Russian con-man found guilty
A Moscow court sentenced Seregy Mavrodi, the notorious mastermind of Russia's most scandalous financial pyramid scheme, to four-and-a-half years in jail and $US 400 fine.
The acronym MMM says a lot to every Russian. For just about everyone in the country MMM means swindle, manipulation and cynicism.
Back in the beginning of the 1990s Russians weren't experienced with joint stock companies and few understood their mechanism. But many wanted to invest their money and get a profit.
Sergey Mavrodi and his company MMM came just in time. After a massive and very aggressive advertising campaign on national TV millions of Russians started buying MMM's shares. The ad wouldn't explain just how MMM earned its money. But no one seemed to care as long as the company was paying dividends. The temptation was too hard to resist.
In fact, it was a pure and classic financial pyramid. The dividends were paid from the money collected from fresh converts. Up to ten million people are believed to have been dragged into Russia's probably biggest fraud. Prices of MMM shares skyrocketed and the hardest task for the company was to print enough of its valueless shares.
When the authorities finally decided to look closer at the pyramid, Mavrodi dropped the prices by 100 times and stopped paying dividends claiming his company was being attacked by the government. The pyramid collapsed
Thousands of his cheated investors came out to the streets demanding the cabinet and police leave MMM alone. And even 10 years later, even after the court's sentence some of them still believe Sergey Mavrodi
Mavrodi himself used his almost hypnotic influence on his investors and to get elected to the State Duma and get MP's immunity. Although he was stripped of his status just one year later, he remained free and was only arrested in 2003 on charges of fraud.
Today after the verdict Mr. Mavrodi remains defiant.
"I am not guilty. So I am not satisfied with the verdict. But considering the circumstances it could be worse," he says.
Sentenced for 4.5 years and a $US 400 fine, Sergey Mavrodi will be set free in just three months, as the rest, spent in jail is taken into account. Mavrodi profited from this leisure time to write his memoirs as the pyramid's mastermind.