Many Nigerians are getting aware of this current Pyramid scheme trending in Nigeria called MMM Nigeria which promises 30% Return on Investment (ROI) after 30 days . it’s usually called a Ponzi scheme because,
First let’s examine what a Ponzi scheme is, one should be wary of MMM Nigeria
A Ponzi scheme 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 putting in additional
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.
When a Ponzi scheme is not stopped by the authorities, it sooner or later falls apart for one of the following reasons.
1. The promoter vanishes, taking all the remaining investment money.
2. 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.
3. External market forces, such as a sharp decline in the
economy (for example, the Madoff investment scandal during the market
downturn of 2008), cause many investors to withdraw part or all of their
funds.
1. The promise of a 30 % ROI is outrageous 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.
2. 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
gullible Nigerians into joining the scheme to keep the system alive.
3. 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, so I therefore
urge Nigerians, please be careful.
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