Cries in Nigeria as MMM froozes account of 6 million

                                

Many Nigerians were shocked to learn that the popular money making scheme, Mavrodi Mundial Moneybox (MMM), had placed a one- month freeze on withdrawals.

A letter displayed on pages of participants of the scheme cited “heavy workload on system” as reason for the freeze.

This means members of the Ponzi scheme, who are due to withdraw their capital and 30 per cent return on investments, cannot do so until sometime in January.

According to the letter, the freeze on withdrawals is partly due to negative reports by the media on the scheme.

The letter reads: “One-month Freezing of Confirmed Mavros. Dear members, as usual in the New Year season, the system is experiencing heavy workload. Moreover, it has to deal with the constant frenzy provoked by authorities in the mass media.

“The things are still going well; the participants feel calm; everyone gets paid – as you can see, there haven’t been any payment delays or other problems yet – but… it is better to avoid taking risk. Moreover, there are just three weeks left to the New Year.

“On the basis of the above mentioned, therefore, all confirmed Mavros will be frozen for a month.

“The reason for this measure is evident. We need to prevent any problems during the New Year and then, when everything calms down, this measure will be cancelled, which we will definitely do.

“We hope for your understanding. Administration.”

The News Agency of Nigeria (NAN) recalls that the Securities and Exchange Commission (SEC) and Central Bank of Nigeria (CBN) have warned Nigerians against participating in the scheme, which they described as a “Ponzi” scheme.

The House of Representatives, in October, ordered an investigation into operations of the scheme.

The Lagos State Emergency Management Agency alerted families to be vigilant against possible suicide by subscribers and investors.

On its Twitter account yesterday, the agency directed families and friends of subscribers to call 112 in case of or suspicion suicide in any part of the state.

Yesterday, there was a report trending on social media of a man who attempted to commit suicide over the alleged crashing of the scheme.

The report which could not be confirmed said the Benue man was shocked that he could not collect the returns on his N300,000 investment, which he would have used for his wedding, planned for January.

MMM Nigeria tweeted that the scheme’s management had only frozen investors access to accounts and operations, to enable it rectify issues about panic withdrawal and not that it had crashed.

It described the one month freezing as a step to ensure the sustainability and stability of the MMM Nigeria system.

It added: “There is nothing to worry about, while your Mavro is in one month freezing, it continues to grow so there is nothing to be worried about. Just continue to PH to earn 50 per cent more.”

According to information on MMM Nigeria website, about over two million Nigerians are participating in the scheme.

MMM was established in 1989 by Sergei Mavrodi, his brother Vyacheslav and Olga Melnikova.

The name of the company was taken from the first letters of the three founders’ surnames.

Initially, the company imported computers and office equipment. In January 1992, tax police accused MMM of tax evasion, leading to the collapse of MMM-bank, and causing the company to have difficulty obtaining financing to support its operations.

Faced with difficulties in funding its foreign trade, the company switched to the financial sector. It offered American stocks to Russian investors, but met with little success.

Later, MMM-Invest was created for the purpose of collecting vouchers during privatisation. This effort was similarly unsuccessful.

MMM created its successful Ponzi scheme in 1994. The company started attracting money from private investors, promising annual returns of up to one thousand per cent. It is unclear whether a Ponzi scheme was Mavrodi’s initial intention, inasmuch as such extravagant returns might have been possible during the Russian hyperinflation in such commerce as import-export.

At its peak the company was taking in more than 100 billion rubles (about 50 million USD) each day from the sale of its shares to the public. Thus, the cash flow turnover at the MMM central office in Moscow was so high that it could not be estimated. The management started to count money in roomfuls (1 roomful of money, 2 roomfuls of money, etc.).

Compiled by Obawole Adeyemo