Alan C. Danneman, whose downtown Washington jewelry business was alleged to be one of two major fronts for a multi-million-dollar gold and silver fencing operation, was sentenced in U.S. District Court yesterday to serve a maximum of five years in prison on racketeering and tax evasion charges.

Danneman, 33, who had pleaded guilty to the two offenses, was one of a dozen persons arrested in April 1981, after teams of FBI agents and area police raided eight locations to culminate an eight-month undercover investigation called "Operation Greenthumb."

Law enforcement officials said at the time that Danneman, who ran ADE Inc. at 1411 K St. NW, and Joseph G. Martin, 37, the proprietor of Royal Carpet and Tile Co. at 1785 Florida Ave. NW, allegedly bought $3 million worth of stolen jewelry and precious metals at cut-rate prices, and then resold them at a profit.

The alleged stolen goods included gold jewelry, sterling silver and class rings taken from homes primarily in Northwest Washington, Montgomery County and Northern Virginia.

"I can't count the number of burglaries that took place to supply Alan Danneman's enterprises with $1 million in business in one year . . . " Assistant U.S. Attorney E. Thomas Roberts told Judge John H. Pratt yesterday.

Since the 1981 raids, 40 burglars who allegedly supplied Danneman, who lived in Lanham, Md., and Martin with stolen goods have been convicted in connection with the case, which law enforcement officials say may have involved up to $8 million in losses to victims of some 800 burglaries. Law enforcement sources said yesterday that the investigation into the fencing operation is continuing.

Danneman's defense lawyer, John W. Karr, said yesterday that Danneman disputes the government'a assessment of his role in the alleged fencing scheme. Karr said, for example, that Danneman, who was injured during a holdup at his K Street store in December 1980, had been hospitalized until the following February.

At a sentencing hearing yesterday, Danneman asked Judge Pratt "to show mercy on me," and said he had experienced a "change in my life" since his arrest. Danneman, speaking in a hoarse, quiet voice, told Pratt that the time he spent in the D.C. Jail after he was taken into custody "was the biggest shock in my life."

Pratt said that while he was "perfectly confident" that Danneman had been rehabilitated, his sentencing had to be a statement to the community that conduct such as Danneman's "would not be tolerated."

"The ramifications of the evils you set in motion are still being felt by scores of people (who) experienced burglaries because you had an available outlet" for stolen goods, Pratt told Danneman.

Pratt ordered Danneman to serve concurrent terms of five years in jail for racketeering and two years on one tax-evasion charge. Pratt said he would allow Danneman, who is free on a $50,000 bond, to begin serving his sentence at a later date at a federal prison designated by the court.

Last July, Martin, who also pleaded guilty to racketeering and tax evasion, was sentenced by Pratt to serve eight years in prison and was taken into custody immediately to begin serving his jail time.

In explaining the disparity in the sentences for the two men, Pratt said he did not think that Danneman's guilt was "quite as great" as Martin's.

Asked how he felt about his sentence as he left the courtroom, Danneman said "I thank the judge for it."