Ponzi scheme nets Larkspur man seven-year sentence

A Larkspur man was sentenced to seven years in prison on Friday after pleading guilty to defrauding six Colorado Springs area residents out of more than $1.3 million in a “Ponzi” scheme that promised investors returns of up to 20 percent from buying distressed real estate.

Mark H. Polunci, 52, pleaded guilty April 3 to one count of securities fraud under a plea bargain with the Colorado Attorney General’s Office. He was indicted Oct. 24 by a statewide Grand Jury in Denver on seven counts of securities fraud and one count of theft of more than $15,000.

Polunci initially began operating the scam in early 2005 from his Larkspur home and by mid-2005 was seeking investors through two companies with offices in El Paso County, Garrett & Associates Ltd. and Cross Mountain Group Ltd., the indictment said. Most investors received promissory notes in which Polunci and his companies agreed to repay the principal amount plus interest at rates ranging from 10 percent to 20 percent, according to the indictment.

Investors weren’t told that Polunci used more than $200,000 in investor funds to repay other investors and $120,000 to pay his personal expenses, including overdrafts in his bank accounts, nor did he disclose he filed a Chapter 7 bankruptcy in 2003, the indictment said.

Three investors, including two of the victims listed in the indictment, have won judgments against Polunci and his companies in 2007 and 2008 totaling more than $500,000, resulting from lawsuits filed in 4th Judicial District Court.