SAN FRANCISCO - Douglas Hollingsworth was sentenced yesterday to 64 months in prison and ordered to pay $4.9 million in restitution for defrauding numerous individuals in connection with an approximately five-year long Ponzi scheme, United States Attorney Melinda Haag announced.
Hollingsworth, 64, of Santa Rosa, Calif., pleaded guilty on February 13, 2013, to wire fraud and money laundering. According to the plea agreement, from approximately June 2007 through October 2012, Hollingsworth solicited money from numerous individuals by falsely representing that his business entities, Baytree Investors, Inc. and Capsule Partners, LLC, had developed a sophisticated computer system that permitted him to identify financial market trends and generate substantial profits from trading activity. In soliciting money from the victims, Hollingsworth falsely stated that if they loaned him money, he could pay them significant monthly interest payments from the profits earned from successful trading activity.
As part of the fraud scheme, Hollingsworth took money from some of the victims after he intentionally failed to tell them that the Federal Bureau of Investigation had searched his residence in July 2010 and that he had been charged with wire fraud in August 2011. In addition, Hollingsworth did not use the money received from the victims to engage in trading, but instead spent the money on personal expenses, including jewelry, and to make monthly interest payments to other individuals who had provided him with money.
Hollingsworth was originally indicted by a federal Grand Jury on August 16, 2011. On August 28, 2012, and December 18, 2012, the grand jury returned superseding indictments. In the Second Superseding Indictment, Hollingsworth was charged with 2 counts of mail fraud, in violation of 18 U.S.C. Section 1341; 21 counts of wire fraud, in violation of 18 U.S.C. Section 1343; and 4 counts of money laundering, in violation of 18 U.S.C. Section 1957. Under the plea agreement, Hollingsworth pleaded guilty to one count of wire fraud and one count of money laundering.
The sentence was handed down by The Honorable Charles R. Breyer, U.S. District Court Judge. Judge Breyer also sentenced the defendant to a 3-year period of supervised release with conditions that limit his ability to hold fiduciary roles and to receive or manage money of third parties, and ordered forfeiture of approximately $80,000 that was in bank accounts seized in July 2010 during the course of the investigation.
At the sentencing hearing, Judge Breyer ordered Hollingsworth to surrender immediately to begin serving his prison sentence. Hollingsworth is now in custody.
Denise Marie Barton is the Assistant United States Attorney who is prosecuting the case with the assistance of Denise Oki, Rayneisha Booth, Elizabeth Garcia and Assistant United States Attorney Patricia Kenney. The prosecution is the result of an investigation by the Federal Bureau of Investigation.