1. CARYN DOLLEY
A RUSSIAN fraudster convicted of
running one of that country’s
biggest pyramid schemes in the
1990s in which millions of people
lost their life savings is now in
charge of an operation with the
same name in South Africa.
The MMM scheme, founded by
convict Sergey Mavrodi and known
locally as MMM South Africa,
entices investors by advertising
that in a month they will make a
30 percent profit.
This week the Communist
Party of the Russian Federation
sent an e-mail to the South African
Communist Party (SACP) warning
about the scheme.
Thousands of South Africans
are believed to have registered as
investors in the intricate money-
exchange scheme, and a consultant
at MMM South Africa claimed
138 million people from 107 coun-
tries had signed up.
This week the scheme set off
alarm bells and even affected the
head of the National Consumer
Commission Ebrahim Mohamed,
who yesterday received an SMS
from MMM offering him 30 per-
cent monthly return on invest-
ments.
National Consumer Commis-
sion spokesman Trevor Hattingh
said Mohamed would refer the mat-
ter to the commission’s enforce-
ment and investigation division as
soon as possible.
“The matter needs to be
assessed by the (commission) to
establish the origins of MMM, and
to study their business practices.
“In the meantime consumers
are strongly advised to not partici-
pate in what could very well be an
outlawed pyramid scheme where
their monies could in all probabil-
ity be lost,” Hattingh said.
The apparent mastermind of
the scheme is Mavrodi.
Videos of him talking about the
scheme in Russian, subtitled in
English, are posted on the scheme’s
South African Facebook page.
In the latest video uploaded six
days ago, he says: “The develop-
ment in South Africa is just mar-
vellous…
“But nevertheless, you must
keep developing the system. Don’t
rest on laurels. Tell people how
good and kind this system is and
that everyone gets paid here.”
This week the Communist
Party of the Russian Federation
warned about schemes it said
Mavrodi was running in South
Africa, India and the Philippines.
In an e-mail to the SACP on
Wednesday it said: “We consider it
our duty to warn our fraternal
peoples that this activity may
result in bankrupting millions of
people. We would like you to know
that as a result of such swindles in
Russia at least 15 million people
suffered and went bankrupt.”
Eight years ago The Moscow
Times reported that Mavrodi, who
at one stage was a Russian MP, was
convicted of masterminding the
initial MMM scheme. A judge
found he defrauded MMM
investors “by deception, betrayal
and abuse of trust”.
“MMM was the first and the
biggest in a series of financial pyr-
amids that hit Russia in the 1990s.
Mavrodi was found guilty of
defrauding 10 000 investors out of
110 million roubles, though in real-
ity millions of people lost money
in the scheme,” the article said.
“Some two million to 10 million
people lost their savings when the
pyramid scheme folded in July
1994.”
Mavrodi was sentenced to four-
and-a-half years in jail.
Yesterday Financial Services
Board spokesman Lesego Mashigo
said it was aware of the South
African scheme, but because it had
no mandate to investigate pyramid
or Ponzi schemes, it had referred
the matter to the National Con-
sumer Commission.
Hawks spokesman Hangwani
Mulaudzi said officers knew of the
original MMM scheme, but were
unaware of a South African
version.
The MMM South Africa website
describes the scheme as “a commu-
nity where people help each other”.
Investors could be awarded var-
ious bonuses, including a referral
bonus. “Inviting new members into
the community is your additional
contribution to its development.
But nobody forces the members of
the community to invite new
participants,” the website said.
According to the Consumer Pro-
tection Act, a scheme is a pyramid
scheme if participants are prima-
rily compensated for recruiting
others, rather than from selling
any goods or services.
More than 23 000 people have
liked the Facebook page for MMM
South Africa and about two weeks
ago a message was posted on it hit-
ting back at those calling it a scam.
“MMM is a community of dona-
tion exchange. MMM cannot be
regarded as an illegal Ponzi
scheme or pyramid scheme.”
Weekend Argus spoke to a con-
sultant on the MMM South Africa
website. The consultant said
Mavrodi had founded the scheme.
Another consultant said there
was no way for Weekend Argus to
reach Mavrodi and would not give
any contact details for him.
The consultant eventually pro-
vided his own work e-mail address.
Queries about the scheme and
Mavrodi, including where he was,
were not answered by last night.
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IB1262VJD
UP AND OVER: Gareth Taylor soaks up the warm spring rays and the waves while skimboarding at Clifton Beach yesterday. The weather is sunny today
with a forecast maximum of 29ºC. Skimboarding makes use of a board that is smaller than a surfboard and has no fins. It is used to glide across the surface
of the water. PICTURE: LEON LESTRADE
Notorious
fraudster
targetsSA
Millions of Russians left destitute
IF THE MMM scheme is to be
believed, it simply involves
people helping each other.
Yesterday a consultant for
MMM South Africa said a
minimum investment was R100.
Once registered on the website
an investor could log on and
enter what is known as an online
“personal office”.
An investor could request to
“give help” and the system would
pair the investor with someone
who needed “help”.
Once an investor transferred
funds, the investor was then
given “Mavro”, the system’s
internal currency, to match the
amount they invested.
This was then expected to
grow by 30 percent a month.
The MMM South Africa
website said: “Participants
transfer each other money
directly, without intermediaries.
“In fact, MMM only regulates
the process and nothing more.
The system completely belongs
to people.
“Without fools. It is a real
mutual aid fund, where ordinary
people help each other.”
NEW VENTURE: Sergey Mavrodi, convicted years ago in Russia
for running a pyramid scheme, has founded a similar operation
in South Africa. PICTURE: FACEBOOK
MMMjustlendingahelpinghand?
Boksmust beatUKcustomstoplayonhometurf
JAN CRONJE
THE SPRINGBOKS may be count-
ing on the magic of home-grown
turf for that edge in the World Cup
games, but before the grass can
work its spell, it needs to pass
inspection by UK customs officials.
The UK Border Force places
restrictions on which plants, fruit
and seeds can be brought into the
UK, especially from outside the
European Union.
Potato seeds, for example, are
banned, and there are many other
restrictions on what can be
brought in and its quantity.
South African Rugby Union
(Saru) spokesman Andy
Colquhoun said yesterday the
union had done its homework on
the legalities of transporting the
turf to the UK. “We have had the
idea for a long time, so we have had
the opportunity to really plan for
it,” he said.
“As far as I understand, the turf
has been cleared as all safe.”
The piece of turf was unveiled
at a celebrity-heavy event on
Thursday at the Springbok Experi-
ence Rugby Museum in Cape
Town. It was grown in soil drawn
from all 14 South African rugby
provinces. Its seed will be taken to
the UK, where it will be planted
and grown in special trays to
inspire players while kitting up.
“This will be a visible and phys-
ical reminder of what they are
playing for and from where they
come,” SARU chief executive Jurie
Roux said this week.
Bringing plants into the UK
bedevilled the South African dele-
gation to the Chelsea flower show
earlier this year.
Some plants for the the SA
National Biodiversity Institute dis-
play got stuck at customs, and
weren’t released in time to be
included in the show. They had to
borrow from competitors. But the
scheme worked, as they won a Sil-
ver Gilt Award. See pages 6 and 31
Spring break
SPORT
SCARRAKEEN
FORFRESH
WPSTART
Page 32
INSIDE
PUTTINGON
THEMATRIC
RITZ
Page 12
PEOPLE
GETTING TO
KNOW
JACK PAROW
Page 16
GARDENING,TRENDS,DECOR,PROPERTY