The anti-graft agency, the Economic and Financial Crimes Commission (EFCC), has launched an investigation into the operations of an alleged Russian Ponzi scheme, amid fears that millions of Nigerians are on the brink of losing their money. The EFCC is seeking clarifications after the Mavrodi Mondial Moneybox (MMM), suspended its Nigeria operations last week saying it wants to ensure the sustainability and stability of its system. In a message to its users on its twitter feed, MMM said the suspension of operations was because “the system is experiencing heavy workload” and then blamed the disruption on “the constant frenzy provoked by the authorities in the mass media.” This provoked a frenzied reaction from its over two million Nigerian users, who took to twitter to vent their anger and frustration at the timing of the suspension, following warnings from government agencies that they may never get their money back.
The EFCC investigation comes after the Central Bank of Nigeria (CBN) warned Nigerians against committing funds to “fraudsters”. The MMM scheme, described as a “mutual aid fund where ordinary people help each other” guaranteed returns of 30% per month on payments and has grown popular across the country. The scheme operates like a revolving door in which MMM asks users on its platform to pay each other without operating a bank account or physical address. Registered participants pledge and donate money to other participants when directed to do so by the scheme’s operators; and after a month, donors are entitled to receive the donated sum, plus 30% interest, paid by another user. MMM refers to pay out by users as PH (Provide Help).
As the Ponzi scheme’s popularity grew with over two million users, Nigerian government officials became alarmed and stepped up campaigns to dissuade Nigerians from taking part in the scheme. The heightened risk warnings by government agencies, apparently made MMM participants hesitate making further investments and this apparently caused major disruptions in cash flow in the system and causing a hiccup in operations. As a result, MMM explained its operations “will be frozen for a month.” Likewise, participants who had already paid out money over the past month and were due to receive returns in time enough for the year-end holiday festivities are unable to get any money.
“Dear Mavrodians,” the MMM said in a twitter feed, “the one month Freezing of Confirmed Mavros is a step to ensure the sustainability and stability of the MMM Nigeria system. The reason for this measure is evident. “We need to prevent any problems during the New Year season, and then, when everything calms down, this measure will be cancelled,” MMM’s message to its users on its website, read in part.
In his open letter to the Nigerian government, the founder of the scheme Sergey Mavrodi advised that MMM should be strengthened to help Nigerians thrive and redistribute wealth. He insisted that MMM was not shady and that all participants were informed of the risks involved at the point of registration.
Huhuonline.com understands that MMM’s suspensions of operations in Nigeria is similar to events in South Africa where the scheme collapsed. In that instance, MMM also blamed the collapse on “persecution” by the government and “organized by the mass media” to provoke panic. Likewise in Zimbabwe, the scheme temporarily suspended operations and slashed withdrawal exchange rates upon resumption causing participants to lose 80% of their investments. It remains to be seen whether the scheme will make a January return in Nigeria as promised, and even if it does, there’s a strong likelihood that having faced the prospect of losing their money, Nigerians are likely only going to be interested in getting their hard-earned cash out of the system.
