MOSCOW, April 28 (RIA Novosti) - A Moscow court has sentenced Sergei Mavrodi, the head of a multi-million-dollar pyramid scheme, to four and a half years in a penal colony, a RIA Novosti correspondent reported from the courtroom Saturday.
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 guilt of the defendant has been fully proven," the verdict reads. The court also turned down suits against Mavrodi worth more than 250 million rubles ($9.7 million).
Mavrodi's lawyer Olga Makarova said the court had not granted moral damage claims. "At the same time, the court granted about 100 claims for material damage compensation," she said, without specifying any figures.
The public prosecutor asked the court to sentence Mavrodi to five years, but the court took into account that the MMM founder had no previous criminal convictions and that he had a young child.
The court also fined Mavrodi 10,000 rubles ($390).
Makarova earlier said the criminal case against her client consisted of over 600 volumes and involved 10,366 plaintiffs from across Russia.
Mavrodi said he will appeal the verdict. "I disagree with the verdict and intend to appeal," he said. Makarova said the appeal will be considered later, but added that "our position remains the same. We believe he is not guilty."
MMM collected millions of dollars a day in its heyday, paying dividends with money from new share sales. When the company collapsed, dozens of people 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.
The press secretary of the Moscow City Court said Mavrodi will have to pay out more than 20 million rubles ($777,000) to depositors.
"Moscow's Chertanovo court granted 600 claims by victims worth over 20 million rubles on material damage compensation," Anna Usacheva said.