His company once raked in millions of dollars a day. He owned enough cash to pack several rooms full with banknotes. He was elected to the Russian State Duma and even attempted a run for president.
Today, Sergei Mavrodi, the man behind the infamous MMM financial pyramid that cheated millions of Russians out of their savings in the 1990s, is broke and in prison for non-payment of a 1,000-rouble ($33) fine.
A Moscow court jailed him for five days on March 14 after he failed to pay the fine, slapped on him for an unspecified administrative offense. A court representative said he faced 10
identical charges.
For many, the jailing of a figure seen as Russia's biggest con man marks just another tumble in his spectacular fall from grace. But several years on the run and a four-and-a-half year stint in prison have not tamed Mavrodi.
'The system must be destroyed'
On the contrary, the trained mathematician last year launched a new pyramid scheme, MMM-2011, which he claims will eventually bring down the entire global financial system.
"My goal is a financial apocalypse, a destruction of the global financial system," he told RFE/RL just hours before his March 14 arrest. "I consider the current financial system unfair; it's not fair that some people own billions while others have nothing. The system must be destroyed and something else must be built in its place. That's precisely what I'm working on."
The principle behind MMM-2011 is the same as in any Ponzi scheme - earlier investors receive their profits from subsequent investors. Mavrodi promises fantastic returns of 20% to 75% a month, as well as lotteries and bonuses for investors.
What sets this new scheme apart is that unlike the original MMM, which was presented as a financial institution with offices selling vouchers bearing Mavrodi's picture, the new version is entirely Internet-based. Investors have their money converted into a virtual currency called the "mavro dollar" that is supposed to increase in value.
Mavrodi describes MMM-2011 as a "financial social network" in which citizens give each other money.
Devout followers
The scheme is also more up-front than its predecessor - the website warns investors of the risks, and its founder openly admits it is a pyramid scheme.
Mavrodi says his new brainchild already has 20 million members, a claim that is impossible to verify due to the scheme's opacity. One thing is for sure: his charisma and his efforts to portray himself as a modern-era Robin Hood are earning him devout followers.
Aleksei Muratov, a former legislator in the Russian city of Kursk, abandoned his political career to devote himself exclusively to promoting MMM-2011. He firmly believes in Mavrodi's stated mission to bring about a new financial era.
"He isn't doing it for money," Muratov says. "I believe that his intentions are noble. Will he succeed? Considering the speed with which MMM-2011 is growing, I think I will see this new life. I think it will happen soon. Even if I go bust, I will have invested my money in his project, I will have supported him as a strong personality."
Authorities reluctant to act
So far, MMM-2011 has been able to operate largely unhindered, largely because Ponzi schemes and financial pyramids are legal under Russian law. And despite numerous pledges to crack down on the pyramid after its creation in January 2011, federal authorities appear reluctant to take action.
Russia's financial ombudsman, Pavel Medvedev, is one exception. He has written to the prosecutor-general's Office but he claims prosecutors are in no rush to look into Mavrodi's activities.
"The prosecutor-general told me that measures will be taken if violations are committed," he said. "Why aren't prosecutors acting against him? Because the Prosecutor-General's Office is not interested, it has a life of its own.
"If a big, big boss gives orders then it will act, otherwise it won't bother. It will take the trouble if there's a serious disaster, of course, if someone is murdered. That's its sensitivity threshold."
Medvedev doesn't believe MMM-2011 has millions of members. If this were the case, he says, he would long have been flooded with complaints from defrauded investors. In his opinion, MMM-2011 probably operates on a very modest scale.
"MMM no longer exists," he says. "What we have here is a wretched person, Mavrodi, who has always been very active. Even in Soviet times he traded jeans, which was a very lucrative business.
"Now he is idle, he must pay the court and defrauded citizens fantastic amounts of money, which he doesn't have, so he can't start any business. I think he's bluffing."
Confident of success
Mavrodi, however, is confident of his success and is now seeking to export MMM-2011 to Western Europe, Canada, and Latin America. His website is currently available in 17 languages, including English, French, Spanish, Czech, Greek, Turkish, Swedish, and Hebrew. It also lists phone numbers of representatives in a dozen countries.
Mavrodi says he is about to launch a massive advertising campaign in Europe. His agents have already been spotted in London distributing Russian-language leaflets promoting MMM-2011. His foray into the West, however, may prove tricky.
Russia's porous legislation and the population's inexperience with capitalism at the time enabled MMM to defraud millions of Russians in the early 1990s. Western citizens, well-seasoned in the principles of a market economy, may prove tougher to persuade. Western laws could also be an obstacle.
MMM-2011's biggest prospective foreign market, the European Union, bans all types of financial pyramids on its territory. Running such a scheme is punishable by a fine, a ban, and in some countries with a prison term.
According to Mavrodi, that's a risk he's willing to take.
"Absolutely nothing will stop me - not threats, not intimidation, regardless of whom they come from, even from the very top," he says.
"Of course I don't want to go to jail. But I'm doing what I have to do, and what will be will be."
- someone else can "brief" our established journalists.
