Sergei Panteleevich Mawrodi

Sergei Mawrodi, 2012

Sergei Panteleevich Mawrodi ( Russian Сергей Пантелеевич Мавроди , scientific transliteration Sergej Panteleevič Mavrodi ; born August 11, 1955 in Moscow ; † March 26, 2018 ibid) was a Russian entrepreneur. He became known in the 1990s as the founder of one of the largest pyramid schemes in the country's history and was later convicted of fraud . The MMM joint stock company operated by Mawrodi in the early 1990s deprived an estimated 10 to 15 million people of their investments.

biography

Mawrodi grew up in Moscow and went to middle school there. He then studied at the Applied Mathematics Faculty of the Moscow State University of Electronics and Mathematics, graduating in 1978. He then worked as a programmer at a mathematical research institute for about three years . At the same time, Mawrodi tried to earn his living with the production and distribution of black copies . In 1981 Mawrodi gave up his work at the research institute for good and concentrated for the next six years on illegal business with black copies of audio and video cassettes. In order to avoid the criminal prosecution practiced in the Soviet Union for not working, he also did various unqualified part-time jobs. In 1983, Mawrodi was arrested on suspicion of illegal profiteering, but was released ten days later. Mawrodi has a strong personality cult around himself. He had his face printed on banknotes and called his new online currency "Mavros", based on his name.

Public company MMM

In 1988, Mawrodi took advantage of the liberalization of Soviet corporate law initiated in the course of perestroika and, together with his younger brother Vyacheslav Mawrodi and his wife Marina Murawjowa, founded the company MMM , whose name stood for the first letters of the family names of the three founders. MMM, which was officially run by Mawrodi as a trading company for computers and office technology , was registered as a company in 1989 and initially had the legal form of a cooperative . On this basis, Mawrodi registered several companies in the following months that were officially part of this cooperative. Among them was the joint stock company MMM (Russian Акционерное общество "МММ" ), which later played a key role in the financial scandal surrounding Mawrodi.

The actual pyramid scheme with MMM shares was preceded by an advertising and marketing campaign that was largely unprecedented for the time, initiated by Mawrodi between 1992 and 1994 for the newly founded stock corporation. Since financial pyramids and how they worked in Russia at the time were still largely unknown, Mawrodi was apparently very sure of the success of his affair and generously financed the campaign by having the company's marketing department broadcast eye-catching commercials for MMM on Russian television every day, in which professional actors demonstrated to the people that one could earn a lot of money without leaving the house. In addition to this, there were other spectacular PR campaigns by MMM during this period, for example, as a kind of special " sponsorship measure ", passengers of the Moscow Metro were able to use the subway several times for a whole day for free.

On February 1, 1994, MMM finally began selling its shares to the public. Sales were carried out nationwide in MMM sales outlets set up especially for this purpose. The initial success of the financial pyramid took on considerable proportions, which was not least due to the high level of awareness achieved through the advertising campaigns, but also to the economic hardship of the broader population of Russia in the years after the collapse of the Soviet Union , the incomplete legislation in the economic sector and the inadequate education of the people about the dangers of investing money in a pyramid scheme. Because MMM investors were actually able to sell their shares at times for a value far higher than the issue price in the first few months (in the course of the previous advertising campaign, potential investors were even suggested a return of up to 1000%), more and more Russians gave their savings to MMM - stocks out in the hope of quick gains. In mid-1994 the company already had over ten million investors, the shares reached 127 times their issue price, and Mawrodi was even considered the richest man in Russia.

The main trigger for the rapid collapse of MMM is an audit carried out by the tax authorities of one of the companies registered under the umbrella of the MMM cooperative, which revealed that Mawrodi owed the Russian state almost 50 billion rubles . The attempt by the Russian government to bring those responsible to account for the penalties for tax evasion was also due to the fact that there were no laws against pyramid schemes in the Russian Federation in 1994.

Since Mawrodi initially refused to pay this claim, further machinations with Mawrodi's companies came to light - partly through journalistic research - which gradually became public through the corresponding reports in the media. After experts and even politicians increasingly called on MMM investors to return their shares, an investor run occurred within a few days at the end of July 1994 , which was accelerated by the fact that numerous companies and institutions apparently also held larger blocks of MMM shares, and now tried to get rid of this quickly. On July 29, when the panic among investors peaked, Mawrodi stopped selling shares and announced that it would lower the issue price of the shares to the February 1 level, that is, to 1,000 rubles. In addition, almost all sales outlets for MMM shares in Moscow closed, only one remained open, as a result of which a crowd of around 15,000 to 20,000 investors formed around them, who loudly and media-effectively demanded their savings. A number of “investor” organizations tried to get their money back, but instead of complaining to the company, the anger turned against the government. Sergei Mavrodi has long managed to turn his own fraud into a failure of state institutions.

The MMM case introduced a number of laws regulating the stock market in the Russian Federation. However, the experience with this massive fraud case has led to massive distrust of public companies in the population.

Arrest and trial

August 4, 1994 Mawrodi was in his Moscow apartment by the militia because of tax evasion arrested and in custody taken. This development caused additional panic among small investors, who now feared that MMM could not be continued as a result and that they would consequently never get their money again. As a result, there were mass protests by investors in front of MMM sales outlets demanding Mawrodi's release. Mawrodi himself took advantage of this mood and promised investors to continue MMM in the event of his dismissal. He had angry investors collect signatures in order to run as a member of the Duma for a vacant mandate in a Moscow constituency, thereby gaining parliamentary immunity . Indeed, Mawrodi managed to collect the necessary number of signatures and to be elected to the Duma with 29 percent of the vote. As soon as the signature collection was over, Mawrodi was released as a candidate. However, since Mawrodi had never fulfilled his official duties as a member of parliament, he lost his mandate on October 6, 1995, and with it his immunity. He also ran in the regular Duma elections in December , but was not elected. Mawrodi went into hiding before he could be arrested. Most MMM investors were still waiting in vain for their money at the time, and quite a few still believed that Mawrodi would get the system working again. The public limited company MMM was officially declared bankrupt on September 22, 1997 .

Since the allegations of tax evasion have now been added to those due to large- scale fraud , Mawrodi was first put out for a national search at the end of 1997 and a year later also internationally. Even today it is not sufficiently known where he stayed between 1997 and 2003, but the media have suggested that Mawrodi never fled the country and stayed in Moscow most of the time. It was not until January 31, 2003 that Mawrodi was located and arrested. At the time he was staying in a rented apartment in central Moscow and apparently had papers made out in someone else's name. Mawrodi rejected allegations of tax evasion, fraud and forgery .

On December 2, 2003, the Khamovniki Mawrodi District Court found him guilty of forging documents and sentenced him to 13 months in prison. The tax evasion proceedings were discontinued at the beginning of 2004 because the statute of limitations for this offense was exceeded . The criminal fraud case, which was also initiated at the beginning of 2004 and in which Mawrodi was accused, among other things, of having caused investors damage totaling around 110 million US dollars through his financial pyramid, was not concluded until the verdict was pronounced on April 28, 2007. In this trial, Mawrodi was found guilty and sentenced to four and a half years in prison. However, since his time in the detention center, where Mawrodi was detained from the moment of his arrest, was counted, he was released on May 22, 2007.

After discharge

In 2008 Mawrodi published a book called Temptation , which contains several novels written by him, some with erotic content. In an interview with the newspaper Delowoi Petersburg , now claiming to operate Mawrodi a year later as a writer, and criticized the Russian justice who regularly swindled his assets in favor of investors MMM foreclose leaves. According to Mawrodi, he has already served his sentence and finds it unjust to be held responsible for the same offense over and over again.

In mid-January 2011, Mawrodi reported back in his weblog and announced that he would create a new (and allegedly harmless for investors) financial pyramid called MMM-2011 . He promised potential investors in the new project a monthly return of 30 percent. According to a press release, the MMM system has now been terminated in 2011. Mavrodi died in a Moscow hospital in March 2018 due to a heart problem. His funeral was paid for by investors from МММ-2011.

International business activities

In 2011 he founded a similar company in India, called MMM India , without denying its constitution as a pyramid scheme. He also started MMM in China. He tried to expand his projects into Western Europe, Canada and Latin America. According to his own information from September 2015, his company expanded at growth rates of one percent per day, or 30 percent per month in South Africa. The communist parties of South Africa and Russia warned against participating in his ventures. In early 2016 he built the same model in Zimbabwe and later in Nigeria. In response, its accounts were frozen in Zimbabwe in September and Nigeria in December 2016. MMM Nigeria resumed its activities in January 2017.

Individual evidence

1. ↑ Mawrodi's biography on the website of the "Aid Committee for Cheated Shareholders"
2. ↑ Interview with Mawrodi, March 26, 2010
3. ↑ Russian pyramid victims hit government (en) . In: UPI , August 28, 1994. Retrieved December 3, 2017. 
4. ^ Manfred Quiring: Sergej Mawrodi, stock juggler in Moscow jail. In: Berliner Zeitung . August 11, 1994, accessed June 16, 2015 . 
5. ↑ biography at peoples.ru
6. ↑ Swindler Mawrodi was released , in: RIA Novosti , May 22, 2007
7. ↑ Text collection on biblioteki.net
8. ↑ Interview in Delowoi Peterburg
9. ↑ New investment by Russia's most famous fraudster , in: Russland-Aktuell , January 11, 2011
10. ↑ Russian Roulette with Mawrodi ( Memento from February 22, 2012 in the Internet Archive ) , in: Wirtschaftsblatt , January 12, 2011
11. ↑ "A Streetcar Named for the Mawro" MDZ from June 24, 2012
12. ↑ Sergei Mavrodi, 90s Ponzi scheme mastermind, this in Moscow hospital . In: TASS , March 26, 2018. 
13. ↑ "Мы можем многое". Что обещал россиянам Сергей Мавроди ( Russian ) RIA Novosti. March 26, 2018. Retrieved March 26, 2018.
14. ↑ Associated Press : Russian Ponzi Scheme Operator Mavrodi Dies at Age 62 . In: The New York Times , AG Sulzberger , March 26, 2018. Retrieved March 27, 2018. 
15. ↑ Сергея Мавроди похоронят на деньги вкладчиков "МММ-2011" ( Russian ) RIA Novosti. Retrieved March 30, 2018.
16. ↑ Alina Lobazina: MMM scheme heads to India . In: Russia & India Report , September 1, 2012. Retrieved September 7, 2012. 
17. ↑ Archived copy ( Memento of the original from May 29, 2015 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. 
18. ↑ "MMM South Africa Scheme" ( Memento of the original from February 16, 2016 in the Internet Archive ) Info: The archive link has been inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. 
19. ↑ Sergey Khazov-Kassia: African pyramids of Mavrodi (Russian) . In: RFE / RL Russian , October 22, 2016. 
20. ↑ http://www.somtoo.com/2016/12/breaking-news-mmm-nigeria-finally.html
21. ↑ "mmmnigeria reopens"

Web links

• Sergei Mawrodi's weblog (Russian)
• Mawrodi's website from 2008 (Russian)
• Biography at Lentapedia (Russian)
• Biography at peoples.ru (Russian)