Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Mavrodi Letter Blames State for Collapse

Sergei Mavrodi, the jailed president of the reputed pyramid scheme MMM, has hit back at Russia's authorities with a letter placed in 16 major newspapers blaming the government for robbing millions of MMM shareholders.

"I cannot and will not quietly watch as the state, through the tax authorities, insolently and using unscrupulous means, tries to rob ignorant and defenseless people," Mavrodi wrote in the letter, which appeared Tuesday in a half-page advertisement in the prestigious daily Izvestia. "Only my release can straighten out the situation that has been created."

Mavrodi was detained by tax police Aug. 4 and subsequently charged with tax evasion relating to an MMM subsidiary. Shortly before his arrest, MMM slashed the value of its shares from 125,000 rubles ($57) to 1,000 rubles, leaving millions of investors holding near-worthless pieces of paper.

The company, which suspended its operations on the day of Mavrodi's arrest, reopened Monday, and investors once again flocked to buy securities in what the government has repeatedly warned is a pyramid scheme.

On Tuesday, MMM was selling notes worth 100 "tickets," a special security that the Finance Ministry has declared worthless, for 1,605 rubles, promising to repurchase them for 1,700 rubles on Thursday. Each ticket is worth one-hundredth of a share.

Mavrodi's letter accuses the authorities of "massive stupidity" in arresting him and says that ordinary investors are suffering as a result.

"It doesn't seem to have occurred to anyone that if I really was the financial trickster that everyone is trying to make me out to be, I would probably pay the taxes in full and there would be no more dispute with the tax authorities," Mavrodi wrote.

Tax authorities claim that MMM division Invest-Consulting owes the government 49 billion rubles in back taxes. Tax police spokesman Nikolai Medvedev said Tuesday that the conflict between Mavrodi and the tax authorities stretches back over two years and that the MMM president has had a number of opportunities to resolve the situation.

"We asked him more than once in the past to present tax documents for his different companies so that he could continue his work," Medvedev said. "But every time he has cried, 'You are harming the interests of my investors,' and continued to commit more breaches of the law."

Apart from Izvestia, Mavrodi's letter has been published in 15 other newspapers across the country, said Sergei Taranov, MMM's press secretary.

Taranov said that Mavrodi was continuing to manage the activities of MMM through his lawyers.

"He's running MMM," he said. "He remembers a lot, he holds a lot of information in his head."

Medvedev said Mavrodi is legally entitled to continue his business activities in jail as long as he does not interfere with the affairs of Invest-Consulting, the subject of the criminal charges.

"He has the right to issue instructions via his lawyers," Medvedev said.