At every business centre, cyber cafe and even in public transport system, the buzz word is MMM and it is sweeping across the country like a hurricane.

igpIt was after Mr Kayode Ogunsola who lives in Lagos, cashed the money he put into MMM that he finally agreed that the scheme is paying and that people are joining at an increasing rate of 1000 to 2000 persons per day all over the country.

Despite the warnings by both the Central Bank of Nigeria  and the Securities and Exchange Commission (SEC) that MMM is a fraudulent scheme which will cause people to lose money, the MMM Nigeria keeps growing stronger by the day.

The name, MMM, was derived from the first letters (M) of the surnames of its founders Sergey Panteleevich Mavrodi, his brother, Vyacheslav Mavrodi and Olga Melnikova.

While a visit to MMM website showed that most Nigerians are investing diifferent sums of money ranging from N10,000 to N4million and above, Ogunsola, who has just collected N45,000 after putting in N25,000 and leaving it for over 40 days, said, “MMM has come to stay because it is helping people to grow their money in a period when the economy is dwindling and prices of everything keep shooting up.”


Govt, CBN, SEC’s clear warnings

The Central Bank of Nigeria (CBN) recently warned Nigerians to be careful of any deposit money institution that is not insured by the Nigeria Deposit Insurance Corporation (NDIC) especially the MMM Nigeria community.

The bank, through its acting Director of Corporate Communications, Mr. Isaac Okoroafor, said in a statement that such deposit money institutions were dubious Ponzi schemes.

“At times like this when the economy has suffered some decline, Nigerians should be very careful with those they deal with. Any institution that is not licensed by the CBN to accept deposits should not be given money to keep under any guise.

“We can vouch for the banking system. The deposit money banks are the only licensed institutions to take deposits. If you need to deposit money in any form, go to any of the deposit money banks and put your money, you can buy fixed income instruments or invest in stocks,” he 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 occur,” the CBN said.

The Securities and Exchange Commission (SEC) also raised the alarm over MMM, describing it as a Ponzi scheme, where returns would be paid from other people’s invested funds.

“The attention of SEC, Nigeria has been drawn to the activities of an online investment scheme tagged ‘MMM Federal Republic of Nigeria (nigeria.)’. The platform has embarked on an aggressive online media campaign to lure the investing public to participate in what it called ‘mutual aid financial network’ with a monthly investment return of 30 per cent. The commission hereby notifies the investing public that the operation of this investment scheme has no tangible business model hence it’s a Ponzi Scheme, where returns are paid from other people’s invested sum. Also, its operation is not registered by the Commission.

The House of Representatives as stated earlier, some days ago, also called on law enforcement agencies to track down promoters of MMM.

The lower chamber also mandated its committees on banking and currency and financial crimes to investigate the scheme.


MMM customers adamant

But those who patronise the scheme appear adamant. According to Ogunsola, they hold that government itself is a ponzi scheme, deceiving people everyday with empty promises.

“Imagine, if you put N100,000 in a bank, instead of growing by the addition of interest which banks are supposed to pay, it will be reducing because of bank charges. In fact, the worst is that before the end of one month, inflation has reduced the value of the N100,000 by N18,300. But put the money in MMM, you are sure of your N130,000 in one month and if you are registering for the first time, N7,000 sign-up bonus will be added. If you did not withdraw after one month,MMM  will continue to add N1000 until the 45th day before it stops growing,” Ogunsola explained.


Blame government, stock market

A herd of participants on MMM said people are compelled to explore all money-spinning avenues to support their livelihoods because of hardship in the country.

“The stock markets are failing; put your money there and you barely get any return on investment (ROI). You get little, or in most cases, no interest from the deposit money banks. Typically, the average man can’t even afford to access a loan from the bank,” Ogunsola told Saturday Tribune.

He said government and politicians should be held responsible for failed promises, looting, and the systemic corruption that have bedeviled Nigeria for decades now.


How does MMM operate?

MMM gives participants back their money with 30 per cent interest within 30 days.  For instance, another participant who preferred not to be named said, “if you accept to provide help of N200,000, the bank account of either one person who requested for help of N200,000 or a number of people whose total request is N200,000 will be sent to you to pay the money into.

“Although one can invest as many times as possible after each 30-day circle, extra bonus is given to people who upload a video of themselves promoting the scheme.

Also,” when you register on MMM and refer people to it, even if you are not investing, you earn 10 per cent of the amount the person invests.

As a networking scheme, he explained that  whenever a participant  provides help (PH) or want to send money to another participant, it is not only his/her money plus 30 percent extra that is generated by the MMM system, there is additional 10 per cent generated for the person who referred the participant known as  ‘MMM referrer›, five per cent for MMM guider and another five per cent for higher participants at the top tiers of the MMM system. That is how higher players on the MMM platform generate their own money.

Explaining further, the source who said he has been participating in the scheme since last June, said, “the MMM, like any Ponzi scheme, is an “investment” (though it is clearly stated in their website that MMM is not an investment) scheme which pays surprisingly high returns to “investors”.

They use the funds accumulated from the increasing number of new investors to pay the old ones. They are able to pay such high returns because of the exponential number of new members; paying really unnatural large returns in the hope that they will keep growing as new members/investors turn in continually.


How long will MMM last?

According to an economist Mr Damian Nnanyerugo, the MMM is solely run on money (contributions).

“The MMM will not remain here for much longer, so it is worthwhile to adopt the frugal economy now. The laws of diminishing returns will eventually catch up with the scheme. Initial investments will yield great returns, but the returns on further investment will gradually diminish. They don’t do any production or sales that might keep them running for a long term,” he said.

He said MMM’s  sustainability primarily depends on the trust the members have in one another and the hope of continuous increase in membership. It does not sound like a sustainable business approach.

“Alternatively, MMM can crash,”  he said.  “But this will only happen when participants are no longer willing to put in their money. As long as people keep joining MMM Nigeria, it will not crash.”

Some analysts also said MMM Nigeria has thrived well so far, and may continue for a while because of the increasing population of the people who have resorted to the scheme as a quick way to get out of the recession.

“The MMM managers even clearly states on their website that there is no guarantee of getting back your money after you have provided help. But the system is well designed in such a way that you provide help before you can get help.

“This eliminates the risk of anyone running away with your money. Failure to provide help within the specified time when contacted, you will be blacklisted out of the system,” Nnanyerugo said.


Beware of investments with more than 15% returns

Well, you may argue that people lose money everyday on sports betting, trading forex, investing in stock among others. So it is entirely subjective and a matter of choice.” I will say enjoy the money while it lasts and good luck, because you will need it. At the same time, beware of any investment that gives more than 15 per cent return. It will soon go the way of other ponzi schemes,” Nnanyerugo warns.

He further said he knew a banker who borrowed money and  invested in such scheme only to loose all the money when the scheme crashed.

Pat Andrew  believes MMM is not a scam and  wants the Federal Government to stop the act of even trying to investigate the scheme.

Also, Ethan Vanderbuilt, in a social media comment, wrote: “MMM is a ponzi scheme that is taking advantage of your country. The original scam crashed because it could not pay people. It will lead to people taking their lives when this one crashes as well. Act to stop this scam now before it grows any larger.

“For all the MMM scammers that think they are not hurting anyone, let me break this down for you. MMM is a direct payment ponzi scheme. For someone to get their money back, someone else has to be fooled into giving them their money with a false claim of them getting a 30 per cent return in one month.

“To get your 30 per cent return others have to be fooled into giving you their money. This goes on through an endless chain of people until no more suckers can be found. When this happens, the scam collapses and the huge number of new people that joined and the people waiting to get help get nothing. Then you get a statement like the following: We regret to inform you that we have to close down MMM. It was an experiment and, unfortunately, it failed. ‘We turned out not to able to pay 30 per cent per month. ‘Old investors are victimising new investors with a scam.”


Origin of MMM

MMM was founded in 1989 by three Russians – Sergey Panteleevich Mavrodi, his brother Vyacheslav Mavrodi and Olga Melnikova. The name was derived from the first letters (M) of their surnames, thus MMM. The company was into computer and  office equipment import until it was accused of tax evasion by the Russian authorities. They couldn’t fund any foreign trade again, making it difficult for them to continue operations. After several unsuccessful attempts at diversification, it successfully turned into a ponzi scheme in 1994.

Within a few months, it grew exponentially and at its peak, it was able to turn in $50million a day. However, it became bankrupt in 1997 due to series of tax issues and unrealistic promises of excessively high returns (up to 200 per cent and even more, in some cases). Sergey Mavrodi was arrested in 2003 and convicted of fraud in 2007 with a four and a half years prison sentence. He was however released a month later, having spent over four years in custody already.

In 2011, it re-branded to MMM-2011 and continued to spread to different parts of the world. They landed in South Africa, for instance, in 2015, promising a 30 per cent monthly return with varying degrees of success. They saw potentials in Nigeria and penetrated the Nigerian market in early 2016 (at about the same period they were banned in China) with a similar model and claims. They have termed  MMM a social financial network of people who trust themselves, and so are providing help (PH) and getting help (GH).

MMM is in over 118 countries in five years of existence in almost all the villages, towns and cities of all the 118 countries with over 300 million numbers (far more than the entire population of Nigeria).

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