A financial scheme based on a virtual currency and propagated by Russian businessman and financier Sergey Mavrodi seems to be gaining ground across rural India.
"It is not a business, not an investment plan and not even a company," is how Ashish Chavan of Kolhapur, Maharashtra, describes MMM INDIA, short for Mavrodi Mondial Moneybox India.
MMM is a network through which common people "help" each other, said Chavan, a patron of the scheme. "It is for a social cause. If you are convinced of the idea of helping people in need, you can join."
Patrons of MMM are at pains to explain that it was not an investment plan. Chavan said he had "committed to help", for a sum of Rs 10,000, and in turn received "help" for a sum of Rs 15,200. He has committed Rs 10,000 again.
An email questionnaire sent to MMM INDIA's representative was unanswered. A person who identified herself as "Jennifer from the admin" wanted to know why Business Standard was pursuing the story, but did not offer any details about the scheme itself.
While the scheme ducks sectoral regulators such as the corporate affairs ministry and the Securities and Exchange Board of India by claiming that it is neither a company nor an investment scheme, MMM steers clear of the other numerous financial laws in the country by maintaining its own currency system, the Mavro. Whatever returns are promised are in the Mavro. "Mavro rate up to 100 per cent per month," screams a banner on the website of MMM INDIA.
"Mavro is a virtual currency. It is just to keep account," said Anil, another MMM patron. "If you help somebody for Rs 5,000, you will get a Mavro equivalent. When you need help, you can put your Mavro up for sale."
Chavan of Kolhapur said he was introduced to the "revolutionary idea" in August by a friend of his father. He is among the thousands of young people getting drawn to MMM INDIA, which has grown rapidly in rural Maharashtra, Gujarat and Punjab over several months. Campaigners of the network were now taking it to Odisha, Chhattisgarh, Uttar Pradesh, West Bengal and Assam, seminar schedules on the group's website showed.
MMM is the brainchild of 57-year-old Mavrodi. The Russian financier has claimed in YouTube video posts on his website that he built MMM to destroy the global financial system, which is created and dominated by people who can print currencies. "My goal is a financial apocalypse, a destruction of the global financial system," he had said on March 14, 2012, just hours before he was arrested.
That was not the first time Mavrodi was arrested. In the post-Communist Russia, Mavrodi's investment firm had imploded after attracting investments from about five million Russians, promising them foreign holidays and 2,000 per cent returns, according to a 1994 Time magazine report.
Mavrodi had immunity from prosecution as he was a member of the Duma (Parliament), until the immunity was nullified in October 1995.
In December 1997, Mavrodi declared MMM bankrupt. He managed to escape arrest till 2003, as gaps in Russian financial laws left authorities clueless about finding the right rule to charge him. Eventually, he was convicted for holding a fake passport and tax-related offences. But he was a free man by May 2007.
It did not take too long for him to devise a scheme to harness the powers of the internet so that national boundaries did not hinder him.
WHO IS SERGEY MAVRODI
- 1955: Born in Moscow
- 1988: Starts MMM with brother Vyacheslav Mavrodi and Olga Melnikova, their initials forming the name
- 1990: Transforms from being an equipment importer to an investment scheme offering fantastic returns
- 1994: MMM implodes after luring millions of Russians and billions of roubles
- 1994: Mavrodi elected to Duma, the Russian Parliament, and gains immunity from arrest
- 1995: Immunity nullified
- 1997: Declares bankruptcy of MMM
- 1998: Launches another plan, this time using internet, called Stock Generation
- 2000: This scheme catches the eye of the US Securities and Exchange Commission, which shuts it down
- 2003: Arrested in Russia on fake passport and tax-evasion charges
- April 2007: Sentenced to jail for four-and-a-half years
- May 2007: Sentence set off against time spent in detention
- 2011: Launches new scheme called MMM
- 2013: Scheme spreads, capitalising on legal loopholes
HOW MMM WORKS
- You are given an login ID and a password once you enrol with MMM
- You are required to have a bank account dedicated to the scheme
- A person can commit 'help' between Rs 5,000 and Rs 50,000
- The administrator uses a software to match the 'help' with the seeker and the giver
- Once you give 'help', you get an equivalent amount of Mavro, which has two exchange rates, one for selling and another for buying
- These rates would be established personally by Sergey Mavrodi
- Mavro said to grow at 100% per month compounding interest
- Mavro holding can be put up for sale