St. Pete Investors Scammed by Major Pyramid Scheme

Thousands of investors have lost billions of rubles in a pyramid scheme set up by the Rubin Business Club, a St. Petersburg-based company.

Reminiscent of similar scams prevalent in the early 1990s, investors, lured by promises of high returns of 25 to 50 percent annually, discovered too late that they would be unable to recover their money, Kommersant reported Tuesday.

Alexander Polshchenko, director of the Rubin Business Club, disappeared suddenly in February, prompting the police to open an investigation into the fraud, called the biggest in a decade.

The company operated mainly in St. Petersburg, the newspaper reported.

The company web site claimed its funds were invested in various construction projects in St. Petersburg.

It also said the Rubin Business Club had signed contracts with various construction companies to transfer their funds to experienced brokers for investment in high-yielding securities.

Its clients were encouraged to make a minimum investment of 3,000 rubles ($125).

The company, however, did not post any license for its operation on its web site, as required by law.

The victims, who have launched the web site Anti-rubin.narod.ru to search for the perpetrators, became suspicious when Polshchenko failed to show up at the company office on Ligovsky Prospekt on Feb. 18.

Igor Rimmer, head of the St. Petersburg Public Chamber, has filed papers at the city prosecutor's office on behalf of the victims.

Rimmer's court filings showed that many of the victims had taken out bank credit to finance their investment, Kommersant reported.