It is no longer new to the public that many Nigerians are taking part in this current Pyramid scheme trending in Nigeria called MMM Nigeria which promises 30% Return on Investment(ROI) after 3o days. Truth be told, this so called business is a Pyramid/Ponzi scheme.
Firstly, what is a Ponzi/Pyramid scheme?
A ponzi scheme also called a Ponzi game or a Ponzi is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources.
Operators of Ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent. Initially the promoter will pay out high returns to attract more investors, and to lure current investors into investing more money.
Other investors begin to participate, leading to a cascade effect. The “return” to the initial investors is paid out of the investments of new entrants and not out of profits. Often the high returns encourage investors to leave their money in the scheme, with the result that the promoter does not have to pay out very much to investors; he simply has to send them statements showing how much they have earned. This maintains the deception that the scheme is an investment with high returns.
The truth is that, when a Ponzi scheme is not stopped by the authorities, it sooner or later falls apart for one of the following reasons.
- The promoter vanishes, taking all the remaining invested money. Since the scheme requires a continual stream of investments to fund higher returns, once investment slows down,
- The scheme collapses as the promoter starts having problems paying the promised returns (the higher the returns, the greater the risk of the Ponzi scheme collapsing). Such liquidity crises often trigger panics, as more people start asking for their money, similar to a bank run.
- External market forces, such as a sharp decline in the economy (an example, the Madoff investment scandal during the market downturn of 2008), cause many investors to withdraw part or all of their funds.
The sad truth is that, MMM Nigeria is a pyramid/Ponzi
The following reasons are strong enough to prove it so.
- The promise of a 30 % ROI is extreme and not in terms with standard rates of investment (Example one makes a profit of 30,000 naira for every 100,000 naira invested in the system in 30 days, excluding additions that comes from referral, signing up and testimonial bonuses) No legal financial company can offer you that investment plan.
- Such “Return on Investments” been paid to older clients are money received from new clients and the circle continues, the 30% is never made from company profits. That is why there is aggressive ad campaign from the company(MMM Nigeria) paying massive additional bonuses to recruiters that they call guiders to conduct seminars and deceive Nigerians into joining the scheme to keep the system alive.
- The CEO of the company(MMM Nigeria) Seigei Marvrodi is a convicted fraudster and had run similar fraud schemes in Russia where he defrauded investors over a hundred billion dollars