Russian Ponzi scheme Mavron still doing business - Daily Nation

Russian Ponzi scheme MMM still doing business in Kenya

Saturday January 27 2018

Sergey Mavrodi

Russian Sergey Mavrodi. Mavrodi started the new Bitcoin-based Ponzi scheme known as MMM. FILE PHOTO 

By JOHN KAMAU
More by this Author

Kenyans are gullible.

Over a year ago, some of those ensnarled by a Russian Ponzi scheme, which is blamed for the huge investments in Bitcoin, wrote tens of threatening letters to me after exposing the fraud.

I am back for the last time and with a reason.

Sergey Mavrodi’s MMM has grown beyond anyone’s imagination in Kenya and trades in bitcoins and a cryptocurrency he calls Mavron.

GDP

How such a fraud continues with no one raising a finger — or warning gullible Kenyans is beyond believing.

The Central Bank of Kenya governor, Dr Patrick Njoroge, has warned those trading in cryptocurrencies, such as Bitcoin, and the Russian fraudster Sergey Mavrodi’s MMM’s Mavron that the bubble might soon bust on them.

The most scaring revelation was however by a Citibank research that revealed that bitcoin holdings in Kenya are about 2.3 per cent of the Gross Domestic Product, which means that we have put about Sh163.3 billion into cryptocurrencies.

PYRAMID SCHEMES
Dear Kenyans, pleaded Dr Njoroge: “If you want to invest in those kind of things it is a bubble of a kind; be ready to lose all your money in that whole operation.”

First we had the pyramid schemes in which some gullible investors — who ostensibly wanted to double their money — lost Sh8 billion to various fly-by-night companies.

The most prominent of these was Deci, founded by George Odinga Donde and Mary Odinga, and which took off with Sh2.4 billion from its 93,485 members.

The next was Pastor Peter Alfred Ndakwe’s Clip Investment Sacco Ltd, which left about 5,846 victims minus more than Sh1.9 billion.

QUAIL
It was only after hackers got into the files of a Panama law firm, Mossack Fonseca, that it became clear that Mr Ndakwe, for instance, had been helped by a Nairobi law firm to register offshore companies where he not only hid his loot but also had his now two foreign-registered companies — Petkinson, SA and Sun Jopkins SA, which had pseudo-foreign directors purchase properties locally.

Nobody would have linked the properties to Mr Ndakwe, who is still enjoying his loot since they are in the name of a foreign-owned company.

There were many others that came after that: The brazen quail business, Manilla Farm cow import fraud, and now still running is the Russian Ponzi scheme by the name MMM Global and its local franchise MMM Kenya.

FRAUDSTER
Fronted by Sergey Mavrodi, a Russian con artist and former Duma deputy (the equivalent of an MP), this scheme got its name from its founders: Sergei Mavrodi, his brother Vyacheslav Mavrodi and Olga Melnikova.

What we know of this once-convicted fraudster is that his main business was initially in importing computers and office furniture but, together with his brother, they found that they could not get the required capital.

That is when they mooted the idea of getting private investors to buy shares in their MMM enterprise.

SHARE PRICE

They then started manipulating the share prices and more investors poured in to cash in on the rising shares.

“No one questioned the fact that the share price was calculated by the very person who stood to benefit from its increase the most.

"There was no independent stock exchange to value the shares. Nor was the share price quoted by a third party,” Collin Cross, the author of Anatomy of a Ponzi Scheme, wrote.

And since investors did not question where the amount of money they were getting came from, or what stock had been sold, Mr Mavrodi in 1994 declared a dividend of 1,000 per cent.

That is when he decided to roll out a huge scheme to defraud more people.

TV AD

It is reported that he started an advertising blitz and picked