Li Baojun and two men he hired to expand his courtyard home five storeys underground had violated construction safety regulations, the Beijing Xicheng District People's Court ruled.
As well as houses, the sinkhole caused a major thoroughfare in the capital to collapse and damage of more than 5 million yuan ($750,000), it said on its official micro-blog.
The trio's actions "endangered public safety" and they were "deeply responsible for the criminal accident", the court said.
Li's house, in a historic neighbourhood in Beijing's Xicheng district, was also brought down when his ambitious extension plans went awry in January 2015.
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Fifteen of his neighbours were reportedly left homeless, although no-one was injured.
Photos posted online and in Chinese state media showed a gaping 10-metre-deep (35-foot-deep) hole extending into a roadway, blocked off by tarpaulins and traffic cones.
Li is a member of the local People's Congress in the eastern city of Xuzhou and heads an auto parts company, the court said.
A total of 1,400 cubic metres (50,000 cubic feet) of concrete were needed to fill the hole.
Despite decades of development, the centre of the Chinese capital still has pockets of ancient courtyard homes with traditional roofs, packed along narrow alleys. Some have been renovated into luxury residences that can command huge rents.
Li had been granted a permit to restore the courtyard, but not to build a basement. He said he needed to consider whether he would appeal, the court said.
Construction projects in China must be approved by local authorities, but laws are poorly enforced.
In recent years, a series of illegal structures has provoked reactions from humour to anger in China, among them a rock villa on top of a 26-storey Beijing apartment tower that sparked an outcry over the contempt for public safety by the country's rich.
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