By Odunewu Segun
Some Nigerians who have participated and are still participating in the Mavrodi Mondial Moneybox, popularly known by its acronym, MMM, have described it as an answer to their prayers as its financial return in a short period is “better than what any bank can offer.”
However, some are cautious because they still remember, in 2007 in the ancient city of Ibadan, when similar schemes, pioneered by Pennywise and Wealth Solutions promised the same bogus returns before the scheme later collapsed.
When Pennywise and Wealth Solutions started with a promise of over 50 per cent returns on investment, not many people took the bait at the beginning. But overtime, with testimonies from those that invested, people from all walks of life flooded the offices of these two ‘wonder banks,’ and barely six months after, the whole scheme collapsed like a pack of cards.
A lot of people allegedly committed suicide after the collapse, with losses valued at billions of naira lost.
Investigations revealed that the model employed by these ‘Wonder banks” was an inverted pyramid scheme that required a continuous inflow of investment in order to pay off the old members. And when those coming in began to decline due to late payments, the scheme could no longer sustain itself, and thereafter, it collapsed with billions in life savings going down the drain.
From investigations, the MMM is actually not different from other Ponzi schemes that rely on an accelerating number of new members to pay off the old.
The scheme which has been banned in China has found its way to South Africa, Zimbabwe and recently, Nigeria, where it has attracted ‘investors’ who put money into it and receive 30 per cent ‘profit’ at the end of the month.
National Daily gathered that people are asked to register and put in money and after 30 days, they receive a 30 per cent profit plus the invested money. However, what many people fail to understand is that due to the larger number of people participating, it is only possible for money to circulate in a case akin to robbing Peter to pay Paul.
According to Mr. Ajibade Olorunimbe, the scheme is not different from Pennywise, Treasure Line, Turning Point and several others that captivated Nigerians with large returns in 2007.
He said the way Nigerians are rushing in now to invest in the MMM scheme was no different from how Nigerians put their hard-earned money in those schemes otherwise known as wonder banks. “What happened eventually? Only a fraction of people benefitted. Bulk of those that invested lost their money as the scheme crumbled when the base became too small to support the growing top.”
He said MMM was using the same structure with the other collapsed schemes. However, while the likes of Pennywise, Treasureline and Wealth Solution had physical presence in form of offices, MMM is strictly an online transaction. This, he said, makes it more dangerous because if and when it collapses like it did in China, Zimbabwe, South Africa and Kenya, there would be nobody to hold for refunds.
The scheme, which was founded in Russia in 1989 by Sergei Mavrodi, his brother, Vyacheslav Mavrodi and Olga Melnikova, recorded rapid growth but in 1994, it came crashing down as it was closed over tax evasion. Sergei Malvrodi was found guilty in 2007 in a Russian court of defrauding 10,000 investors and sentenced to four-and-half years in prison.
One of the beneficiaries of the scheme who spoke with National Daily, Folake Ogunnusi, a Hairdresser at Fagba area of Lagos, said when she was told about it, she was initially skeptical due to her past experience with such schemes.
“I have invested several times and gotten my profits, but I am not doing it again because I’m certain the scheme has gotten to its climax,” she said.
Folake said she would have liked to invest more if she had known earlier but as it is, she is afraid to put in more money.
However, a banker with Union Bank who craved anonymity said these people always come with very interesting propositions. “These are fraudsters who are just out there to collect people’s money and run away as soon as they hit their target. There is no insurance because the NDIC does not even protect them against such risks when they occurred.”
Similarly, the Central Bank of Nigeria, through its acting Director of Corporate Communications, Isaac Okoroafor, also warned Nigerians against putting their money in the MMM scheme as the apex bank could not guarantee the unregistered financial enterprise.
As it is, those that have gotten their profits from the scheme are telling potential investors not to be afraid, but it is just a matter of time before it will come crashing down as did those before it.