California Man Sentenced to 64 Months For Securities Fraud
On 22 August 2013, Douglas Hollingsworth of Santa Rosa, California was sentenced to 64 months in prison for defrauding investors of at least $4.9 million in a five-year Ponzi scheme. The U.S. Attorney’s Office for the Northern District of California had brought charges against him in 2011.
Earlier in the year, Hollingsworth pled guilty to one count of wire fraud and one count of money laundering. Between June 2007 and October 2012, he solicited money from investors, telling them that his two businesses, Baytree Investors, Inc. and Capsule Partners, LLC, had developed a sophisticated computer program that identified market trends, and would enable him to profit enormously from trading.
If only he had more money, of course. He promised his targets that if they made loans to him, he’d pay them generous monthly interest. As with all Ponzi schemes, early investors who wanted out were paid in funds contributed by later investors.
Hollingsworth neglected to tell those later investors that the FBI had raided his residence in July 2010, and that he’d been charged with wire fraud in August 2011. As is generally the case with Ponzi schemers, he hadn’t used the money entrusted to him for trading; instead he spent what wasn’t needed for interest payments on personal expenses, including jewelry.
In addition to the 64 months’ confinement, Judge Charles R. Breyer sentenced the defendant to 3 years probation, with conditions that limit his ability to receive or manage money from third parties. Breyer also ordered him to forfeit $80,000 found in his bank accounts during the investigation.
Hollingsworth is now in custody.
For further information about Ponzi schemes, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected]. This securities law blog post is provided as a general informational service to clients and friends of Hamilton and Associates Law Group, P.A. and should not be construed as, and does not constitute, legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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Brenda Hamilton, Securities Attorney
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