The MMM Pyramid Scheme (Russia)
The Story
In the chaotic post-Soviet economy, Sergei Mavrodi created MMM, a company that promised returns of 1000% or more. It was a simple pyramid scheme advertised relentlessly on TV, using patriotic imagery and Mavrodi's everyman persona. At its peak, MMM accounted for a significant portion of all Russian financial transactions. The scheme collapsed in 1997, wiping out the savings of millions.
🚩 Red Flags
- Returns mathematically impossible in legitimate markets
- No actual product or service being sold
- Heavy reliance on advertising and social pressure
- Exploited economic instability and distrust of banks
- Founder openly admitted it was a pyramid on TV
⚖️ The Fallout
Mavrodi was arrested and served 4.5 years for tax evasion, not for the pyramid itself. He later launched multiple online versions of MMM in other countries. The scheme devastated the Russian public's trust in financial institutions.
📚 Lessons Learned
Showed how economic desperation creates fertile ground for fraud. Even when a scheme is blatant, the fear of missing out can override logic.
Related Scams