The Truth, Lies and Facts Behind MMM Nigeria

It's no news that Nigeria's economy is currently in recession. This has led a lot of Nigerians to look for alternative means of making more money or multiplying their current income to keep up with the rising inflation. One of these alternative means is MMM Nigeria, an online investment scheme which promises you 30% extra earnings by providing "help" (*coughs* Who you epp?). At a first glance this looks like a typical scam an average person should know about. Surprisingly, a lot of Nigerians are still joining MMM Nigeria daily. 

At the beginning of the month, the Security and Exchange Commission (SEC) issued out a warning to Nigerians. The warning clearly stated that MMM Nigeria is a Ponzi scheme (I'll explain later) which  has no real income generating venture apart from paying the supposed 30% returns to old investors, same money they collected from new investors. Apparently, this warning seemed to fall on deaf ears and even more Nigerians are getting interested in MMM daily.

UPDATE: Panic and Confusion as MMM Nigeria freezes all accounts for 30 days. Read full article here.

Lots of questions like What is MMM Nigeria? Who owns the scheme? When did it start? Is Nigeria the only country doing MMM? Is MMM Nigeria real? are being asked daily. In this post, I'll try to give answers to all these questions and give you my own personal thoughts about this new "money making scheme".

DISCLAIMER: This post is NOT sponsored. It is designed to educate everyone about the history and background of MMM and its founders. I am not here to preach to you, feel free to make your own decisions. I belong to everybody and I belong to nobody. 

WHAT IS MMM?

According to Wikipedia, MMM is a Russian company that perpetrated one of the largest ponzi scheme of all time. It was established by Sergei Mavrodi, his brother Vyacheslav Mavrodi and, Olga Melnikova. The name of the company was taken from the first letter's of the founders surnames.

The Ponzi scheme was created in 1994 and it grew very rapidly. 

In February 1994, the company reported dividends of 1,000%, and started an aggressive TV ad campaign. Since the shares were not quoted on any stock exchange and the company itself determined the share price, it maintained a steady price growth of thousands of percent annually, leading the public to believe its shares were a safe and profitable investment.

In July 1994, the offices of MMM was closed down by police for tax evasion. The company stopped operations owing it's "investors" between 100billion and 3 trillion rubles (50 million - 1.5million USD). This led to the death of about 50 investors who had lost all their money and committed suicide. Mavrodi was arrested in 2003 and was jailed for a period spanning four and a half years.

(Ventures Africa) Bye Bye Soon?

WHAT IS A PONZI SCHEME

Named after Charles Ponzi, A ponzi scheme is a fraudulent investment operation where the operator, an individual or an organization pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources. Operators of ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short term returns that are either abnormally high or unusually consistent.

Initially the promoter will pay out high returns to attract more investors, and to lure current investors into putting in additional money. Other investors begin to participate, leading to a cascade effect. The "return" to the initial investors is paid out of the investments of new entrants, and not out of profits.

Often the high returns encourage investors to leave their money in the scheme, with the result that the promoter does not have to pay out very much to investors; he simply has to send them statements showing how much they have earned. This maintains the deception that the scheme is an investment with high returns.

WHAT IS MMM NIGERIA?

MMM Nigeria is the Nigerian arm of this infamous Ponzi scheme. Investors are offered 30% Return on Investment (ROI) in a month by offering help.

Who you epp?

HOW DOES IT WORK?
Interested investors are required to sign up on the MMM Nigeria website and submit their bank details. After which they'd be offered two options of whether to "offer help" or "get help". Investors who offer this help are expected to get 30% profit + initial investment after 30 days. There is a referral system which credits user who invite others a particular percent of their transaction.

IS MMM NIGERIA A SCAM?
MMM Nigeria is a Ponzi scheme which is categorised under fraudulent business types. In plain financial terms it offers no legitimate backing and the money pool is controlled by the owner of the scheme. Sounds like a scam. Risky sturvs.

WHAT ARE THE RISKS INVOLVED?
A Ponzi scheme is very volatile and can run into crisis at any point in time. When it is not stopped by the authorities, it falls apart due to one of the following:
1. The promoter vanishes, taking all the remaining investment money.
2. Since the scheme requires a continual stream of investments to fund higher returns, once investment slows down, the scheme collapses as the promoter starts having problems paying the promised returns (the higher the returns, the greater the risk of the Ponzi scheme collapsing).
3. External market forces, such as a sharp decline in the economy, cause many investors to withdraw part or all of their funds. (Remember Nigeria is in recession).

Recommended: Click here to find out how to check your BVN on any phone.

These three points show that sooner or later MMM Nigeria is bound to follow in the footsteps of earlier ponzi schemes and several millions of naira will vanish into thin air. A good example is the recent collapse of MMM in Zimbabwe and South Africa where the promoters claimed to have put the system on pause for a while. In January 2016, MMM was banned from registering in China given its history as a fraudulent scheme.

BUT I KNOW PEOPLE WHO ARE GETTING PAID VIA MMM NIGERIA?
Yes, MMM Nigeria "pays". Just like every other Ponzi scheme, the promoter pays out high returns to attract more investors, and to lure current investors into putting in additional money. Ask those who have registered, they only got the so called "30%" after the first month with returns dropping lower in subsequent months. Eventually when there are no more new entrants "investing", the whole scheme collapses.

It's a trap?

My Opinion

A wise saying goes: "Experience is the best teacher". Since the '90s MMM has always ended up swindling people out of their hard earned money and if history is anything to go by, MMM Nigeria will be no different. The earlier you get your feet out of the troubled waters, the better it is for you. To be forewarned is to be forearmed.

If for any reason, you are willing to take the risk , make sure whatever you are investing is not what will bring you to tears once it disappears. Already, several variations of the MMM Nigeria website are popping up everywhere claiming to help "guide" people through the process and even some posing as a branch of MMM. Some government sources even claim the government may clamp down on bank accounts related to the scheme soon.

MMM will SURELY collapse at some point. It may be next year, next month, tomorrow or even today; but whenever it collapses, I hope you don't end up being one of the victims. If you are currently benefitting from the scheme, tread with caution. All that glitters is not gold. A word is enough for the wise.

UPDATE: Panic and Confusion as MMM Nigeria freezes all accounts for 30 days. Read full article here.