The MMM-2011 pyramid scheme founded by the convicted Russian fraudster, Sergei Mavrodi, and operating in Russia and the CIS states, has denied media reports about its bankruptcy in Ukraine.
“The media is actively seeding panic among members of our system by spreading lies that the MMM-2011 had collapsed, and that Mavrodi himself has confirmed it. The system does not face anything of this kind,” Ukrainian news agency UNIAN quoted MMM’s statement as saying.
On Tuesday, the Yurist Online web site reported that MMM had suspended deposit payments and that depositors’ money had reportedly been transferred from the office in cash.
The depositors of the ponzi scheme, who managed to contact the office, said that the administrator told them that “the pyramid had collapsed, we had warned everybody, there is not and will not be any money.”
The MMM headquarters in Kiev is closed on Thursday morning, RIA Novosti reported from the Ukrainian capital. Ukrainian police said that nobody had yet filed complaints about the non-payment of deposits.
According to MMM, about five million people, including 1.5 million Ukrainians, had invested into the scheme.
MMM-2011 (the three letters stand for "We Can Do a Lot" in Russian) uses the WebMoney online payment system to allow investors to buy tickets that work like shares, but have no real value. The project's mastermind has promised investors returns of 20-30 percent per month.
Amid rumors about the collapse of MMM-2011, Mavrodi announced on Thursday he would create the MMM-2012.
“Since this moment, the new pyramid, the MMM-2012 has been created. The old one is not shut down, thus both the MMM-2011 and the MMM-2012 will operate independently from now,” Mavrodi, who was put on the wanted list, wrote on his official web site.
Experts say that it is difficult to prosecute participants in the system because all transactions are carried out through personal accounts and there is no law to prohibit ponzi schemes.
A former mathematician, Mavrodi was released from prison in 2007 after serving a sentence for offenses relating to the collapse of the original MMM in 1994.
The MMM-1994 swindle, which came to be regarded as a symbol of the lawlessness of the chaotic 1990s in Russia, was one of the largest such schemes in that era. The pyramid schemes took advantage of the ignorance of a nation still learning the basics of a new capitalist system. Ponzi schemes became so commonplace that their prices were quoted on the front pages of newspapers.
Four percent of Russians however are ready to invest money with MMM, according to a poll taken by state-run pollster VTsIOM earlier this month. Forty six percent of the respondents said the Mavrodi’s project would be likely to collapse because of government pressure, not because of a lack of members.
