The return of MMM: All that glitters not gold

Apparently, Ponzi scheme looks new in Nigeria, but it is not. Nigerians have seen variants of Ponzi schemes that differed only in degrees of persuasions and deceit. Money doubling and the Wonder Banks of the early 90s are a few examples that targeted and actually ravished the over-ambitious, greedy and weak-minded Nigerians.

Ponzi schemes are named after Charles Ponzi, who duped investors in the 1920s with a postage stamp speculation scheme. Mavrodi Mundial Moneybox (MMM) which was launched in 2011 by Mavrodi, an ex-convict, is the latest and more widespread in operation.

The controversial scheme enjoyed warm acceptance and large following in Nigeria until it crashed in December 2016, living in its trail misery, frustration, broken hearts, strained relationships, family dislocations and, in extreme cases, death as some people, whose losses were too dire to bear, committed suicide.

Given the socio-economic milieu in which Nigerians live, it is not difficult to understand why there were huge acceptance and large following for MMM as a fraudulent scheme. Besides poverty which is said to have its headquarters in Nigeria, the country represents a society with warped value system.

Nigeria glorifies wealth with little or no consideration for virtues and values of hard-work. Expectedly, the country harbours citizens with strong desire for get-rich-quick. And with the desire to get-rich-quick comes unbridled greed, soaring and inordinate ambition, all of which provide fertile ground for the flowering of schemes such as MMM.

Against the normal run of business in which returns on investment are directly proportional to risk, Ponzi scheme offers fantastic and abnormal returns without any risk at all. Unfortunately, the greedy and weak-minded enter into it with only their hearts and not with their heads, ignoring the Biblical injunction which says, “The road is wide and the way (means) is easy, that leads to destruction; but the road is narrow and the way is hard, that leads to life.”

Operators of Ponzi schemes like Mavrodi are generally smart Alecs who seem to understand the human mind better than those that own them. Their strategy is almost foolproof. Though subscribers to the scheme are told that their money is invested to generate high returns with little or no risk, what actually happens is that the scheme pays existing investors with funds collected from new investors.

The operators plan the scheme in such a way that the investors do not see the need to cash out because constantly the operators are working on their greed by increasing their returns. This is why, with little or no legitimate earnings, the scheme gets a constant flow of new money with which it survives.

But, like any thing in life, there is always a beginning and an end. In the case of these fraudulent schemes, when it becomes hard to recruit new investors, or when large numbers of existing investors cash out, the schemes tend to collapse.

Perhaps, this was why MMM crashed in many countries including Nigeria in December 2016. When this happened, the hope and dreams of an estimated three million Nigerians were dashed.

Though there was an extremely few people who took a walk away from the scheme after some moderate returns, a large chunk of the investors had their fingers burnt. Many took bank loans to invest in the scheme. For such people, it is a life in perpetual bondage of debt servicing and repayment.

Some families sold property such as cars, houses, jewelries, etc in order to reap bountifully, but had their money trapped, leaving them in misery and woes. There are cases of marriages that collapsed as a result of these hasty, ill-advised and uninformed actions.

There were also cases of intending couples who invested the money meant for their marriage in MMM, hoping to raise more money from the scheme and stage a society wedding. Some of those planned marriages either ended in the middle of nowhere or had their planned dates cancelled or deferred.

Many other unprintable incidents happened following the collapse of the MMM scheme and it is hard to believe that in spite of it all, Nigerians have embraced the scheme once again in its second coming with all the deceptive appeal it is making to more greedy and gullible minds in the country.

The scheme, which staged a come-back on January 22, 2019, is now labeled MMM Cooperation. This time, the scheme is promising up to 50 percent return on any amount invested in it, which is about 20 percent more than what the previous version offered. But like the previous version, the ‘new’ MMM requires participants to register, invest a particular amount in the form of ‘providing help’ and ‘getting help’ with their investments and interest back after 30 days.

With the negative impact the collapse of MMM had on the Nigerian citizens, it is surprising that some people are still embracing the scheme. Over and above that, it is thought-provoking that government allows the scheme which is not registered to continue to operate and defraud unsuspecting citizens.

Some Nigerians still vulnerable to the deceits

If you go by the popular saying in Pidgin English that ‘Warri no dey carry last’, which literarily means that an average person in Warri, Delta State, is very sharp and hardly falls for deceits, you then wonder what happened at the heyday of Mavrodi Mundial Moneybox, nicknamed (MMM), where over three million Nigerians, including those from Warri, fell for the deceitful ponzi scheme.

Instead of MMM for short, Mavrodi Mundial Moneybox should have been rightly tagged 419because of the high level deceit, which many unsuspecting Nigerians fell for, though they were warned by the Central Bank, and the anti-graft commission.

From its inception in Nigeria, the deceit was obvious. First, the MMM scheme launched its website in Nigeria in November 2015, when the recession began to bite harder in the country. So, the scheme took advantage of the vulnerability of Nigerians in the face of the economic hardship to grow its subscribers.

Moreover, a promise of 30 percent return on the initial capital within 30 days was suspicious and unrealistic in the normal financial system. Yet, the scheme went further to promise other perks such as bonuses from referrals. But the deceit sets in when most people made profit from their initial investments, and are now lure to invest more.

About 90 percent of the people who invested more lost both their capital and profit as the scheme was suspended on account of the death of one of the founders in March 2018 and eventual shutdown in April same year.

As Odeyemi Apampa, a psychologist with the University of Lagos, observes, the MMM scheme would not have had up to one million subscribers if it had been introduced before the recession.

“There are other get-rich-quick schemes such as Ultimate Cycler, Crowd Rising Paradise, and Helping Hands, but they did not have as much subscribers as MMM. Imagine the magic of getting over three million subscribers between November 2015 and the last quarter of 2016, it was all because of the hardship in the land,” Apampa says.

A testimony of the popularity and number of victims deceived were tracked by Alexa.com, web traffic data and analytics, which showed that the MMM website was rated the 12th most visited website in Nigeria and 3,330 globally.

Worried on how MMM caught on like wildfire in Nigeria, Taiwo Kola-Ogunlade, Communications and public affairs manager for Anglophone West Africa, Google, said in 2017 that MMM was a major trending topic in Nigeria’s cyberspace.

But while the shutdown in 2018 was sudden, it was also deceitful because it froze and trapped millions of investments and leaving the Nigerian investors in bad shape, poorer and some even died due to the inability to paying back loan they invest in the scheme.

Of course, the deceit did not stop at the shutdown. A day after freezing the accounts of its subscribers in Nigeria, the MMM scheme launched its website in Kenya, promising 40 percent return on investment in 30 days, 10 percent higher than what it gave its Nigerian subscribers. Many thought that the scheme should not have opened anywhere in Africa until it paid back all the money it owed its Nigerian investors. So, the Kenya launch confirmed the fraud.

But Kenyans were wiser, they did not fall like Nigerians, credit to their stable economy and the cyber crime laws.

The Nigerian case, the operators of the scheme (in their usual style) struck at a time when the investors put in their all, and expecting a huge harvest. It was a huge betrayal.

But as much as that was a huge betrayal and deceit, the notorious MMM scheme, which dashed the hope of over three million Nigerians in 2018, is back, and some Nigerians are falling for it, yet again.

Hypocritically, the new version now known as MMM Cooperation, promises as much as 50 percent return on any amount invested in it; representing 20 percent more than what the extinct version offered.

Just like the previous version, participants are to register, invest a particular amount in the form of “providing help” and “get help” with their investment and interest back after 30 days.

At the shutdown last year, a message on MMM Nigeria website had read, “After much deliberation, we have made the conclusion that continuing the system operation, without our leader and ideological inspirer, is impossible and makes no sense”.

The deceit again is that the present operators who saw no the sense operating the scheme without their leader last year, on January 2019, countered their views, saying in the website that they are re-launching globally “to make Mavrodi’s legacy worthwhile.”

The website even claimed to have recorded six million participants from across the world all in a space of four months from January 22, 2019.

The return is not a surprise to Emmanuel Ajeh, an economist and public analyst. He explains that in spite of burning their fingers in the first coming of the MMM scheme, many will still subscribe to the ponzi scheme because the economic situation in the country now, is not different from the era of recession. “Many people who were poor during recession are even poorer now. So, there is still poverty in the land and nothing significant has happened since then to better people’s lives. Many will still fall for the new MMM and more to come to take a chance to better their lives”, he says.

The deceit, according to Ajeh, is obvious, but many are overlooking the loss and focusing on those who gained while the scheme lasted. “It is like staking a bet at any of the betting platforms. What spurs people are friends and people who have won big money and are enjoying. Those who lose hardly come to mind. So, the people falling for the scheme will promise to exit before it crashes again, but they cannot as the hope of getting more money keeps luring them back”, Ajeh says.

Princewill Amanowei, a lawyer, is asking the Nigerian lawmakers to enact laws against ponzi schemes or the CBN to ban it from entering into Nigeria again.

“The warnings by the regulatory agencies, especially the EFCC do not make sense when a simple law can ban the scheme from operating in Nigeria and save the citizens the headache of later regret. Again, government should fulfill the election campaign promises such as job creation and youth empowerment to curb unemployment, lift families from poverty and reduce crime in the society”, the lawyer says.

While you read this article, more people are subscribing and will keep subscribing until the government and regulatory authorities do something to save them from the imminent deceit lying in wait as obtainable in all ponzi schemes.

The many faces of Ponzi scheme

In March 2017, the Nigeria Deposit Insurance Commission (NDIC) said Nigerians lost N18 billion to the MMM in 2016, which had over 3 million participants before it suspended payment to investors.

Before MMM was eventually suspended for about a month in December 2016, the scheme was so popular that the Central Bank of Nigeria (CBN), also had to caution Nigerians.

“We have heard about the activities of MMM. But I want to warn you against it because they are wonder banks that are not regulated. Desist from their activities because they are fraudulent,” said Kadija Kassim, head of the consumer protection department of the CBN.

After the first one month, it re-opened in 2017, adding crypto currency twist to the investment package, but it had already lost momentum in Nigeria.

BDSUNDAY understands that MMM eventual collapsed in 2017 with millions of funds belonging to many Nigerians trapped in it. At that time, it was reported that the Ponzi scheme associated its collapse to the death of its founder, late Sergei Mavrodi, and this caused serious frustration for many Nigerian investors.

Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. It promises high rate of return with little risk to investors.

The name ‘Ponzi’ was derived from its inventor, Charles Ponzi, who made an elaborate scam in the 1920’s. It is a pyramid scheme that operates like multi-level marketing.

Most recently, Nigerians have fallen victims to one or multiple of such schemes. Though different types of wonder banks have come and gone but the volume at which Ponzi schemes enter Nigerian market has increased.

This was attributable to the rising economic hardship in Nigeria, which has been taking tolls on families since Nigerian economy slipped into recession in 2016 after recording 2.06 percent contraction in growth.

At that time, Nigeria, one of the world’s largest exporters of crude oil, suffered cash crunch in 2016, after the international prices of crude oil fell from highs of about $112 per barrel in 2014, to below $50 in 2016.

With crude oil sale accounting for 70 percent of government revenue, the value of Nigerian currency, the naira, was highly affected, resulting to devaluation of the currency, which also resulted in naira exchanging for as high as N500/$ from N200/$ but this later dropped to N306/$ after the economy exited recession in 2017.