The popular pyramid scheme MMM is set to make its grand entrance into the Kenyan investment market after successfully penetrating other African markets.
MMM is luring thousands of people and promising them riches. Due to the hard economic times, it has arguably been embraced by the populace.
Founded by Sergei Panteleevich Mavrodi, Vyacheslav Mavrodi, and Olga Melnikova, MMM stands for Mavrodi Mondial Moneybox.
The outfit promises its clients 30% return in 30 days on investment for money put into the system. It was established in 1989 by these three Russians who call it a mutual aid fund through which recruited members contribute money to assist others.
The local chapter in Kenya has over the past few months started recruiting heavily and luring unsuspecting people into the network. It is hard not to pay attention to promised financial freedom so one cannot blame those who delve into the scheme.
Members are made to play a waiting game as they are told that they will be rewarded if they donate money to the needy. They will also earn points in the electronic currency, bitcoins.
Central Bank of Kenya on the issue of bitcoins warned the public that electronic currencies are not legal tender in Kenya. There is no protection for the consumer when the platform that holds the electronic currency goes out of business.
”Transactions in virtual currencies such as bitcoins are largely untraceable and anonymous, making them susceptible to abuse by criminals in money laundering and financing of terrorism.”
To fully understand the risk involved in investing your hard earned money into this scheme, a background of the founders should provide some insight.
Wikileaks says МММ perpetrated one of the world’s largest Ponzi schemes in the 1990s. By different estimates, between five and forty million people lost up to $10b although the website says the exact figures of money lost are unknown.
One of the founders, Sergie Mavrodi is a convicted criminal and a former deputy of the State Duma in Russia. Mavrodi was found guilty in 2007 in a Russian court of defrauding 10,000 investors of $4.3m.
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In January 2011, Wikileaks reported that Mavrodi launched another pyramid scheme called MMM-2011, asking investors to buy ”Mavro currency units.” He described it as a naked scheme with an aim to destroy the current financial system which he considers unfair.
”It is a naked scheme, nothing more … People interact with each other and give each other money. For no reason!”
MMM thrives on the introduction of new ”helpers” into the community. What happens when the number of receivers outway the recruits? It crashes.
MMM Zimbabwe is an example of this. Sixty-six thousand participants in the country found that their account balances had been slashed down and could not withdraw their money unless more investors are injected into the scheme.