Question

What reasons does he give to Sergei for his telling lies?

Answer 1

He says that if he would tell the truth people would not give alms. We can correlate it with the way beggars dress and crib about being hungry for days. 

In some bigger cities there are criminal gangs keeping an army of beggars. They do the required cosmetic make up and drop off beggars at strategic traffic points. They train those beggars to cry properly so that people would show mercy on them. 

At the end of the day the gang lord gets a hefty commission out of day’s booty.