The recent warning by Nigeria’s security and exchange commission (SEC) about the dangerous business model of MMM Nigeria has generated a lot of heat among many, especially those already caught in the web of a scheme too good to be sustained.
According to SEC, MMM Nigeria is a Ponzi scheme with no real income generating venture apart from paying the supposed 30% returns to old investors, same money they collected from new investors. Few hours after FINANCIAL WATCH published the warning to stay away from this venture, a scheme described by SEC as online fraudsters in the capital market, a FINANCIAL WATCH reader sent a positive review of the company, apparently already an investor. Below is the review:
MMM is not a scam, an MLM, HYIP, Bank or Investment company. MMM is a DONATION COMMUNITY where members have decided to help themselves gratuitously, without collateral, provide financial help to each other.
Thirdly, MMM advertises because of the way it works. Even the Banks and organizations do aggressive advertising. Even the banks need more customets to survive. MMM operates the way a stockvel operates. The point is, whose money has Sergei Mavrodi stolen. No member of MMM , anywhere in the world gives his or her money to Mr. Mavrodi. When you join MMM, you do not give your money to MMM. MMM or MMM founder Mr Mavrodi, I repeat, does not collect a dime from anyone anywhere in the world. We members give money to each other. We pay directly into the others Bank account. ….so how does Sergie run away with your money.
MMM has enemies, the politicians, the banks, government and press. Why? Please go do your research very well. Then u will find the answer. I want you to go do that research, when you find it, only then you’ll be convinced to join MMM.
Mr. Mavrodi has made his money way back before MMM. His aim and ideology about MMM is to fight against the unjust financial system of the world; which makes the poor poorer and rich richer, although its the poor who does the hard work. The Bank takes your money in the pretense of keeping it for you. You keep it there for years. How much do they give u as interest Peanuts! Mr Mavrodi belives no government can make the masses rich, no politician or rich person will come to make you rich. He believes, the masses must take the bull by the horn by helping each other and that is why he put this system in place for everyone to take advantage. Again. Mr. Mavrodi nor MMM does not collect money on his website or from anyone. Mr. Mavrodi is a Mathematician, a programmer and he only set up this system to help the masses. MMM has changed my financial status!!!
Mmm has been in existence for five years in over 100 countries of the world. #mmmpays. It has been paying everyone for five years. #MMM has paid me severally, I’ve lost count. #MMM is NOT A SCAM!
Here is what you really need to know about MMM
It is obvious that many Nigerians are getting aware of this current Pyramid scheme trending in Nigeria called MMM Nigeria (http://www.nigeria-) which promises 30% Return on Investment(ROI) after 30 days.
The business is a Pyramid/Ponzi scheme, Why would anyone call it a Pyramid/Ponzi Scheme ? First let’s examine what a Ponzi/Pyramid scheme is one should be wary of MMM Nigeria
A Ponzi scheme (also a Ponzi game or a Ponzi) is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources. Operators of Ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent.
Initially the promoter will pay out high returns to attract more investors, and to lure current investors into putting in additional money. Other investors begin to participate, leading to a cascade effect. The “return” to the initial investors is paid out of the investments of new entrants, and not out of profits. Often the high returns encourage investors to leave their money in the scheme, with the result that the promoter does not have to pay out very much to investors; he simply has to send them statements showing how much they have earned. This maintains the deception that the scheme is an investment with high returns.
Unraveling of a Ponzi scheme
When a Ponzi scheme is not stopped by the authorities, it sooner or later falls apart for one of the following reasons.
- The promoter vanishes, taking all the remaining investment money.
- Since the scheme requires a continual stream of investments to fund higher returns, once investment slows down, the scheme collapses as the promoter starts having problems paying the promised returns (the higher the returns, the greater the risk of the Ponzi scheme collapsing). Such liquidity crises often trigger panics, as more people start asking for their money, similar to a bank run.
- External market forces, such as a sharp decline in the economy (for example, the Madoff investment scandal during the market downturn of 2008), cause many investors to withdraw part or all of their funds.
Why do FINANCIAL WATCH believe that MMM Nigeria is a pyramid/Ponzi scheme? lets look at the following reasons.
- The promise of a 30 % ROI is outrageous and not in terms with standard rates of investment (Example one makes a profit of 30,000 naira for every 100,000 naira invested in the system in 30 days , excluding additions that comes from referral, signing up and testimonial bonuses) No legal financial company can offer you that investment plan.
- Such “Return on Investments” been paid to older clients are money received from new clients and the circle continues, the 30% is never made from company profits. That is why there is aggressive ad campaign from the company(MMM Nigeria) paying massive additional bonuses to recruiters that they call guiders to conduct seminars and deceive gullible Nigerians into joining the scheme to keep the system alive.
- The CEO of the company(MMM Nigeria) Seigei Marvrodi is a convicted fraudster and had run similar fraud schemes in Russia where he defrauded investors over a hundred billion dollars.
At this point it is pertinent to be weary of these kind of Ponzi scheme which promise too much to be true, while many Nigerians will continue to defend the scheme, according to many #MMMPays, yes it may pay now, but just like every other fraud, it strikes at a moment the investors express much confidence in their venture. So Nigerians should be wise and avoid unrealistic business ventures like MMM Nigeria.