Furious Investors Turn on Mavrodi

Investors in the collapsed MMM pyramid scheme hurled bottles and insults at the company's headquarters Tuesday, after MMM president Sergei Mavrodi marked his recent election to parliament by suspending the purchase of his company's shares.


The announcement sparked a near-riot among thousands of MMM investors who had gathered in the pouring rain outside the company's headquarters in southern Moscow to await the previously announced reopening of MMM offices throughout the country.


"They should throw him out of the Duma and back into jail," said Anna Panasuk, 67, huddling under an umbrella as other angry investors shouting "Thief!" and "Swindler!" hurled empty bottles at the building. "I wish he were in our shoes."


It was the first time since the MMM bubble burst last July that investors had turned their anger over lost savings on Mavrodi, rather than on the state.When Mavrodi was arrested and jailed, investors had organized hunger strikes and pickets of support.


MMM investors also backed Mavrodi in his campaign for election to parliament from the Moscow suburb of Khimki last weekend, and upon winning Mavrodi declared that he would use his new power to protect the rights of MMM shareholders.


In a recorded statement repeated over two loudspeakers every 10 minutes to the angry crowd Tuesday, the same Mavrodi blamed MMM's latest crash on "speculators and middlemen" and on "monstrous abuses" committed by company managers while he was in jail. He said that the invalidation of all MMM shares and "tickets" issued before Nov. 1 would only last until Jan. 1, 1995.


But most investors were not buying it anymore.


Emma Grineva, who introduced herself as "one of the poor shareholders," said she no longer believed she would get the 1 million rubles ($300) she had invested this summer in MMM tickets, which were created to obviate government regulations on share issues. "I was robbed," she said.


Some people, however, decided to play again, lining up to buy a new issue of MMM tickets for 1,000 rubles apiece at MMM offices that reopened throughout Moscow on Tuesday as promised. Those offices, however, refused to buy back any tickets.


Spokesman Sergei Taranov said MMM had been forced to close down its offices at the end of September because Mavrodi could not run the company from jail.


A loudspeaker told the crowd at MMM headquarters that the company would repurchase the new tickets for 1,270 rubles each on Nov. 8.


"I am going to buy about 20 tickets," said Mikhail, who refused to give his last name. "Maybe I will hold them for a week, maybe two. Time will show."


The new tickets were quoted at 10 rubles each Tuesday at the Russian Raw Materials and Commodities Exchange. Prices for pre-November tickets fluctuated around 2 rubles.


Interfax quoted "sources close to Mavrodi's election campaign" Tuesday as saying that he was planning to step down as MMM president, leaving his brother Vyacheslav to take over the position. It also quoted Valery Yampolsky, first deputy head of the Russian Tax Police, as saying that MMM was planning to expand its activities into the Commonwealth of Independent States, the United States, Brazil, India and China.


Taranov confirmed that the company was going to develop, but refused to name the countries. He said, however, that millions of new tickets had been printed and were being kept in "a European country."


He also said that MMM -- despite its financial difficulties -- had decided to sponsor the upcoming Queen of the World '94 beauty show, where Mavrodi's wife, a former model, would head the jury. The show will take place at Moscow's Red Army Theater on Nov. 5.