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A Santa Rosa man faces a potentially lengthy federal prison sentence after pleading guilty to wire fraud and money laundering in a case prosecutors say defrauded a dozen investors up to a total of $7 million.

Douglas Dean Hollingsworth, 64, admitted Wednesday in U.S. District Court in San Francisco that from June 2007 through October 2012 he defrauded investors of his businesses, Baytree Investors Inc. and Capsule Partners.

He told investors he had developed a sophisticated computer system that allowed him to identify market trends and generate substantial profits from trading activity, U.S. Attorney Melinda Haag said in a written statement Thursday.

In the plea deal, Hollingsworth admitted that he didn't trade with investors' money but instead spent it on personal expenses, including jewelry, Haag said, and to make promised payments to other investors in a Ponzi scheme.

Hollingsworth's attorney could not be reached Thursday.

The FBI searched his Santa Rosa home in July 2010, leaving with several items of evidence. A month later, a federal grand jury indicted Hollingsworth on nine counts of wire fraud involving a single East Coast victim.

Hollingsworth continued to defraud other investors while out of custody awaiting prosecution, Haag said.

Additional indictments were issued in August 2012 and December 2012 that alleged the bilking of 12 victims in all. Ultimately, he was charged with two counts of mail fraud, 21 counts of wire fraud and four counts of money laundering.

But in San Francisco on Wednesday, he agreed to admit guilt to one count of wire fraud and one count of money laundering. The agreement includes the forfeiture of $80,000 in bank accounts that were seized in 2010 and restitution of at least $3 million.

Hollingsworth agreed that, as a result of his scheme, he bilked investors of at least $4 million and as much as $7 million, Haag said.

When the family's house was searched in 2010, neighbors said Hollingsworth and his wife did not appear to have a lavish lifestyle, although they favored hiring limousines for travel to airports, birthday parties, trips to San Francisco Giants games and the like. They said Hollingsworth had between 20 and 30 computers in the house.

Hollingsworth's wife, Rebecca, was not charged in the criminal case, although she is named in civil lawsuits filed in connection with the fraud.

Hollingsworth's victims were from California, New Jersey, Michigan, Virginia and Quebec, Canada.

Paul and Kim Danoff of Santa Rosa filed suit against the Hollingsworths in September 2010 and won a judgment of $890,000, to be paid by May 5, 2015, according to Sonoma County 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 gave Hollingsworth $2.35 million, receiving only two repayments of $10,000 and $264,000, court documents said.

The money-laundering charges involved checks of more than $75,000 to Best Buy, Santa Rosa Dental Care and the now-defunct Earthworks jewelry store.

Sentencing is set for July 17. The maximum prison term for both counts is 30 years, but federal sentencing guidelines could result in a lesser sentence and could include fines and restitution.You can reach Staff Writer Lori A. Carter at 762-7297 or lori.carter@pressdemocrat.com

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