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Pyramid tycoon Mavrodi convicted in Moscow

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MOSCOW, April 24 (RIA Novosti) - A Moscow court has found Sergei Mavrodi, founder of a multi-million-dollar investment scheme, involving at least 2 million people in the 1990s, guilty of massive fraud.

"The court has found that Mavrodi committed fraud by cheating [investors] and abusing [their] trust," a judge said Tuesday.

The court is reading out the verdict, which could take several days.

Mavrodi's defense lawyer, Olga Makarova, said the criminal case consisted of over 600 volumes and involved 10,366 plaintiffs from across Russia.

One of the world's largest pyramid schemes, MMM run by Mavrodi, his brother and his brother's wife, sold shares to the public, promising spectacular returns in an aggressive advertising campaign on national television. According to different assessments, between two and five million people succumbed to the promises.

The company collected millions of dollars a day in its heyday, paying dividends with money from new share sales. When the company collapsed, dozens of people were reported to have committed suicide, having lost all their money.

Mavrodi has been in custody since 2003, when he was convicted of holding a fake passport and sentenced to 13 months in prison. While in custody he was also investigated over tax evasion and fraud charges that came to light in 1994 and 1995. Court hearings on the fraud charges began in March 2006.

In 1994, Mavrodi managed to get elected to the State Duma, the lower house of parliament, using the support of defrauded investors, whom he had promised to start a pay back program. His parliamentary immunity was cancelled in 1995. Mavrodi declared MMM bankrupt in 1997 and was on the run until his arrest in 2003.

MMM's "success story" inspired the emergence of a host of similar companies in post-Soviet Russia. Fraud scandals made many people suspicious of any joint stock companies.

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