Santa Rosa man sentenced in $7 million fraud case

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.

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