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    Russian Sergei Polonsky (C) is escorted by Cambodian police at Phnom Penh international airport on May 17, 2015

    Drugs, Money and Fax Machines: The Rise and Fall of Sergei Polonsky

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    As Sergei Polonsky returns to Russia to face fraud charges, we look at the spectacular rise and fall of one of Russia's most eccentric billionaires.

    Russia's Interior Ministry has confirmed that Russian real estate tycoon Sergei Polonsky has been deported to Russia from Cambodia.

    Polonsky is suspected of defrauding investors of the Kutuzovskaya Milya construction project. His eccentric personality and rise and fall as a businessman have made him one of the most infamous businessmen in Russia's recent history

    According to the prosecutor's office, LLC Avanta, a subsidiary of Polonsky's Mirax Group collected 5.7 billion rubles from investors in 2007-2008 (around $190 million at the time), of which only 2.5 billion was invested into the construction project. In 2009, the project was frozen by Polonsky's Mirax Group, which was facing economic difficulties.

    Polonsky is accused of intentionally taking actions to liquidate Mirax Group's subsidiary, LLC Avanta, before fulfilling its obligations to its investors. The City of Moscow terminated the contract with Mirax and FCRS in 2010 and later awarded it solely to FCRS, which continued construction in September 2011. Polonsky went on a hunger strike at the construction site, protesting the actions as an illegal takeover.

    LLC Avanta won a 1.7 billion ruble settlement in March, when an arbitration court judged that FCRS gave 800 million rubles' worth of real estate to Avanta's investors but remains reponsible for the remaining sum of the total 2.5 billion rubles that LLC Avanta had invested in the project.

    Polonsky's Towering Rise

    Sergei Polonsky began his business career after completing army service in the Airborne Forces, where he was deployed to South Ossetia during the armed conflict there in 1991. In 1994, he and a friend founded the company Stroimontazh in St. Petersburg, which initially intended to do building renovations, but became a construction company thanks to a successful business deal.

    In 2000, Polonsky opened a Stroimontazh affiliate in Moscow, which he later rebranded to Mirax Group. At its peak in 2008, the company was building Europe's tallest skyscraper, Federation Tower in Moscow City, had construction projects in eight countries including the US and UK, and made a profit of $616 million. Energy giant Gazprom had a profit of roughly $6.653 billion (173 billion ruble) the same year.

    Even before the crisis, Mirax Group was known for unusual releases, such as videos of the company destroying its last fax machine. In March 2008, at an afterparty following an international real estate exposition in Cannes, France, Polonsky was quoted by Vedomosti as saying "Anyone who doesn't have a billion can go to hell."

    Crisis and Collapse

    The 2008 global financial crisis drove Mirax Group into debt and led it to freeze most of its projects. In October 2008, Polonsky together with the Builders Association of Russia authored an open letter to journalists, asking to stop negative reporting on the financial state of the construction industry, writing "by completely destroying us, you will for a long time lose news about such an interesting topic as construction."

    In 2011, he got into a altercation with billionaire Alexander Lebedev on national television after saying that he wants to hit Lebedev in the face after hearing him speak.

    After being accused of defrauding investors for 5.7 billion rubles, Polonsky disappeared, and lated surfaced in Cambodia, where he owns several islands.

    In Cambodia

    After coming to Cambodia in 2012, Polonsky was arrested for an altercation with Cambodian sailors, and spent three months in prison. Polonsky was released in March 2013 after writing letters to the Cambodian King.

    Polonsky was arrested by Cambodian authorities again in November 2013 after an extradition request by the Russian government. He was released in January 2014.

    While in Cambodia, Polonsky conducted a series of "business training" seminars which were noted for Polonsky's approach. "Losers" of team-building exercises would run around the biggest tree on the island, and Polonsky himself would howl into the night.

    In March, Polonsky wrote on his blog that he will be suing 20th Century Fox for $1 billion because of a portrayal of him in the Fox-produced Russian film "Uncatchables." The film depicts an eccentric billionaire "Sergei Polyansky" who runs over a teenage activist against discourteous drivers.

    Polonsky's reputation began to deteriorate after a feud began between him and Cambodia's other powerful Russian tycoon, Nikolai Doroshenko. The feud escalated after a conflict over the management of the "kaZantip" festival in Cambodia. "KaZantip," also called "Russia's Burning Man," is a multi-day drug-fueled rave party which took place in Crimea prior to its reunification with Russia.

    The conflict over revenues from the festival escalated into a vicious brawl between Polonsky and Doroshenko's associates on February 13, according to Cambodia's Phnom Penh Post. The man accused of masterminding the attack is Oleg Tikhanov who is wanted in Russia on weapons and explosives charges, as well as his role in organized crime.

    On March 2, Cambodia's Foreign Minister visited Moscow and talked to his Russian counterpart Sergei Lavrov. As a result, Russia and Cambodia are considering a new extradition treaty which allowed Russia to return Polonsky.


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    fraud, deportation, arrest, Mirax Group, Sergei Polonsky, Russia, Cambodia
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