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Russia's top pyramid schemer makes comeback


The man who created the biggest pyramid scheme in Russia's history announced Monday that he was making a comeback with a new investment vehicle that brings in monthly returns of 20 to 30 percent.

Sergei Mavrodi said in a message on his website that he was creating an international "financial network" called MMM- Protected content the three Russian letters standing for "we can do anything."

"You all know my situation. I do not have the right to perform any transactions with any valuables -- with any sorts of securities," the man who created the original MMM investment pyramid in Protected content in the video message.

"But we can still employ a good old principle from judo: using the opponent's strength against him," he added.

"All the transactions will only be performed between the investors themselves. I will not lay a finger on this money."

The slightly-built man with huge glasses became a Russian celebrity in the Protected content by flooding television with ads in which a middle class couple watched their MMM investment make millions as the months wore on.

The brief but omnipresent spots made a particularly strong impact because they were some of the first to be aired on Russian television as it welcomed advertisements following decades of Soviet rule.

Hundreds of thousands of Russians -- including a few high-profile celebrities -- bought "shares" of a company that unravelled once the first flood of investors tried to cash in their winnings.

Nevertheless some 25 percent of people said they would be willing to do so again in an informal poll conducted Monday by Moscow Echo radio.

But a prominent member of the lower house of parliament who serves as the country's first financial ombudsman said Monday that he will try to stop Mavrodi in his tracks.

"Our financial laws are so vague that Mavrodi can try to pretend that he is falling within the law. I will try to make sure that our prosecutors do not agree with that assessment," Pavel Medvedev told Moscow Echo.

"I am going to demand an inquiry," said Medvedev, who so far is only empowered to resolve disputes between six banks but may be given a wider role in the future.

A pyramid -- or Ponzi -- scheme is based on people investing increasing amounts of money in a fictitious investment mechanism that leaves them empty-handed once it eventually falls apart.

Mavrodi's creation became an emblem of Russia's post-Communist lawlessness and led to the creation of nearly a dozen similar pyramids whose prices became quoted on the front pages of newspapers alongside the weather reports.

He was arrested for tax evasion in Protected content then elected to parliament later that year by a groundswell of support from investors who saw him -- and their quickly vanishing money -- as a victim of a corrupt state.

But parliament stripped Mavrodi of his immunity the following year and his Protected content to run for president was rejected by the central election commission.

Mavrodi was arrested on fraud charges in Protected content released in Protected content instructions to pay off millions of dollars in debt to investors and not involve himself in finances again.

His 30-minute Internet message explained a complicated financial mechanism in which investors trade between themselves while the value of their MMM "tickets" rises.

Mavrodi promised "regular" investors a monthly return of 20 percent "while pensioners and those with disabilities will get 30."

Yet the 55-year-old spent most of his time explaining that what he was trading was not a share or any other security but a "fantik" -- a Russian word that translates loosely as Monopoly money.

"We will once again introduce tickets," said Mavrodi.

"They are like a unit of money -- a ticket, a share, it is all the same. But these virtual tickets -- these are not securities, they are little more than Monopoly money. They will rise in value."

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