Cape Town – Members of MMM who are in it to make their fortune have joined with the “wrong motives” and could quite easily lose out, according to a business consultant linked the scheme.
Business consultant Deon Jansen van Rensburg told media last week that he has lodged papers in the Pretoria High Court to get clarity on whether MMM is a pyramid scheme, as claimed by financial experts.
While it offers between 30% to 40% returns on being charitable – something it markets extensively on its site – he said it is not an investment scheme and so cannot be classified a pyramid scheme.
However, he said the system of goodwill could be exploited.
“I can’t tell you today that there’s nobody that goes with the wrong reasons into MMM,” he told Fin24 in a skype interview.
In countless testimonial videos posted to its site, MMM members explain how the scheme took them from poverty or debt to financial freedom and wealth. However, not many people say they aren’t making money, but just like the gift of giving. The balance sheet doesn’t seem to add up.
Jansen van Rensburg, who gives financial literacy courses for MMM members, said members should know they might not be able to benefit from the scheme.
“It’s very clear on the system that there are no guarantees that, once you’ve made a donation, you’re going to get anything out of it,” he said.
“There’s ample warning on the system for that,” he said, adding that “nobody who participates in MMM is under any illusion” that they are guaranteed a benefit if they donate money.
WATCH: Members are not under any illusion - Jansen van Rensburg
MMM the biggest pyramid scheme to hit SA - Wouter Fourie
An investigation into whether MMM is breaching any laws in South Africa has become a priority, the Directorate for Priority Crime Investigation (Hawks) told Fin24 on Friday.
The Hawks said its probe into MMM will soon advance from the cybercrime and digital forensic laboratory to the Commercial Crime Unit, following an initial review of the scheme by the National Consumer Commission in 2015.
One of its offerings, MMM Republic of Bitcoin, shut down this month after failing to give 100% returns to its members. It sent a portion of its liabilities to the South African unit to recover via its members.
On Tuesday, Financial Planner of the Year Wouter Fourie, who is also a director on the board of the Financial Planning Institute, told Bruce Whitfield on The Money Show that MMM is “probably the biggest (pyramid scheme) we’ve seen in many years.
“Time will prove them wrong,” he said. “This is a pyramid scheme, it’s going to go bust and people will feel the brunt of the pyramid scheme in probably a month ... or four months time.”
AUDIO: Bruce Whitfield interview with Wouter Fourie
You are freely giving away your money
Jansen van Rensburg told Fin24 that “people are not supposed to make money from MMM”.
“It is quite possible that people can lose (money),” he said, adding that if members believe it is a get rich quick scheme, then they have joined with the “wrong motives”.
“Everybody who becomes a participant is warned very clearly that… the possibility exists that (if) you donate today, you are freely giving your money away,” he said. “If at the time you require assistance, there is nobody that will donate to you, then obviously you have no guarantee and you have no claim to receive that assistance.”
Members of MMM are “encouraged” to donate money from one bank account to another member’s account with the aim to raise 'mavros', a virtual points system that can be used to request more money, if there is a willing donor.
“Mavros are a measure of reward,” said Jansen van Rensburg. “It may entitle you to request assistance in some form at some later stage. That assistance will only be given to you should there be a donor that… is available and willing to pay you an amount.
“There is a conversion rate between mavros and the rand,” said Jansen van Rensburg. “That conversation rate is adjusted as the flow of money through the system is generated.”
WATCH: MMM is not supposed to make you rich - Jansen van Rensburg
Don't regulate MMM - Jansen van Rensburg
Jansen van Rensburg admitted there could be MMM members who are only using the platform to get rich, but does not believe regulation is the key to protect "innocent" members.
“I don’t believe the National Consumer Council (Commission) was ever given the mandate to protect me against my own stupidity,” he said.
“Government can’t protect you,” he added. "Government is not a moral actor.
“We have to accept responsibility for ourselves and make decisions based on what we believe is right. There is no such thing as a good law.
“Every law, every act that was passed by Parliament chips away at your freedom. Therefore, I am against regulation. I believe as a society, if we… become the society we are meant to be, then we wouldn’t need regulation. We will be self-regulated.”
If MMM doesn't collapse
In his media statement, Jansen van Rensburg asked: “How can MMM collapse if there are neither investments, nor returns?”
To answer that question he could turn to Kipi, an online scheme with many similarities to MMM.
It too has not collapsed, but it has not paid anyone their “dreams” (aka donations) since December 2015. It is waiting for people to add more money to the system before that can happen.
Unfortunately, most of its members have jumped ship to MMM, hoping that this time around, the vision will succeed.
If the authorities don’t shut down MMM and it doesn't collapse as the experts predict, what could possibly go wrong? In that case, perhaps the only concern members should have is a glacial "donations" freeze, with its members unable to ask for financial assistance.
That reality might have kicked in already.
There are no guarantees.