Founder of the Largest Financial Pyramid Opens a New One Online

The year when I graduated from school and joined the university was 1998 – the year of the heaviest financial crisis in post-Soviet Russian history when over a single day the exchange rate of US dollar dropped three-fold and many people around lost virtually all their savings. All in all, the 90s in the history of Russia is a story of unstable financial situation where people kept losing money in this way or another all the time. I can tell you that in this country there’ve been too many absurd financial stories that sometimes don’t even seem to be true enough to believe them – but they actually happened.

One of such stories was that of financial pyramid named MMM founded by Sergei Mavrodi. In early 90s every Russian citizen was exposed to tons of ads on TV that promised happy and prosperous lives based on huge earnings. Inexperienced people took their savings to MMM and funded payouts to previous members but unfortunately this scheme came to an end when the pyramid grew too large and powerful not to notice (it is told to have accumulated a third of the entire budget of the country). So interference of the authorities provoked a panic among investors and a total disaster that left millions of people (different sources estimate 10 to 15 million) who trusted the company without their money.

This is a very complicated story that I am no expert in and I don’t think anyone has the entire knowledge to make judgments. But the craziest part is that MMM founder Mavrodi who is now back from prison (where he spent 4.5 years for fraud) has decided to launch a new pyramid based on pretty much the same scheme – but this time it should all take place exclusively online using electronic payment provider WebMoney that is one of the most popular tools in Runet.

MMM founder announced the new project in his blog (hosted by Blogger) a few days ago and promised monthly earnings of up to 20% (30% for retirees). The project is actually named MMM-2011 so the founder does not try to hide the affiliations with the previous disaster. In fact, he keeps claiming that the new attempt may be a success because the scheme cannot be destroyed by the authorities as there’s no legal entities involved – only private exchanges between participants.

This time the pyramid will not involve any heavy TV advertising – the founder claims that it is not needed now that we have internet and so many users who are willing to join. In fact, while admitting that this new project is a pyramid (since there are no outside sources of income, only the money of participants themselves), Mavrodi actually invents the term ‘financial social network’ where everyone is invited to participate.

The scheme includes creating two virtual wallets in WebMoney for various transactions. WebMoney has already informed their users that their services are not intended for any financial pyramids or other multi-level schemes and that they would now watch for suspicious activities. At that the law-enforcement authorities can do nothing to protect people before they get harmed – because in such situations they can only advise not to engage in such activities but are unable to prevent anyone from participating before some breach of law actually happens. Various experts also warn people that this should be dangerous but I’ve seen enough comments from people who tell that they will join with some $100 just to see what happens – and I’m quite certain there will be a lot of such risky people.

But the most interesting part is that while thousands of people send emails expressing their interest in participation, there are already voices that claim that this new idea is nothing but a viral marketing campaign for a new movie named Pyramid to be launched this year (script written by Mavrodi obviously). But even if this is true reason for the project (and it can be given that the project receives immense attention on TV, in print and online), it is definitely obvious that even the most creative frauds have come online now – either looking for easy ways of promotion or building totally new financial schemes. After all, what is viral marketing in social networks that we are all so enthusiastic about if not some sort of a pyramid?

Via (in Russian)