCC? Isn’t it your job to stop crap like this?” to which the EFCC answered: “You mean amongst the plethora of venality we fight daily?
“Ponzi schemes aren’t sustainable. There were a number of warnings.
“If it looks or sounds too good to be true, it almost always is. Do not patronise wonder banks. Protect yourself…”
Nelson Trump sounded despondent. “Ultimate Cycle carry my 25, 000 go, that one no teach me lesson. Now, MMM is going with my 150, 000.”
Chinweike Anugwolu disclosed how his brother developeed high fever of learning of payments suspension and urged the relevant authorities to help prevent MMM’s crash. “Please, don’t let this source of income to manly Nigeria crash. Although I warned them, including my brother. Now, he has high fever.”
But, Ukwachinaka wrote he doesn’t really care if he loses money in MMM.
“Who cares?! MMM4Life! It’s my money. Don’t worry if I lose it. Just know that I received N400, 000 this evening.”
In another twist, the Lagos State Emergency Management Agency (LASEMA) urged Nigerians to dial an emergency line, 112, if they see anybody trying to commit suicide as a result of possible frustration from MMM’s freezing of payments till next year.
Two months ago, the House of Representatives ordered an investigation into the operations of the scheme.
Last month, the Presidency, Securities and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN) as well as economic analysts warned Nigerians that the MMM is a ponzi scheme not designed to last and that they would lose money in the long run.
CBN distanced itself from the scheme.
Acting Director of Corporate Communication, Mr Isaac Okorafor, said MMM subscribers should bear their crosses. “All I can tell you is that we have repeatedly warned Nigerians about the dangers of investing their savings in ponzi schemes. It is unfortunate that some people have failed to heed these warnings. They are on their own.” MMM’s suspensions of operations in Nigeria is similar to events in South Africa where the scheme collapsed and was forced to start over, according to Quartz.
As with Nigeria, MMM blamed the collapse on “persecution.”
Similarly, in Zimbabwe, the scheme temporarily suspended operations and slashed withdrawal exchange rates upon resumption causing participants to lose 80 percent of their investment.
MMM, according to Wikipedia, was established in 1989, by Sergei Mavrodi, his brother Vyacheslav Mavrodi, and Olga Melnikova.
The name of the company was taken from the first letters of the three founders’ surnames. Initially, the company imported computers and office equipment.
In January 1992, tax police accused MMM of tax evasion, leading to the collapse of the MMM-bank, and causing the company to have difficulty obtaining financing to support its operations.
Faced with difficulties in funding its foreign trade, the company switched to the financial sector.
It offered American stocks to Russian investors, but met with little success.
Later, MMM-Invest was created for the purpose of collecting vouchers during privatisation. This effort was similarly unsuccessful.
MMM created its successful ponzi scheme in 1994. The company started attracting money from private investors, promising annual returns of up to one thousand percent. It is unclear whether a ponzi scheme was Mavrodi’s initial intention, in as much as such extravagant returns might have been possible during the Russian hyperinflation in such commerce as import-export.
But, participants have expressed their disappointments on the measure as they explained that the same measure being put for the sustainability of the scheme would lead to its eventual collapse.
Meanwile, the Economic and Financial Crimes Commission (EFCC) says it warned Nigerians against investing in MMM.
There have been several warnings against participating in the scheme from the Securities and Exchange Commission (SEC), the Central Bank of Nigeria (CBN) and the House of Representatives which also ordered an investigation into the operation of the scheme, in October.
SEC, CBN and have warned Nigerians against participating in the scheme which they described as a “Ponzi” scheme.