Amidst harsh economic reality, more Nigerians join MMM train

Amidst harsh economic reality, more Nigerians join MMM train
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Notwithstanding the strident warning by the authorities dissuading Nigerians from investing in the Mavrodi Mondial Moneybox (MMM), the scheme is gaining greater participation from Nigerians who see it as an outlet from the grueling economic recession. Aljazirahnews takes a brief look at the money doubling scheme.

 By Dupe Oloyede, Abuja

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MMM to the rescue?

The Mavrodi Mondial Moneybox simply known as ‘MMM’ has no doubt generated lot of controversies among Nigerians, financial analysts and other financial institutions owing to the model on which the initiative is operated.

Surprisingly, many Nigerians, both the high and mighty, learned and illiterate have come to derive joy in the financial freebies the online investment scheme has to offer.

MMM is an online platform where interested persons log on to, declare their interest, make financial commitments depending on the investor’s financial strength.

An investor after subscribing is then instructed to pay a certain sum into another subscriber’s account.

He or she then must then wait for 30 days to receive his money with 30% interest.

Interestingly, the platform, does not give much room for feedback or customer complaints in case the need arises, which also confirms the high-risk factor involved.

 Why we take part in MMM- subscribers

While speaking with some ‘self-acclaimed investors’, Aljazirahnews gathered that 70% of them dabble into the online investment programme bearing in mind that there could be potential risks and that they may lose their funds.

Speaking with Aljazirahnews, a petty trader, who simply gave her name as Amaka explained that although she has indirectly tried the scheme and had received 30% of the money she invested, ‘something was not right.’

“The pay is good but it is too easy to be legitimate. My friend introduced it to me but he used his account. He helped to invest N5,000 I later collected N12,000.

“I know it is risky because even that my friend said that you won’t even know the people you are dealing with as everything is just online, but me, I cannot put ‘plenty money’ there if I want to do it again in case they ‘eat my money.’ If I do that I will know that it is due to my greed.”

 A finance expert’s take

Another respondent, a finance expert, who would not want to be printed in the report wondered why Nigerians were blind to the fact that the entire scheme was a scam intended at defrauding Nigerians.

He described the scheme as ‘robbing Peter to pay Paul’ explaining that the scheme was first introduced in 2006, as High Yield Investment Programme, HYIP.

He said: “basically, you put in some money, and then every day or week, or month, depending on the particular HYIP website you registered with, you would earn a percentage, maybe 10%, 15%, 20%, 25%, 50% and even 100% again depending on the HYIP site and as time goes on, the site disappears, your entire account is wiped out without trace.

“MMM is a Ponzi scheme. Simple and short. I have been in business long enough to smell a scam from a thousand miles away, and this one is a big scam. It’s the return of the HYIP days of 2006.

“Ponzi scams reinvent themselves every few years, change their name, wear “new clothes” and come out as the newest best thing since sliced bread.

“In 2008, they returned as wonder banks – Nospetco, Gradual Investments, etc. In 2010 it was Clickviral. In 2012 – 2013, it was “Oil and Gas Investment” companies. Today it’s MMM. MMM is a scam. It is not a real business.

“A real business has A PRODUCT to SELL, a product that adds value to the person buying it. There’s an EXCHANGE of value between both sides – the buyer and the seller.

“MMM doesn’t have that. Rather it “pays” you a “commission” to refer people. Where does it get the money to pay these commissions? For how long can this be sustained?

“What product does MMM sell? Why does an “investor” take his money and “gift” it to some stranger, and then wait for someone else to choose him and also “gift” him too?”

 ‘I intend to sell my car to join MMM’

But another investor, an auditor who is also engaged in the scheme gave instances of people who had invested millions in the scheme and has gotten their returns adding that many now go as far as selling their cars.

“You see, I started with N100,000 and I won’t say I didn’t get my profit. In fact I intend to sell my car. This life is a risk, we take risks every day. But you just wait and see how it goes.”

The authorities express reservations

Meanwhile, the Central Bank of Nigeria (CBN) recently through the Head, Consumer Protection Department, CBN, Hajiya Kadija Kassim, warned Nigerians against patronizing the scheme, even as it described it as ‘wonder banks.’

Also, the Nigerian Security and Exchange Commission (SEC) had given a similar warning in the past with the House of Representatives going on the offensive by urging the law enforcement agencies to go after the proponents of the scheme so as to shut it down in Nigeria.

But the scheme has continued to gain more investors with new schemes also coming on board.

As at today these include others like iCharity, Alternate Avenue, Ultimate Cycler, Zarfund, Crowdrising and a phalanx of other ‘money making’ platforms.

 What is a Ponzi Scheme?

A Ponzi scheme according to Investopedia is a fraudulent investing scam promising high rates of return with little risk to investors.

It adds that the Ponzi scheme generates returns for older investors by acquiring new investors. This is similar to a pyramid scheme in that both are based on using new investors’ funds to pay the earlier backers. For both Ponzi schemes and pyramid schemes, eventually there isn’t enough money to go around, and the schemes unravel.

“A Ponzi scheme is an investment fraud where clients are promised a large profit at little to no risk. Companies that engage in a Ponzi scheme focus all of their energy into attracting new clients to make investments. This new income is used to pay original investors their returns, marked as a profit from a legitimate transaction. Ponzi schemes rely on a constant flow of new investments to continue to provide returns to older investors. When this flow runs out, the scheme falls apart’’ it says inter alia.

Aljazirahnews learnt that the first notorious Ponzi scheme was orchestrated by a man named Charles Ponzi in 1919.

The postal service, at that time, had developed international reply coupons that allowed a sender to pre-purchase postage and include it in their correspondence. The receiver would take the coupon to a local post office and exchange it for the priority airmail postage stamps needed to send a reply.

With the constant fluctuation of postage prices, it was common for stamps to be more expensive in one country than another. Ponzi hired agents to purchase cheap international reply coupons in other countries and send them to him. He would then exchange those coupons for stamps that were more expensive than the coupon was originally purchased for. The stamps were then sold as a profit.

This type of exchange is known as an arbitrage, which is not an illegal practice.

Ponzi became greedy and expanded his efforts. Under the heading of his company, Securities Exchange Company, he promised returns of 50% in 45 days or 100% in 90 days. Due to his success in the postage stamp scheme, investors were immediately attracted.

Instead of investing the money, Ponzi just redistributed it and told the investors they made a profit. The scheme lasted until 1920, when an investigation into the Securities Exchange Company was conducted and security operatives waded in.

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