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Sergei Mavrodi Convicted of Fraud in MMM Trial

Published: April 27, 2007 (Issue # 1266)


MOSCOW Sergei Mavrodi, the mastermind behind the notorious MMM pyramid scheme that scammed millions of people in the early 1990s, was convicted of fraud on Tuesday in a Moscow court in what appears to be the end of a bizarre saga that stretches across the entire post-Soviet era.

Reading out the verdict Tuesday, Judge Nadezhda Markina of the Chertanovsky District Court said Mavrodi had defrauded MMM investors by deception, betrayal and abuse of trust.

MMM was the first and the biggest in a series of financial pyramids that hit Russia in the 1990s. Mavrodi was found guilty of defrauding 10,000 investors out of 110 million rubles ($4.3 million), though in reality millions of people lost money in the scheme.

Markina is expected to finish reading the 820-page verdict later this week and to sentence Mavrodi on Saturday. Prosecutors have asked for a five-year sentence, but it is likely that Mavrodi will be released soon, as he has already spent four years in custody.

Mavrodis lawyer Olga Makarova insisted that her client was innocent.

We do not consider him guilty, Makarova said just before Markina began reading the verdict.

There is no article in the Criminal Code that applies to what happened to MMM, Makarova argued.

MMM, which operated from 1992 to 1994, was a sensation thanks to a clever saturation advertising campaign on national television that promised spectacular overnight returns on investments.

MMMs droll, 60-second television spots, featuring ordinary Russians whose lives improve drastically after they purchase the companys stock, captured the nations imagination.

The advertisements fictional heroes, Marina Sergeyevna and Lyonya Golubkov, became household names as MMM shares soared in value from 1,600 rubles (then about $1) to 105,600 rubles (about $65). Dividends were paid with money from new share sales.

Some 2 million to 10 million people lost their savings when the pyramid scheme folded in July 1994, and thousands of panicked people took to the streets. Investigators have estimated that Mavrodi made off with up to $100 million.

After MMM collapsed in 1994, Mavrodi was charged with tax evasion and jailed. But he was released in October 1995 to run for a seat in the State Duma, which he won, largely on the promise to spend $10 million on improvements in the Moscow suburb.

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ALL ABOUT TOWN

Thursday, Dec. 18


Improve your English and knowledge of British culture during todays FORM lesson at the British Book Center. These free English lessons with a native speaker elaborate not only on grammar particulars but cultural topics as well. Todays event will discuss the BBC Two documentary Victorian Farm Christmas.



Friday, Dec. 19


Test your mastery of parlor games during Game Evening at the British Book Center. Learn how to play a variety of classic, mentally challenging games and use your newly acquired skills to crush weaker opponents. The event beings at 5 p.m.



Saturday, Dec. 20


The citys Babushkina Park on Prospekt Obukhovskoy Oborony will be invaded by dozens of rocking-and-rolling Santa Clauses during todays Santa Claus Parade. Not only will they parade through the park but there will also be competitions amongst the festively-clad participants and a musical master class. There will also be a prize for the best-dressed Santa Claus.


Stock up your record collection during the Vinyl Christmas Sale at the KL10TCH bar on Konyushennaya ploschad today. Spend the afternoon perusing the records for sale while listening the classic, clean sound of records spinning out hits from a variety of musical genres and time periods.



Sunday, Dec. 21


TheZenit St. Petersburg basketball team returns to the northern capital this evening for a matchup with Krasny Oktyabr, a Volgograd-based basketball club. Tickets for the game, which tips off at 6 p.m. this evening, can be purchased on the clubs website or at their arena, Sibur Arena, on Krestovsky island.


Satisfy your sugar cravings during Sweet New Year, an ongoing seasonal festival at the Raduga shopping center. Each weekend of December will welcome hungry visitors to taste hundreds of different kinds of desserts made from a plethora of sweet treats. Workshops are open to visitors and seasonal gifts can also be purchased for those rushing to finish their New Year shopping.



Monday, Dec. 22


Pick out the latest fashions as holiday gifts for loved ones or as early presents for yourself during the Christmas Design Sale at Kraft on Obvodny Kanal, starting on Dec. 20 and continuing through Dec. 27. Designer clothes will be on sale every day of the week or you can buy something more festive to decorate the home while sipping on hot coffee and perusing the various master classes.



Tuesday, Dec. 23


Meet Arctic explorers Fedor Konukhov and Viktor Simonov during SPIBAs and Capital Legal Services event Arctic Expedition this morning in the Mertens House business center at 21 Nevsky Prospekt. The meeting will discuss the explorers ongoing eco-social project and how companies can use the project as a unique marketing opportunity. Email office@spiba.ru by Dec. 22 if you wish to attend.



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