Fast and easy cash

ABUJA, Nigeria—Chinyere Ujor was on a trip to Ghana in 2016 when she received an important text message from her sister. The message said the investment scheme Ujor had invested in had crashed. The 30-year-old Abuja resident had no job at the time, and the company, called the Mavrodi Mondial Movement, or MMM, served as her sole source of income.

MMM is a Russian-born scheme that promises participants 30 percent “interest” on their investment in 30 days. The organization announced in December 2016 that holiday traffic had crashed its website and promised to return the following month.

Ujor had paid $835 into the scheme and expected $278 in interest when the site crashed. She lost both her initial deposit and the interest. “It was all [the money] I had at that moment,” Ujor said.

MMM is a web-based Ponzi scheme, one of several that have drawn in millions of Nigerian participants. The networks run a cycle of cash investment and return by using new members’ investments to pay back older participants. In Nigeria, MMM members start with as low as $2 and choose either to offer or receive financial “help.” The scheme describes itself on its website as a mutual fund, saying the goal is “to destroy the world’s unjust financial system.”

Ponzi schemes became increasingly popular at the peak of Nigeria’s recession two years ago, thriving under the nation’s high unemployment and a lack of government regulation. The catch is, the websites could crash and disappear at any time. The Nigeria Deposit Insurance Corporation said Nigerians lost more than $50 million when MMM crashed. Financial analysts warn that the high-risk investments could land the country’s troubled economy in more peril.

Sergei Mavrodi set up MMM in Russia in the 1990s, but it collapsed after losing about $100 million of its members’ money. Russian officials sentenced Mavrodi to four years in prison on fraud charges. Since then, the scheme has made its way to China, where the government banned it, and to African countries such as South Africa, Kenya, and Nigeria.

MMM reopened early last year, but paid back losses in installments and only to some members who added more money into the cycle. Wale Yinkaoju, a 31-year-old Abuja resident, said he tried MMM for the second time in July. He expected his return in August, but the management informed members that the requests for help had exceeded the number of people offering it. “My money is still there,” he said.

The site crashed again in October and a month later announced it would restart its entire system. MMM in a statement said it froze all older investments until the system strengthened. Ujor said she received back only $139 from her initial deposit of $835. “I’m not sure it’s coming again, so it’s pointless just putting false hope.”

The initial success of MMM opened the door for other similar schemes. Ujor said she also took part in Ultimate Cash Cycler before it also crashed in 2016. The website promised double the amount invested within six hours. Chimdi, a young business owner, said he has used MMM and also has a running account with Wealth Help Alliance, which promises 50 percent interest within 15 days. He also lost $55 to another scheme called Twinkas. Chimdi uses the sites to make extra spending cash, but Ujor said the interest she earned paid for her needs: She used her earnings to cover personal expenses and to drill a well at her parents’ house.

Many of the schemes have no formal points of contact. Wealth Help Alliance lists an untraceable address and phone number used by several other companies online. MMM has only online agents and a message form with no published contact information. The secrecy means the schemes rely largely on referrals and word of mouth. Chimdi said one of his friends earned more than $100 for uploading a video lauding MMM.

The Lagos-based Redeemed Christian Church of God last year released a national memo warning its pastors and members against patronizing Ponzi schemes. An assistant general overseer at the Pentecostal church, Pastor Johnson Odesola, said the leadership would penalize any pastor or member who used the church’s name as a platform to participate in such a program.

Financial Derivatives Company (FDC), an economic think tank based in Lagos state, said the schemes pose an economic threat despite the early participants who reap personal benefits or the banks that generate transfer fees when members send money online. “Money just exchanges hands with no kind of production or value creation taking place,” the group stated. “The capital that could have been deployed into productive ventures is lost.” The group said the Nigerian government has exerted no control mostly because the schemes operate online and sometimes use virtual currency, which is difficult to trace. Nigeria’s Central Bank and the Securities and Exchange Commission issued warnings against patronizing the schemes, but they have mostly gone unheeded.

Sitting in front of his tailoring shop at a mall in the city of Garki, Chimdi agreed the websites pose a lot of risk, but he sees it as the risk that comes with making any investment. “They’ve given strict instructions to use your loose cash,” he said.

Ujor landed a job last year in April. Since then, she said her perspective on Ponzi schemes has changed. “I did it when I was not working,” she said. She now feels certain that nobody could talk her into such a racket again.