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A philanthropic spirit encompassed with an entrepreneurial mind, I am passionate about technology and the things technology can help people to achieve.

Monday, February 15, 2016

How MMM & Other Ponzi Schemes Work

I know fans of pyramids and network marketing are going to yell for my head but sometimes the truth has to be told. Can it be possible that Sergey Mavrodi set up a website to help people make money for free? That is highly unlikely but how does he then cash in seeing he only "facilitates" people helping each other?

1. Mavrodi set up a website then built a team using people who are bought into the idea of easy money. Just how many the people in his team are depends on his target reach in terms of money. Maybe 1000 spread across small business people and simple people who know the streets. These are the people who cash out of the system.

2. He then marked these people with special accounts (super users) only he can see at the back end of the website. He can top up their MMM accounts with non-existent money balances to allow them to withdraw bigger amounts e.g. someone gets R25,000 on their account without putting a cent. They provide help to another of their inner circle. Meaning this person is due R25,000 plus interest of 30%.

3. The owner of the scheme has insight into everything while the people have no information whatsoever. If you go to the Facebook page of MMM you can identify some of these super users assuring restive members that they must be patient. Think about this, it's easy to put money into it but when it comes your turn to get something out you must wait in a long queue.