Crook dupes Russians from his cell

THEIR faith in miracles resuscitated by Order No 1, promulgated from inside a Moscow prison, thousands of Russians queued for hours yesterday in a cold drizzle outside the scandal-ridden MMM investment fund - not to get their money back but to hand over yet more.

Bamboozled and embittered by the collapse of the get-rich-quick venture, desperate investors now place their hopes in a defiant, promise-laden directive issued from Sailor's Silence Prison by Sergei Mavrodi, the jailed mastermind of the scheme.

His Order No 1, which appeared as a full-page advertisement in Izvestia over the weekend, declares MMM back on its feet, puts Mr Mavrodi back in charge and says the company is ready to handle the claims of 'pensioners, invalids and the needy' on Sunday.

In the meantime, everyone is invited to increase their stake in the firm, which officials denounce as a classic, crooked pyramid scheme but which many investors, said to number up to 10 million, see as the victim of government interference and tax-collectors' avarice.

'I believe in MMM,' said Nina Kalinina, waiting her turn yesterday to buy more shares in a firm that shows no inclination to return an earlier investment of 2m roubles ( pounds 630). Her strategy, endorsed, she says, by a trusted astrologer, is simple: 'The more we all buy now, the more money there will be, the more chance I have of getting paid back.'

Shares that peaked at more than 130,000 roubles each last month were on sale yesterday at the company headquarters on Moscow's Warsaw Highway for 1,500, about the price they started at when the MMM roller-coaster first got moving in January. Instead of stock certificates, investors now receive freshly minted 'tickets' decorated with Mr Mavrodi's bespectacled face and known as 'Mavrodchiki'.

Three weeks ago angry investors stampeded at the same building, demanding their money back. Few, if any, got anything. Yesterday many of the same people were back, waiting patiently to put up more money.

The initiated calculate that they can make a profit playing the margins: MMM may be bust, but its shares still trade on the Moscow Commodities and Raw Materials Exchange for more than the company's new purchase price. Others are betting on a government bail- out.

Most, though, seem desperate just to keep the whole carousel turning.

Among them is Yevgenny Selivertsov, an unemployed former soldier who borrowed 5m roubles from the Moscow City Bank and invested it all in MMM at the height of its fortunes. The bank wants its money back and Mr Selivertsov says he will do anything to keep MMM afloat and his own hope of repayment alive, even buy new shares.

Protected by guards in jungle camouflage and equipped with detectors to catch counterfeit bank notes, cashiers doled out wads of Mavrodchiki throughout the day. So long was the queue that a woman who had waited most of the night could hawk her place near the front for 50,000 roubles.

It barely seemed to matter that MMM is reviled as an Eldorado of fool's gold by the chairman of the Central Bank, Viktor Gerashchenko, or that Mr Mavrodi is in jail on charges of tax evasion and resisting arrest. In a country where many people lost their life savings because of a price reform in 1992 and in which business ventures far more dubious than MMM can harvest fabulous fortunes, disbelief is easily suspended.

'Mavrodi should be Minister of Finance; he deserves the highest post,' declared a skinny pensioner with nothing but kind words for the architect of a scandal that not only cost him more than 1m roubles but now threatens other investment funds and several banks. 'He can help the country. Those people in power cannot do anything.'

Helping to sustain unreality are MMM's hugely successful television advertisements, paid for in advance and still aired each evening on the main state-run network. 'I knew all this was a game, like roulette,' said Alexander Tyulkov, explaining why he was ready to invest again in MMM, 'But if you and I are gambling together, why should anyone else bother us? Why should the government take away one of the players at gun-point?'

To try to get Mr Mavrodi back into the game, his most dedicated defenders are staging a hunger strike.

They set up camp in a row of filthy tents in front of the MMM headquarters. Bedraggled banners and rain-sodden posters proclaim their contempt for Boris Yeltsin's government: 'You spit on the people but if the people spit on you you will drown.'

For a man who claims to have gone without food for nearly a week, though, Viktor Zhalalov, their leader, looks remarkably fit. 'I believe, we all believe that the government is at fault,' he intones.

'They started the panic. In a democracy we never believed our government could do such a thing. Everyone talks about pyramids. The only really shaky strcture is the government. Mavrodi gives us optimism. Look at all these people, they are here because they believe, because they have hope.'

(Photograph omitted)