Sergei Mavrodi, a folk hero even to some of his millions of victims, collected so much cash from investors that he and his partners had no place to put it.
Russian swindler's story to be told in movie
MOSCOW // He was the architect of the most notorious pyramid scheme in Russian history, a brainy, enigmatic businessman who claims to have at one point controlled the equivalent of one-third of Russia's national budget. Now leading a reclusive life following his release from prison two years ago, Sergei Mavrodi will see his story hit the silver screen with a film he says will the truth behind MMM, the company he founded that left millions of Russians with worthless shares when it collapsed 15 years ago. Based on an autobiographical work, the film, PyraMMMid, is being shot in the Belarusian capital of Minsk by a Moscow-based production company with a budget of US$2.5 million (Dh9m). Few figures in modern Russian history are more emblematic of the country's chaotic, frenzied transition to capitalism than Mr Mavrodi, a trained mathematician who concocted a pyramid scheme that he says left him and his partners with so much cash they literally had no place to store it. To this day, however, he claims that he never broke any laws and that he was always upfront about the fact that his company was not investing the money entrusted to it and was paying out unbelievable returns only thanks to a constant stream of new clients. Mr Mavrodi said he hopes the new film, scheduled for release in April, will prove there was nothing illegal about the business he ran. "It will open people's eyes to a certain degree about how things really were," he said in an interview by e-mail, his preferred method of interaction. ("In general, I'm not a big fan of interaction," Mr Mavrodi wrote.) Inna Lepetikova, a spokeswoman for the production company, Leopolis, said elements of Mr Mavrodi's story had been spiced up by screenwriters to ensure a "more exciting experience, not just a straightforward biopic", for viewers. At times Mr Mavrodi's 15-year saga seems so bizarre as to render embellishment obsolete. Between 1992 and 1994, Mr Mavrodi attracted millions of investors to MMM, largely on the back of a series of irrepressibly perky television commercials showing a Russian everyman named Lyobya Golubkov who gets rich off of quick returns from MMM vouchers, telling his hard-working brother Ivan: "I'm not a freeloader, I'm a partner!" The ads captivated a nation unfamiliar with financial dynamics; Mr Mavrodi says the company had about 15 million investors when it collapsed in July 1994. Millions of them lost their life savings when MMM folded and thousands took to the streets to demand their money back. Russian investigators estimated that Mr Mavrodi made off with around $100m. Curiously, Mr Mavrodi became something of a folk hero among many of his defrauded clients, who accepted the businessman's argument that MMM was illegally targeted by the Kremlin and that the government should compensate investors' losses. Mr Mavrodi was arrested but temporarily gained immunity by securing a seat in Russia's lower house of parliament, though he was later kicked out for lack of attendance. He then went into hiding and was placed on Interpol's wanted list, as investigators believed he had fled the country. In fact, for five years - until his arrest in 2003 - Mr Mavrodi had been living in an apartment in his old neighbourhood in central Moscow with a team of former KGB agents on his payroll to keep an eye out for authorities. "Basically the authorities encountered resistance from a structure identical to their own, but more powerful and better organised," Mr Mavrodi said of his protection. In April 2007, Moscow court convicted Mr Mavrodi of defrauding 10,000 investors out of more than $4m, though he was subsequently released after having spent the equivalent of his sentence in pretrial detention. After his release, Mr Mavrodi said he would like to pay back the money to all of his investors. With court marshals keeping watch over his earnings, however, Mr Mavrodi says he is essentially handcuffed from engaging in any sort of business. He said he rarely leaves his apartment these days and spends most of his time writing. "I am writing all of the time, but I like this," he said in e-mailed comments. "I don't like adventure at all, it's adventure that likes me. I'm by nature a quite person and a homebody. The only thing I really love in life is fishing. I can do without the rest." Mr Mavrodi claims that MMM was not a pyramid, labelling it instead "a new financial structure that in practice showed its viability and superb efficiency". He says the collapse of Lehman Brothers and the US government bailout of AIG amid the global financial crisis show that major financial institutions were no more sound than his company or, for that matter, the pyramid scheme run by convicted US swindler Bernie Madoff. "Everyone these days is shedding crocodile tears for Madoff's poor investors, but for some reason no one remembers the investors of AIG, Lehman Brothers and dozens of other banks and financial structures," Mr Mavrodi said. "Why is that? Because these were 'healthy' structures? That doesn't make it anymore pleasant for their investors." Mr Mavrodi said he understands that many will see the new film about his life as an attempt to whitewash his reputation. At this point, however, he doesn't really care. "There's no way my reputation could get any worse, so it's only up from here," he said. "I have nothing to lose." email@example.com