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. Last Updated: 07/27/2016

Mavrodi Depicted as Innocent Victim

Lawyers for Sergei Mavrodi, the man at the center of Russia's biggest investment scandal, portrayed him Tuesday as the innocent victim of vested business and political interests.


Mavrodi, head of the MMM investment fund that lured millions of Russians into buying its shares with promises of sky-high returns, was charged Saturday with large-scale tax evasion at one of the companies in his corporate empire.


Mavrodi, 39, was also accused of obstructing a legal investigation. He could face a jail term of up to five years if convicted of tax evasion and up to two years if convicted of the second charge.


But four of his lawyers told a news conference that tax investigators and police had broken laws in their haste to gather evidence against Mavrodi.


"The investigators are being manipulated like puppets," said Eduard Safronsky. "There is no way they could make such mistakes without pressure from other structures."


Safronsky declined to identify exactly who he had in mind, but talked darkly of "powerful political and economic structures" who he hinted were out to get Mavrodi.


"There are more dangerous people in Moscow than Mavrodi. Why lock him up?" asked Safronsky.


Mavrodi was arrested early this month, a few days after slashing the price of its shares in July as a crisis of confidence triggered a run on the paper.


The finance ministry says MMM was nothing more than a pyramid scheme, using income from share purchases to fund buy-backs at higher rates. MMM denies the charge and says it invested its income in profitable Russian companies.


Mavrodi is accused of tax evasion at the Invest Consulting firm, part of the MMM empire. Lawyer Alexander Soloshenko said the charge related to a sum of 24.5 billion rubles ($12 million) which was deposited briefly in the Invest Consulting bank account before being transferred to another MMM company. The money was not taxable, he said, because taxes had already been paid on it when it was transferred to the company from MMM Invest, Mavrodi's voucher investment fund.


From the start MMM has taken a populist stand, striving to show itself as a friend of the man in the street.


Safronsky said that during the search of the MMM offices last month, police had broken a valuable computer and thereby wrecked the fund's chances of compensating more vulnerable investors such as pensioners and war invalids.


He also said investigators had seized piles of papers unrelated to the case. "The best people in the tax office and the Interior Ministry are involved in the battle with MMM, as are the newspapers which receive state subsidies," said MMM press officer Sergei Taranov. "Every day they come up with new accusations. Never has there been a case when the state attacked a private company."