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Sergei Panteleevich Mavrodi, founder of Mavrodi Mondial Moneybox (MMM)

Herald Reporter
Social financial network MMM Global Zimbabwe is a fraudulent investment scheme and people have no legal recourse if they lose their money, the Reserve Bank of Zimbabwe has warned.

The online investment pyramid scheme, effectively a Ponzi scheme relying on an accelerating number of new members to pay off the old, is simply referred to as Triple M and has in the past months seen thousands of Zimbabweans joining in a bid “to get rich quickly”.

There are now reports that thousands of Zimbabweans who joined the scheme have been put on hold until September 15 and cannot do any transactions. In any case, the affected members have nowhere to claim back their investments.

Ponzi schemes benefit their creators, as there is a seemingly endless pipeline of potential new members, but very soon the number of new members at each step has to exceed the population of the Earth, so most who join never see any money.

The scheme advertises itself as a mutual aid fund under which recruited members contribute money to assist others and are promised investment returns of 30 percent per month.

MMM stands for Mavrodi Mondial Moneybox and takes its name from its founder, Sergei Panteleevich Mavrodi of Russia.

He founded MMM in 1989 and the scheme was declared bankrupt three years later leading to the disappearance of Mavrodi until his arrest in 2003.

The RBZ on Thursday urged the public against investing in Ponzi and pyramid schemes.

“It has come to the attention of the Reserve Bank of Zimbabwe that MMM Global, whose founder was once convicted and jailed in Russia for defrauding thousands of investors in a Ponzi scheme, has established a local chapter calling itself MMM Global Zimbabwe,” the central bank said.

“MMM Global Zimbabwe is not a registered or regulated entity in the country. It advertises its operations through a website and through recruiting agents operating in various centres of the country. It has no official offices or office bearers.”

The RBZ added: “Testimonies by the privileged early members who would have benefited from the scheme, are often used to lure new recruits. Ponzi and pyramid schemes are not sustainable because, eventually and inevitably, they run out of new recruits leading to their collapse, with most contributors losing their funds. This has already happened in a number of countries where MMM Global has chapters.

“Since it is not registered under any law and its activities are not regulated or supervised by any authority in Zimbabwe, members of the public are advised against putting their hard-earned money in this or similarly structured schemes. Those who invest in such schemes do so at their own risk and may find themselves without legal recourse when they lose their funds.”

The RBZ said such schemes were fraudulent in every aspect.

“They are fraudulent investment schemes under which existing investors are paid returns, not from genuine market investment of their funds, but from contributions made by new investors, until a point when the scheme can no longer attract new investors,” RBZ said.

“The participants are made aware that they make their money by recruiting new members who in turn must recruit more members.”

In 2013, business people and civil servants were left stranded when their payments worth millions of dollars disappeared after the collapse of Geozing Pawnbrokers, Perfect Shot Investments and McDowells.