MMM is one of the most popular Ponzi schemes in the world. It is based on creating mutual aids and donations exchange for people. Millions of people from Africa, America, Asia, and Europe are into MMM. But MMM did not just start recently. It had been around for a couple of years now and have undergone different changes. Let us take a careful look at the evolution of MMM. So, what was the main difference of MMM-2011 compared to older versions of MMM? Let's find this out together.
MMM started way back in 1989. It was founded by a Russian man known as Sergey Panteleevich Mavrodi. MMM began as a cooperative company which was mainly involved in the selling of computers and office equipment. Although the direction of the company’s activities changes a lot then, the company was very successful. It even helped people to travel for free on the Moscow Metro severally in 1991.
On the 20th of October 1992, Mavrodi registered MMM as a joint stock company. By the 1st of February 1994, MMM started selling its shares and people were eager to buy the shares. The company then bought the shares back at much higher rates than they were sold. The growth rate was almost 100 percent in a month. The shares were sold quickly and it soon became obvious that the nine hundred and ninety-nine shares would not last for a long time.
The company then decided to register the second issue of one billion shares but it was rejected by the Ministry of Finance in Russia. So Mavrodi decided to start selling MMM tickets that were not securities. The tickets were sold at thousands of point of sales and were sold very quickly. The value of MMM shares increased day by day and company experienced a huge amount of success.
By the middle of 1994, the price per share of MMM increased one hundred and seven times. They had almost fifteen million investors. It was also believed that the turnover of the company made up to one-third of Russia’s economy. The money became so much that they could not be counted and they were stored in a room.
The Russian government became worried at the growth rate of MMM and the uncontrollable economic structure. The government started putting pressure on the company. The media also embarked on a series of campaign to warn investors about the impending danger and that it is a scam. All these were seen as attacks against MMM. On the 4th of August 1994, MMM-94 collapsed. Sergey Mavrodi was arrested in his apartment for tax evasion. The arrest was broadcasted live on TV.
It was claimed that when they had searched his house, they found evidence of gross violation of tax laws. Nobody knew what has happened to the money of MMM-94 until today. Some people claimed they saw seventeen trucks loaded with cash driven through a back door.
Sergey Mavrodi went into hiding. While he was in hiding in his apartment, he launched a new online project called Stock Generation. The western countries became the target this time and it was a game of chance. Between 1998 and 2000, thousands to millions of people from the UK, the USA, Australia and other countries, joined Stock Generation. It was designed as a game and had the necessary gaming license. It did not violate any law related to securities. The US Securities and Exchange Commission took Stock Generation to court but they lost. Mavrodi registered Stock Generation in Dominica which was a famous offshore zone at the time. Stock Generation was eventually stopped on the basis of the court order.
Sergey Mavrodi saw that the major problem with the previous MMM system was that all the money were in one location physically. Also, the previous system had a legal restriction. These were problems he saw as reasons why they collapsed and for the government to seize the funds. Mavrodi decided to create a better system which he called MMM-2011.
In this system, the cash was kept in the account of participants only. MMM-2011 was created from nothing and it became a revolution. Under this system, Mavrodi was no longer the owner of MMM in a way. His role was more of a consultant. He constantly gave recommendations and expressed his thoughts and ideas on the development of the system through the video messages posted on the MMM website weekly. It was left for investors to either follow the recommendations or not.
The system of MMM-2011 worked in such a way that payments were made to all participants. There was no legal entity or top person or an official office or a central repository of money. Everything was managed by the participants. It was a pyramid of managers; manager of ten, manager of 100, manager of 1000, etc. Each of the managers had a personal bank account and participants under them. Each of the participants under them could also be managers of some other participants. When a new participant wants to join MMM, the participant pays money into the account of a manager of ten. The manager of ten then later distributes the money to other participants. If more money is needed, the manager of ten turned to the manager of hundredth manager, while if needed the hundredth manager turns to the one thousandth manager. All the cash were distributed among thousands of bank accounts belonging to different MMM cell leaders.
MMM-2011 began to raise concerns in Russia and other countries. The government started fighting against the system. The same tactics used to bring down MMM in 1994 were also used this time. Panic was created by the media and Sergey Mavrodi was arrested along with some tenth manager. MMM-2011 eventually began to collapse. The leaders of the structures panicked and held on to money already in their account to pay themselves and their loved ones. Also, payments were made to participants who the managers believed needed the money most.
On the 16th of June 2012, Sergey Mavrodi announced he was launching a new system. It was the beginning of MMM-2012 and the end of MMM-2011. The MMM-2012 system had two ways of operation. People who wanted to provide assistance and people who needed assistance. Mavrodi created a software for MMM-2012. Participants who were interested in providing help sent money to participants who have requested for assistance. The MMM-2012 system was designed as a virtual wallet connecting all the people who needed financial assistance and people who wanted to provide the assistance.
However, MMM-2012 also faced serious problems, especially with advertising. Also, the managers didn’t feel like inviting new participants because they were all shocked to see MMM-2012. MMM-2012 came to an end by December 2012.
MMM-2011 differs from all other versions in that money was not kept in a location or account. Money paid in by new participants were distributed into accounts of other participants. Thus the MMM money was dispersed across different accounts. Also, the introduction of the tenth, the hundredth, and the one thousandth manager. Almost, every participant was a manager of the people they registered. Since 2013, there have been new versions of MMM which has been introduced in different countries around the world. These versions have also faced series of challenges.
Hope you have found the information above useful. Remember, in any situation you should always think twice.
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