MMMIndia suspends operations as banks freeze accounts

Mavrodi announces 'calm regime' for a week as cops begin probe

Russian financial scheme MMMIndia has run into trouble as banks and police authorities have clamped down on its operations. Over the past couple of weeks, several banks have begun to refuse deposits and have even frozen some accounts of ‘Mavrodians’, as the participants in the scheme call themselves.

The moves follow alerts sounded out by the regulatory authorities recently, according to officials familiar with the development.

MMMIndia had spread rapidly in tier-II towns and rural areas on promise of spectacular returns and an alternative currency aimed at triggering a financial apocalypse. Earlier this month, Business Standard had reported the proliferation of the scheme, its modus operandi, and the dubious history of the scheme’s promoters.

An email seeking comments sent to MMMIndia’s administrator did not elicit any response.

However, following the crackdown, Sergey Mavrodi, the scheme’s mastermind based in Russia has announced a suspension of key operations.

“… until the authorities come to a conclusion about what we actually do (and if whatever we are doing is right or wrong), I announce the CALM REGIME,” Mavrodi said in a video-cum-text message posted on the scheme’s website on Monday(April 15).

In a “calm regime”, certain functions that involves transfer of money will be suspended. “The dispatcher will not work, which means orders will not be created,” he added in the message. He also said participants do not have to transfer anything to anybody during the calm regime.  “Our Mavrodians being taken for questioning, certain banks not willing to deposit funds in accounts, and also freezing accounts without any reason,” said the message, adding, “All this suggests the now MMM has drawn to itself the attention of the authorities, like police , banks, etc. And they are trying to understand what kind of community we are,” he said.

“They are searching for the truth and probably want their doubts cleared whether we are just another MLM (multi-level marketing) company, which people join for money (and this type of MLM companies are actually banned in India), or are we a community of people with free will who want to change the world for the better by really helping each other,” added the Russian kingpin, whose Ponzi scheme collapsed in 1990s in Russia wiping out savings of millions of investors.

He also blamed some “hack-attacks” on the network’s software for the difficulties faced by the participants. However, it is not clear whether the site is being disabled officially by the authorities.

The network, which has enrolled numerous participants through multi-level marketing across the countryside, hopes to return in seven days. Mavrodi hinted there could be some changes to the scheme when it resumes after the calm regime.

“Anyways, no matter the attacks by the hackers and whatever the conclusion the authorities come to, we start ‘full power’ after seven days. We might start with little corrections, which totally depends on the reaction of the authorities. But we will continue helping each other more...” said Mavrodi.

CALM BEFORE STORM?

• Banks refuse deposits, freeze accounts of Mavrodians
• Police said to have picked up participants for questioning
• MMMIndia also said to be facing “hack-attacks”
• Mavrodi announces CALM REGIME for a week
• No money transfers to be made during the period