Indictment didn't deter Santa Rosa fraud suspect, federal grand jury says
Published: Thursday, December 20, 2012 at 6:56 p.m.
Last Modified: Friday, December 21, 2012 at 8:26 a.m.
A Santa Rosa man indicted and arrested on federal wire fraud charges last year continued to defraud would-be investors even as he was out of custody awaiting criminal prosecution, a federal grand jury said.
Douglas Dean Hollingsworth, 64, now faces 27 felony counts involving a total of 12 people he allegedly victimized over more than five years, according to a new grand jury indictment made public this week -- the third to be issued in the case so far.
The document says Hollingsworth, operating as Baytree Investors LLC and Capsule Partners LLC, lured investors with promises of returns as high as 6 percent, saying he'd developed a "sophisticated computer system" that permitted him to track market trends and make highly successful securities trades.
But the grand jury said Hollingsworth never intended to invest their money, instead using it for personal expenses as well as Ponzi payments to others to whom he was supposed to repay money. They said the only trades he made were "minimal and unsuccessful."
Three of the suspected victims conducted their business with Hollingsworth after his Aug. 16, 2011, indictment on nine counts of wire fraud involving a single East Coast victim, the indictment states.
It says Hollingsworth never told them about a 2010 FBI raid on his home, authorities' seizure of more than $80,000 in several bank accounts held in his and his wife's names, and the resulting grand jury indictment.
The Press Democrat was unable to reach Hollingsworth and his wife, Rebecca, for comment. Their attorney, Chris Andrian, also was not available for comment.
But residents on El Dorado Court near Sutter Medical Center, where the Hollingsworths lived for about eight years before losing their home to foreclosure earlier this year, said the couple made a point of declaring their innocence to several neighbors in the months after their legal problems became public.
Douglas Hollingsworth has pleaded not guilty in the case. Rebecca Hollingsworth is not named as a criminal defendant, though she was a co-defendant in a related civil suit settled earlier this year with a Santa Rosa couple who claimed to have lost more than $1 million to Hollingsworth.
Neighbors said Douglas Hollingsworth moved into the house before the rest of his family, including a daughter now in middle school and an older daughter of Rebecca Hollingsworth.
Douglas Hollingsworth had 20 to 30 computers in the house and appeared to be a driven, somewhat hyper man who rose early to check the markets.
At least one neighbor was solicited as an investor, though he declined, his wife said.
The Hollingsworths, whose youngest daughter attended Sonoma Country Day School until the criminal case began to unfold, did not appear to have a lavish lifestyle, though they favored hiring limousines for travel to airports, birthday parties, trips to San Francisco Giants games and the like.
Neighbors said it was disturbing to see a phalanx of FBI agents descend on the neighborhood one day and begin carting property out of the house.
They remembered that the couple's daughter was home with a babysitter when authorities arrived because the couple had left in a limousine for an anniversary getaway.
One neighbor, who did not want her name used, said she also remembered the day some investors turned up at the Hollingsworth home seeking answers, and then came over to her house to report having been threatened.
They also remembered seeing a computer technician who worked with Hollingsworth be put up against a wall by FBI agents who patted him down before letting him go.
Hollingsworth's alleged victims were from around North America, including Quebec, Canada, New Jersey, Michigan and New Jersey.
Four of them -- two married couples -- are Sonoma County residents, though they, like the others, are identified only by initials in the indictment.
It is possible that a Santa Rosa coupled called P.D. and K.D. in the indictment are Paul and Kim Danoff, who filed suit against the Hollingsworths in September 2010 and in January won a judgment of $890,000, to be paid by May 5, 2015, according to court documents. Their attorney, Tom Kelly, said Thursday they declined comment.
A DHS delivery man named E.S. of Petaluma listed in the indictment may be a Petaluma man named Eric James Sanchez, who filed a small claims case against Hollingsworth in May 2008 over $10,000 he invested, according to court documents.
The largest single investor appears to be Appu Kuttan, founder and chairman of a Virginia-based nonprofit organization called the National Education Foundation, which provides training and grants to disadvantaged students.
Between mid-2008 and mid-2009, Kuttan loaned Hollingsworth $2.35 million, receiving only two repayments of $10,000 and $264,000, court documents said.
Kuttan was the only victim listed in the nine wire fraud counts alleged in the initial grand jury indictment more than a year ago.
A superceding indictment issued in August added a second victim - "E.S." -- and a mail fraud charge.
The new indictment covering 12 victims includes 22 counts of suspected wire fraud and two mail fraud counts, each of which carried a maximum 20-year prison sentence, a maximum fine of $250,000 and payment of restitution.
The new indictment also includes four counts of suspected money laundering, citing $42,343 in checks to the now-defunct Earthworks jewelry store, $14,191 in purchases from Best Buy, and $20,192 paid to Santa Rosa Dental Care.
Hollingsworth, who has been out on $100,000 bond since his first court appearance Sept. 2, 2011, is scheduled to return to federal court Dec. 27.
You can reach Staff WriterMary Callahan at 521-5249 or firstname.lastname@example.org.
All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.