How The MMM Broke Up

Table of contents:

How The MMM Broke Up
How The MMM Broke Up

In the 90s of the last century, the abbreviation "MMM" was well known to many millions of Russians. This private company, created by Sergei Mavrodi, went down in history as the largest financial pyramid, the scale of which was simply amazing. And as it should be for any financial pyramid, "MMM" eventually collapsed, leaving a huge number of depositors with nothing.

How the MMM broke up
How the MMM broke up


Step 1

Creation and development of "MMM"

The MMM company was founded in 1989 by three founders: the Mavrodi brothers (Sergei and Vyacheslav) and Olga Melnikova. The first letters of their names served as the name. Neither Vyacheslav Mavrodi nor Olga Melnikova played practically any role in the company's activities. Sergey Mavrodi was in charge of everything. He needed other founders only to comply with the formal requirements for the company he was organizing.

Step 2

In the beginning, like a great many similar organizations, "MMM" was engaged in trade and procurement activities. But after the collapse of the USSR, Sergei Mavrodi decided to start issuing securities (shares). In February 1994, MMM shares with a par value of 1,000 rubles began to be sold. According to the law, the maximum number of such shares should not exceed 1 million. But the quick implementation of the first emission package (which was facilitated by skillful advertising) prompted Mavrodi to start issuing new shares, already in much larger quantities. The ban of the Russian Ministry of Finance was circumvented by issuing so-called MMM tickets, which were not formally securities. These tickets were readily purchased by many citizens who believed in the possibility of quick and easy enrichment.

Step 3

How did the "MMM" collapse?

Despite the fact that all the activities of MMM had the characteristic features of a pyramid scheme, and also despite the warnings of many competent people - economists, lawyers, mathematicians, convincingly proving the inevitability of the imminent collapse of this company, the number of investors wishing to purchase its tickets and shares grew daily from day to day. The cost of tickets and promotions was set by Mavrodi himself twice a week.

Step 4

In just 6 months, from February to the end of July, “MMM” promotions and tickets have risen in price by almost 130 times. Of course, this was pure fraud, but many people ignorant of economics and finance did not even think about the simplest question: what is the reason for such a fantastic rise in prices? They wanted to believe that they would have the same luck as the ordinary guy Lena Golubkov, the hero of an advertising video about the “MMM” action.

Step 5

Eventually, this unsecured financial bubble burst. On August 4, Sergei Mavrodi was arrested (later he was sentenced to 4, 5 years in prison). And many millions of depositors who committed annoying advertising and were flattered by the get-rich-quick opportunity lost their money.