Sergey Panteleevich Mavrodi

Sergey Mavrodi — founder and leader of the financial network structure widely known as MMM, its main developer and mastermind ideologist. His personality in a strange, almost esoteric way, is vital for the existence and development of the system – to him it owes its ceaseless rebirth even after seemingly irreparable panic collapse. He is considered to be one of the greatest adventurers of all ages, and a financial genius — the number of supporters for the last is permanently growing (in 2012, for example, according to the sociologists, almost a third of Russians shared the same thought, then such polls were stopped). The Mavrodi supporters consider him to be the same type of revolutionary-reformists guru such as Luther or Gandhi. They have no doubt that in few years he will become known throughout the world more than the founders of the largest computer and social networks, and in many countries there will be monuments erected in his name.
The question, whether MMM can exist without Mavrodi remains open. Hence, being aware of the drawbacks inherent to the “authoritarian” management style, in 2012-2013, he gave the “franchise” to all the groups of participants wishing to develop the system autonomously. After the restart in 2012 their leaders who were dissatisfied with the lack of transparency of the decisions made by Mavrodi and his top managers, decided to conduct the business completely independently. However, none of the separated structures survived in the end, and in early 2014 whatever was left from them, together with the Mavrodi’s loyal fractions, joined into a single socio-financial flow — MMM.
As well as in the above, and in the other, sometimes arguable decisions of Sergey Mavrodi, it is clearly seen only one imperative approach, which he stated repeatedly, and which is even supported by his critics: all his actions are subject to the same goal — the development of the MMM to the degree, allowing to modify the existing deeply unjust global financial world order. In fact, Mavrodi solves a task of a messianic scale, with all advantages and costs of such type of activity. His nature, respectively, is characterized by sometimes contradictory combined set of values and psychological features. However, for many MMM participants the personal confidence in Mavrodi is the key factor in deciding to join the system. This is supported by the Mavrodi’s gift of leadership and an independent goal-setting, ethical aptitude and civil courage, the ability to motivate to action the greedy, the righteous and players, all at the same time. He is endowed with a kind of spartanic charm, some consider him cynical and a harsh idealist who believes that the goal justifies the means. Women find him “cool”. Intellectuals appreciate, far from simple, the basic revolutionary-paradoxical thesis of MMM “The principle of mutual trust stands above the principle of mutual obligations”. Other than that, Mavrodi is himself a writer as well – an insightful observer can learn a lot about his personality from a variety of different genres of texts and videos posted on his MMM website – from weekly comments on current events and interviews to artistic stories and screenplays.

Inception

Sergey Mavrodi was born in 1955, in Moscow in a simple soviet “middle class” family – of a worker and an economist. From his father, half ukranian greek, was left a memorable surname. Born with a bilateral heart disease, the doctors predicted that the boy wouldn’t survive until the age of eighteen. “However- it was not the case! It couldn’t come to an end so quickly!”. Since high school the young man showed great talent in the exact sciences, was the winner of numerous physical and mathematical Olympiads, sometimes even led lessons for his teachers. Had a phenomenal memory, “I could literally repeat any passage, which was read aloud to me”. Manifested himself as a nonconformist since an early stage. Given that, having every reason to enter the prestigious Moscow Physics and Technology University, abandoned it after an unfair, in his opinion,first assessment exam. Subsequently he entered in the Moscow Institute of Electronic Engineering at the Department of Applied Mathematics, from which he graduated in 1978 with the specialization “artificial intelligence.” (“It is not there! The Natural one – is not there” – he was speaking ironically later). According to his classmates, the mathematical abilities of Sergei Mavrodi were “fantastic”. Already a freshman, he became the winner of the competitions in mathematics and physics organised between universities. However, quickly lost his interest in studies and did not appear in the university almost at all. Nevertheless, his studies were successful in the overall: “If I was able to get the lecture notes at least a couple of hours before the exam and have time to browse through, I would pass the exam without any problems”.
As well as Putin, whilst in the University he got interested in Sambo, and soon became master in sports, not losing a single fight, and having a weight of 60 kg became the champion in Moscow in the Open category. However, this was the end of the sports career as further growth demanded too much time. Today he is indifferent towards sports: “Excessive enthusiasm in martial arts is not as harmless as it seems. You become physically stronger, but the spirit – weaker. You get used to losing, even if it’s when training. You get to learn your limits. A senior fighter will never come to grips with several strong opponents, because he knows what is it. He would prefer to retreat.”
Upon graduation Mavrodi worked for some time as a software engineer, but then resigned and started a simple business – trade of the audio and video recordings. Though, any private activity at that time was banned. (“Freedom –is the same as the ability to breath” – said Sergey afterwards about the main reason for such decision). In 1983 he was first arrested for 10 days by the Department fighting with Socialist Property Theft and Speculation (ОБХСС) staff, however the laws, those days, got liberalized and he didn’t have the lawsuit case opened. Later he says: “The fate needed me for great deeds”.

MMM

In 1989 Mavrodi founded the corporative society “MMM”, based on which, then created a few dozen of other commercial structures. The corporative society, in particular, was engaged in computer supplying, which were only at their starting point of accessing the market’s daily turnover. In 1992, the brand became universally recognizable after Mavrodi offered, several times, to all the residents of Moscow a day of free of charge travel in Metro.
But, MMM as a pyramidal project started only on the 1st of February, 1994 ” There was privatization. And if we call a spade a spade – a total deception and robbery of defenseless population who doesn’t understand anything – says Mavrodi. – I did not like it and I wanted to prevent it. Execute instead a genuine, a truly national privatization. They say: “there was no alternative”. Lies! There was – MMM. It would have been a fair, honest, genuinely popular privatization. The masters of the country would have become its citizens, the usual, ordinary Russians, MMM depositors, which were 15 million at that time already, and a month later – it would have been half of the country.”
Evidently, Mavrodi had issues arising with the authorities almost immediately, he had to act “in an aggressive environment”, taking fast and non-trivial solutions. In the regulations of the emerging stock market were loads of normative-regulatory gaps, and the logic itself led to the “virtualization ” of MMM shares and their conditional exchange rating. “I was publicly defamed, being accused in all mortal sins, and in particular that the MMM shares and tickets are intrinsically no assets. In response I wrote : ” MMM shares – full analogue of NASDAQ shares, the dividends of which also were almost never paid and which as well were purchased exclusively with a speculative objective, hoping for their further growth. As a matter of fact, the securities now, in the modern world, are no an “assets” at all – it’s nothing else than just an abstract object of speculation. And if this is the case, then what’s the difference what to speculate with ? “Shares”, paintings, cigarettes, or MMM tickets ? Absolutely no difference.”
Interestingly enough, at first Mavrodi was not going to print his own “MMM tickets” but paint dollars in red instead: “Why should I spend money, when the U.S. government had already printed it out for me? Green dollar – the usual ones, red – mine. There is no violation of the law at all – the dollar is not going to cease being a dollar because it was painted, isn’t it?”. He had, however, to give up to this idea as it was “too shiny”: “It would immediately attract towards MMM too much attention.”
MMM lasted only six months – a period during which the number of participants reached, according to various estimates, 10-15 million, the total amount of deposits – a third of the national budget, the price of shares, designated with a “discretionary decision ” at the rate of 100 % per month, increased 127 times. In Moscow alone, the revenue of the structure was about $ 50 million a day. The “Gold Rush” was stimulated by the largely conducted massive television commercials in the soap operas style, as well as the inexperience of the people in the practical realities of the new economic order. There were no relevant laws either.
“There was not enough time to count the money and they were considered as “rooms”. They were kept right in the office, to have it always at hand – in case of panic. There was no guard either – come into the room and take as much as you want. Nobody would even notice– as nobody even knows how much money are there. Basically almost all the employees were taking. The man enters in a magical room full with money, all himself so solid, important, serious! – then, changing in seconds. Starts, acting feverishly and all the time looking at the door, stuffing packs of money into his pockets. Or ladies – those usually under the dress, obviously (where else?). Dirt and filth, of course. After that you get disappointed in people forever, probably. You look at the person and think involuntarily – you’re singing beautifully, but how would you, brother, behave yourself in the “magic” room? Nobody could stand the temptations.
However, it did not matter – shrinkage, typical production loss. And what could I do? Guards? First of all, it would have seriously impeded the process; and secondly – security would have started stealing, but this time systematically and on a much larger scale. To address the issue to the authorities – suicidal, I was in war with the government. Connect the gangsters? It’s the way into the abyss. That’s why I had to turn a blind eye to all these innocent pranks. It’s ok, let them steal, just work!”.
Mavrodi was managing MMM mainly by phone, guided by his own ideas about a good management : “The chief should not engage in the turnover. He shouldn’t do anything at all! He must rest, fish and contemplate over strategic objectives”. As an advanced practitioner, Mavrodi was personally advising the leaders of the Department of securities and stock market of the Ministry of Finance (MINFIN) on the creation of short-term bonds (GKO – abreviation of the short-term obligations in russian) – actual analogue of MMM shares, launched in October 1994 and ran for almost 4 years. Later Mavrodi claimed that “the authorities, as usual, didn’t understand anything” and made a number of fundamental errors. Subsequently, this led to a default of the short-term bonds in 1998 and a sharp collapse of the ruble (russian currency). In the meantime Mavrodi was arrested in August 1994 on charges of tax evasion on income of one of his companies. From a legal point of view the accusation looked absurd (“taxes – from a pyramid?”) and subsequently was reclassified as fraud – also quite unproven. However, it was not permitted for the authorities no to react, simply because of the scale of what was happening. As one of the investigators said later: “Well, how could we not arrest you ? Another month or two, and there would be no president, no government, no State Duma (russian parliament) in the country; there would be Sergey Mavrodi alone, the one and only. And accusation… who cares what for!”
“The system did not collapse at all. It was artificially destroyed at the peak of its development,” – said Mavrodi. In the criminal case the witnesses told about 17 trucks in which, special forces commandos had taken cash from the MMM office. Directly from the prison the chief suspended the activities of the system and started collecting signatures for registering as a candidate for the State Duma of the Russian Federation. After two months was signed in and released. Subsequently Mavrodi was regretting not to have decided a more radical civil action having such an impressive “support group” of citizens, interested in the return of their investments. “I am not repenting in anything and I’m regretting only that I didn’t bring it all to an end.”

Politics

In politics as such, Sergei Mavrodi was never particularly interested and this activity, he said, he never liked. Due to the magnitude of his enterprise he was forced to deal with it constantly one way or another. But the relationships with the powerful ones of this world did never evolve, “negotiation” did not work. During the MMM-94 “explosion” he was repeatedly invited in Kremlin, including once to the government meeting, but he ignored the invitations. He did not go for concessions and compromises as a rule, if he thought he is right – acted accordingly, guided by the well-known principle of “do what is right, and let it be!”. Sometimes he lacked an elementary flexibility and caution. During Mavrodi’s election campaign he did not keep as a secret that he goes to State Duma solely for the sake of the parliamentary immunity, and since elected as a deputy, was not present at any of its meetings. As a result, a year after, the State Duma ceased his activity. ” I shouldn’t have changed them ( MPs ) all the tickets (MMM) straight away – Mavrodi wrote later – I should have done it gradually, bit by bit.”
The exclusion of the Duma (itself a rare event ) Mavrodi treated easily, probably believing that with the help of “Party of People’s Capital”,created by himself, would easily return to be a deputy. But unexpectedly lost the next elections, taking the penultimate place among two dozen of candidates. Given that, that on the eve of elections as per all ratings, he was leading the polls with a wide margin. In early 1996, the Central Election Commission has rejected a significant part of the signatures in the support of his registration as a candidate for president of Russia. Against Mavrodi was opened a case in the court for faking the signature sheets, closed later due to lack of evidence.
There is another couple of relevant political episodes. On the eve of the USSR (Union of Socialist Soviet Republics) collapse, having learned from his guards – former KGB-s, that there is a plan to arrest the newly arrived in Moscow leaders of Ukraine and Belarus, Mavrodi personally travelled to several Western embassies to warn about it. “Back then, I still believed in all these democracies and considered that I should go. If I had not gone, I would have despised myself.”
20 years later Mavrodi declared about the mass registration of the MMM members as candidates and voters in the elections of the Coordinated Council of opposition to the current leadership of Russia (around 18 thousand signed in). The mass-media expressed the opinion that he does it in the interests of the Russian government, in exchange for an end to the counter-propaganda against MMM on the official channels. Thus, Mavrodi himself continues to respond to the economic and social policy of the current authorities quite critical and jaundiced. MMM does have a “political wing”, but his appointees are involved mainly in the local elections, with varying success.

Manhunt

After the revocation of Sergei Mavrodi’s parliamentary mandate, the investigations against him were restarted, additionally to the existing cases- regarding the MMM activities- there has been added one more – fraud. He was added into the Russian and then in the international wanted list. More than 5 years he was hiding in a rented apartment on a nearby street (” where they won’t search”) factually in a voluntary detention – the appearance of the Internet era was a blessing. In his confession, Mavrodi stated that hiding from the investigation helped his own security service, which consisted of former secret services of high quality. About the persecution Mavrodi is philosophical : “Since my first arrest in 1983 I was not under investigation, wanted or in prison more than a month. Over 30 criminal cases after all! Everything fell apart in the end, due to lack of evidence. Well, except for the very last.”

Out of the shadows — in a new light

Despite the assumptions about his escape abroad, Mavrodi claims that he never left Russia and does not even have passports. That did not stop him, without having to leave the refuge, to create in 1998 a worldwide pyramid – virtual stock exchange market Stock Generation (SG), issued in the form of gambling, in one of the Caribbean countries in the name of the 18 -year-old sister in law. According to official data solely, the number of participants, in less than a year of activity, reached 275 thousand, mainly from U.S. citizens, Western Europe and Australia. According to unofficial data, there were millions participating worldwide. On the Stock Exchange there were bought and sold shares of several virtual companies whose quotes were changed arbitrarily. Under the same, as in the MMM- 94, 100% per month, their price increased up to 5,000 times in a year”. In a pyramid the debt is not critical, but the behaviour of its participants, – the chief explains the basic principle of those who “rule the heaven”. – Could have easily grown another million times. It has no difference at all. ”
Employees, however, simply did not have time to register the incoming bank checks, with which the basements were packed and send planes with cash. «SG would have continued to exist without any issues, if SEC (Securities and Exchange Commission of United States) didn’t interfere and ruin it – says Mavrodi. Besides, when SEC tried to bring the official charges in the District Court of Boston, they lost at the pre-trial hearings stage. After all, formally SG was just a game, it had the appropriate license, and it did not violate the laws related to securities – there were no real securities. The judge was a staunch opponent of financial pyramids, but he managed to maintain objectivity and neutrality “Were the rules posted? Were. Everybody played voluntarily? Voluntarily. That’s it! There is no subject for a lawsuit”. Nevertheless, after the appeal was put forward, the Stock Generation activity was stopped and many of its members were among the victims.
“The situation with SG clearly showed me that in the West as well all this “legitimacy” – is a concept of a very, very relative nature, shaky and largely it is nothing else than only declared. SEC announced an inspection and immediately blocked all the accounts of the company. Nothing was proven yet, even the checks did not start, and, meanwhile, it was basically destroyed. The company didn’t even have the funds to hire a lawyer, it didn’t have the chance to have the right for defence, guaranteed by the constitution of every country!”.
Perhaps, Mavrodi was inspired by the idea to create SG due to the failure with the internet pyramid scheme in Russia. In 1996, the Sergei’s younger brother – Vyacheslav organized in Russia a virtual system of mutual donations. In reality it is likely that it was guided by Sergei. In this system as a means of payment were accepted the depreciated stocks and tickets of the joint stocks company “MMM”. The exact magnitude of this project is unknown, but had to suffer a lot of advanced compatriots, overly optimistic about the future of the still unfolding global communication. In 1997, the activity of this system were ceased, as has been said, “because of the threat of prosecutorial harassment.”

The arrest and trial

At the time of his arrest in 2003, in the rented apartment in Moscow, while the operative forces were braking the armored door, Sergei Mavrodi was listening to Brahms. Initially he was charged with several lawsuits, eventually they have fallen, due to expired time limits except one: fraud. Therefore out of the 3.5 thousand volumes remained “only” 650. According to the prosecutors, the damage done by MMM to millions of depositors, was estimated at $ 110 million ; according to the Association of depositors – $ 70-80 billion ; the experts named the figure to be “at least a billion”. From the criminal case, followed that Mavrodi was the owner of about 8 % of the shares of Gazprom ($ 25 billion), issued on the names of third parties. The accusation stated that the funds were spent solely on the MMM’s development: payments, advertising, staff salaries, opening new offices, etc. For himself Mavrodi didn’t spend almost anything – didn’t buy yachts, palaces, planes, etc.
The investigation lasted 3.5 years, another year was the court. All this time Mavrodi was detained in the prison for dangerous criminals – thieves -in-law, leaders of organized crime groups, killers and maniacs. “Usually they don’t hold anybody there more than a year. A year later, people start barking at the guards”. Flatly refused to comply with the prison’s schedule. Conducted 12 hunger strikes, including 8 days without water in the summer heat, a significant portion of total detention period was spent in the lockup. Later described his prison experience and observations in a series of analytical video essays.
In April 2007, the court sentenced Sergei Mavrodi to 4.5 years in prison (the term was relatively modest due to the cancellation of the Criminal Code of severe fraud on a large scale). Basically nearly the entire term imposed on him, the founder of MMM, had already spend in the lockup. In order to capture the moment of his release, there were gathered about fifty representatives of Russian and foreign media ; MMM depositors, both supporters and opponents of Mavrodi, were not more than a dozen.
In May 2008, at the presentation of his book “Temptation”, the bailiffs presented to Mavrodi the penalty writs for the money recovery in the favor of the investors who had to suffer, according to the civil suits. The total amount claimed was estimated at 300 million rubles. The entire print run of the book was confiscated, later Mavrodi had his personal library completely expropriated (more than 1.5 thousand volumes ).

Women

Mavrodi was solving his problems with women in a peculiar manner. Was holding Beauty contests under the auspices of MMM at a high level (up to Miss World), where was simply choosing his favorite contestants. “Why bother? You come and say : “I am so and so. Not a pervert, nothing unusual. Let’s meet from time to time, I’m paying that much. If you don’t want anybody to find out about it then nobody will ever know”. That’s it! There were no rejections. Not even one. Everybody is reasonable at the end of the day. And the women are in particular. Right! You should sell easily and expensively”.

Family

In 1993-2005 Sergei Mavrodi was married to the ukrainian Elena Pavlyuchenko, winner of various beauty contests. However, they did not live together. As he said later in an interview, “I cannot imagine at all how can one live in the same apartment with a woman”. Mavrodi even invented an amusing scheme “wife management”. A famous astrologer, whose predictions Elena undoubtedly believed, was actually his man. Being convinced that would get a big sentence, he himself filed a petition for divorce in the prison”. If you really want to let go your wife, you have to make the first move yourself. You should take the responsibility in your hands, and not relegate it on the weak and poor woman – who is anyway in a bad condition now. Life, alas, is a cruel thing”. At the same time the greatest human flaw Mavrodi considers to be betrayal.

Personality features

Hobbies: collecting books, insects (mostly butterflies and beetles, even funded a special scientific expedition in Papua – New Guinea), hunting, fishing (“the only thing I really love in this life”). Loves bard songs. He himself writes poetry in a style reminiscent to chansons and ballads, as well songs based on the classical melodies (Mozart, Bach, Beethoven ) – which himself performs.
His entire adult life sleeps twice a day, at 4:00 in the morning and evening (AM and PM). Complied with this mode even in the prison – in fact conquered the right for it. Never smoke or drink alcohol, his entire life visited only once the restaurant. Is not prone to excessive theorizing, but while solving problems is not shy to draw conclusions on the purely common sense basis, which sometimes are in a radical contrast with the usual ideas. Can be extremely closed.
The one who personally shot the hostages, in Afghanistan, the commander of the assault battalion, with whom Mavrodi shared the cell, said that in his life hasn’t seen a more fierce man. “It is strange, but about the same told me afterwards another two of my inmates, but from the other cells – said Mavrodi. – Although I gave absolutely no occasions to such statements in any of these cases. Known in the 90s serial killer Alex-the soldier, spoke a bit differently: “The only truly dangerous man in this prison. Everybody else – just pretends.”
Learning during one of the medical examinations that he had liver cancer and that he had less than six months to live, Sergei didn’t disclose it to any of his friends or relatives, and continued to live in the same way. A month later, at the re-examination, was found that the diagnosis was wrong.

Phenomenon

According to the psychiatrists, in the Moscow region only in the year 2000, in hospitals were registered almost 400 “Sergei Mavrodi” – much more “twins” than anyone else. For example, “Yeltsin” (first president of Russian Federation) at that time was only about fifty.
After his discharge from prison, Mavrodi got engaged into writing activities. In 2008, was released his book “The Temptation”, written by him in prison (copyright name — “Son of Lucifer”). Mavrodi himself believes that his literary talent is not minor to the financial one. “A greater book than the “Son of Lucifer” – does not exist. If people still don’t understand that – than worse for them”. Critics are generally more restrained in their comments, indicating in particular that the demonization of the relationship with the world is not quite adequate to his messianic task of transformation.
The density of the events of the S.P.Mavrodi’s biography reminds a dashingly twisted action movie, while its central episode is the story of the creation of MMM- 94. It is no coincidence that on its basis, as described in the book “Pyramid”, was shoot a movie “PiraMMMida”. Mavrodi himself did not like it as being too Hollywood alike. “Everything was much tougher, tougher and more ruthless! I was fighting with the System! Against all! No room for error. You play whites, ahead of your rivals by one pace, but only by a single one! Which means, you must constantly attack and attack, shouldn’t give to the enemy time to recover even for a second, even for a moment ! Hesitation is death alike! What kind of glamorous kitties, oligarchs and security services are we talking about ? They were all modestly staying in the sidelines and watched with bated breath, how will it all be over. This whole nightmare and horror — who wins?”.
“Are you afraid that everything will fall apart? If this will be the case, means that the whole world will be playing at this point! Therefore you will have the widest field for maneuver. And the means of the whole world are in your pocket! If I was a magician, I would have waved with a magic wand and make rain of dollars, euros, etc. fall down from the sky. It would have poured, poured and poured… and at the same time all the computers would lose, without any trace, all the information about all accounts. Abolition of all money ! And then give to everybody a certain amount and start all over again. System restart-reboot. After all, the resources in society are sufficient (products, goods, production facilities, etc.), failure — in their distribution system”.
Will the hero’s life have more vivid tops – the world soon will know. Freedom of choice, no guarantees and complete honesty – this is his present and essentially unchanging credo. In 2011 Mavrodi revived MMM, which also has passed through a series of metamorphoses. Today, it is a kind of innovative charity fund, global mutual aid society and simultaneously a growing national movement, an implicit but powerful tool for the arising socio- economic transformation. Details on the website sergey-mavrodi.com

QUOTES

“The cowardice has lots of names. I do not fear nobody’s and no types of calls. You shouldn’t be afraid at all, of anyone or anything. Fear – humiliates. You lose yourself.”
“I have a completely clear and sharp inner… conviction?.. Feeling?.. that nobody, nobody! In the whole world could tempt me or seduce me, nor to somehow influence or impact me. NOBODY ! Neither God nor the Devil. I myself always make my choice. Me and only me alone!”
“You can betray only that who trusts you. The worst sin – treachery! The fallen who overstepped the line – is not human. Does not deserve even contempt.”
“Excessive insightfulness is suspicious. Everybody judges based on his own example. Only a villain is always alert and expects betrayal from all. A normal human on the other hand is always caught by evil by surprise.”