Crooked pyramid schemes are back

For many Russians the intricacies of the money markets are still a mystery. And it’s a naivety that makes them easy prey for crooks and swindlers. During the 1990s many were duped out of their life savings in get-rich-quick pyramid schemes. Now the elabor

In a financial pyramid, investors put in money and wait for new investors to do the same. Those who organise them collect the cash, and in many cases run-off with it, and then the pyramid collapses.

Financial consultant Tatiana Morozova says there’s nothing new about the schemes: “Financial pyramids have always been and will continue to be. They only derive their money from investors. The newcomers always hope that they are in at the beginning. But it is confidential information available to the organisers only,” Morozova says.

Although it’s not always easy to spot a pyramid company, there are some indicators. First – bright and obtrusive promotion, which promises more than 12% annual profit. Second – the pyramid is only getting its money from newcomers. And third, and most important – the company isn’t licensed.

Pensioner Lidia Pertseva didn't have that information. “I trusted them, because they promised a lot and the companies looked serious,” she said.  But Lidia lost all her savings and is now trying to get at least part of her money back at a compensation centre in Moscow.

Financial pyramids flourished in the 1990s. Having collected the money, their founders fled abroad leaving the investors empty handed.
 
Sergey Mavrodi, owner of the MMM company, was arrested and found guilty of fraud. But investors didn't get their cash back. There were thousands of similar cases.

After a decade in the wilderness, the pyramids are back.

A police officer who wants to remain anonymous told RT: “Yes, we have a list with ample evidence against those behind the pyramids”.

However, he wasn’t hopeful of bringing the crooks to justice: “since there is no single application from the cheated depositors, we can't help and all the protests and demonstrations after the pyramid crashed with the managers on the run are useless here,” he said.