Now, helped by the Internet explosion, he is doing it again, andhas scores of Russians buying into his new scheme despite therelative stability of the oil-powered economy. So far authorities have been powerless to stop him. Mavrodi, a reclusive former mathematician, ex-lawmaker andconvicted fraudster with wild hair and geeky glasses, has flauntedthe fact that his latest ventures are 'pyramids', or Ponzi schemes. Cheekily, his ads warned 'pyramids are dangerous for your financialhealth.' Soon after the breakup of the Soviet Union, up to 15 million peopleinvested in coloured bills bearing Mavrodi's face.
Reportedly 50people committed suicide after the scheme collapsed in 1994. Mavrodi's new scheme, launched early last year, is called MMM-2011and is organised on the Internet. 'This is where the money lives,' said an electronic billboard inMoscow's Sheremetyevo airport, while an ad sprayed on pavementsread: 'Get your 40 percent per month!' On June 1 Mavrodi announced that due to a 'panic' that he blamed onmedia, he was freezing payouts for two weeks. With typicalchutzpah, he added he was starting a new scheme called MMM-2012. Moscow police said Thursday they had opened a criminal probe intoMMM-2011, over attempted fraud by an organised group on anespecially large scale, with a maximum sentence of 10 years.
But Mavrodi was not named or charged. He is currently in hiding anddid not respond to interview requests. But his lawyer argued that authorities did not have any evidence tostart proceedings against the scam artist. 'I don't think they will charge him.
There is a lack of corpusdelicti,' Roman Tabachkov told AFP Thursday. He argued that Mavrodi simply headed an 'association of citizensbased on certain interests -- financial interests.' Several other regional authorities have also launched legal actionagainst MMM-2011. The Federal Anti-Monopoly Service (FAS) recognised MMM-2011 as afinancial pyramid last year. Yet the scheme is tough to pin downbecause it is not registered anywhere and participants makepayments in virtual Internet money.
'You can't ban participants from handing each other money. It's akind of financial flashmob,' Dilyara Ibragimova of the NationalAgency of Financial Investigations said during FAS discussions lastyear. The question is why people are taking the risk, given Mavrodi'sdubious track record. State opinion pollsters VTsIOM in April found that four percent ofRussians would consider investing. Alexander Katyanov, a grey-haired man in glasses, was handing outfree MMM-2011 newspapers outside the metro.
A hard-up former businessman, he said he invested 10,000 rubles($308) in April and then recruited others. He was due to receivehis first payments on June 20. 'I didn't drag anyone here. I honestly explained that this is apyramid,' he said.
'The reward I should receive is very good for me.' Asked if he trusted Mavrodi, he paused. 'Not completely, I'm not that gullible. He warned that 'Yes, it's apyramid, it could crash' and so on. I accepted this.' Many passers-by reacted negatively.
'MMM? No thanks, we already got burnt once,' one middle-aged womansaid. 'My father-in-law bankrupted himself on this,' said a gold-toothedpensioner. But one neatly-dressed grey-haired man said he hadinvested in MMM-2011 and got a return. 'When will it all start rolling again?' he asked.
Mavrodi claims that 35 million people have joined the scheme, alsooperating in ex-Soviet states including Ukraine and Belarus. A colourful figure, at the height of the original MMM, Mavrodi paidfor the Moscow metro to be free for a day. After its collapse, hebecame an MP to gain immunity from prosecution. He was eventually arrested in 2003 in a rented apartment, wearing awig in an apparent escape bid.
He was jailed for four and a half years for fraud. The VTsIOM poll found 75 percent of Russians think he is aswindler. Seventeen percent see him as a 'financial genius.' Some argue that this time, investors know exactly what they aregetting into. 'The government did all it could to make everyone understand aboutMMM,' lawmaker Viktor Zvagelsky, deputy chair of the lower house ofparliament's economic policy committee, said in televised comments.
'All those people who want to be duped once again, they will beduped. Whatever we do, whatever laws we write,' added Zvagelsky.
