A 64-year-old Santa Rosa man who bilked as much as $7 million from investors with promises of high returns through his own high-tech sorcery has been sentenced to more than five years in federal prison and ordered to pay $4.9 million in restitution, the U.S. Attorney's Office said.
Douglas Dean Hollingsworth, whose house full of computers bolstered claims he had developed a sophisticated computer system to accurately predict market trends, spared no one in his pursuit of investors for his companies, Baytree Investors LLC and Capsule Partners LLC.
His targets included neighbors, wealthy associates, an East Coast philanthropist, even the man who delivered packages — mostly computer equipment — to his door.
Hollingsworth and his wife assured neighbors he was innocent following a high-profile FBI raid on their north Santa Rosa home in 2010. The following year, a federal grand jury determined that Hollingsworth never intended to invest funds entrusted to him, but instead used them on personal expenses and payments to other individuals in what federal officials described as a Ponzi scheme. Some of his victims were defrauded even as he awaited prosecution after the 2010 raid, officials said.
Initially indicted on wire fraud, Hollingsworth eventually faced 27 felony counts of mail fraud, wire fraud and money laundering involving 12 investors, the U.S. Attorney's Office said.
He pleaded guilty in February to one count each of wire fraud and money laundering and Wednesday was sentenced to 64 months in prison, a spokeswoman for the U.S. Attorney's Office said.
Hollingsworth was taken into custody at his sentencing and will begin serving his term immediately, officials said.
U.S. District Court Judge Charles R. Breyer, who handed down the sentence Wednesday, also ordered Hollingsworth to serve a three-year period of supervised release after prison with conditions preventing him from holding fiduciary posts or managing third-party funds.
He also forfeited $80,000 seized from his bank accounts in 2010.
One of his victims, Eric James Sanchez, of Petaluma, said there was some limited satisfaction in knowing that Hollingsworth will pay a price.
"When you take somebody for a ride like that there should be consequences," he said Thursday.
Sanchez still drives for DHL Express, which is how he met Hollingsworth. He said he was repaid about $150,000 that he and his wife invested with Hollingsworth, taken in part from the equity in their home and eventually subject to a civil lawsuit.
But Sanchez said the couple has not yet recovered financially because they took on so much debt after turning their savings over to Hollingsworth in anticipation of monthly payments.
Paul and Kim Danoff, who were Santa Rosa residents at the time, lost more than $1 million to Hollingsworth, according to a 2010 civil lawsuit they filed against Hollingsworth and his wife, Rebecca, in Sonoma County.
The Danoffs won a $890,000 judgment in early 2012, though it is unclear how much, if any, has been paid. They could not be reached for comment on Thursday.
Also among the victims was Appu Kuttan, founder and chairman of the National Education Foundation, a Virginia-based nonprofit that provides training and grants to disadvantaged students around the world. Kuttan lost most of the $2.35 million he said he loaned to Hollingsworth, according to a federal indictment.
"To me, it's stealing from kids," Kuttan told The Press Democrat in 2011. "It's horrible."