Christine Hunsicker, founder of the clothing-rental startup CaaStle, was arrested Friday on federal charges of defrauding investors out of $300 million, according to the U.S. Attorney’s Office for the Southern District of New York.
Prosecutors allege that Hunsicker misled investors by fabricating audits, forging documents, and inflating revenue projections. She is also accused of falsely claiming CaaStle had hundreds of millions in cash, when the company was, in fact, on the verge of collapse.
“Christine Hunsicker defrauded investors of hundreds of millions of dollars through document forgery, fabricated audits and material misrepresentations about her company’s financial health,” said U.S. Attorney Jay Clayton in the statement.
According to the indictment, Hunsicker allegedly continued her efforts to raise capital even after CaaStle’s board removed her as chair and prohibited her from seeking new investments.
Her legal team, Michael Levy and Anna Skotko, said Friday that Hunsicker has been “fully cooperative” and criticized the indictment as a “distorted picture.”
The 48-year-old executive had resigned from CaaStle in April after the board accused her of misconduct. CaaStle, formerly known as Gwynnie Bee, filed for Chapter 7 bankruptcy in June amid growing legal and financial troubles.
Federal authorities say Hunsicker surrendered to law enforcement on Friday morning and was scheduled to appear in federal court that afternoon.
She faces a total of six charges: one count each of wire fraud, money laundering, and making false statements to a financial institution, two counts of securities fraud, and one count of aggravated identity theft. Each fraud-related charge carries a maximum sentence of 20 years, while the false statements charge carries up to 30 years. The identity theft charge requires a mandatory two-year sentence.
Once a celebrated entrepreneur with partnerships involving brands like Ralph Lauren and Ann Taylor, Hunsicker’s legal troubles mark a dramatic fall from grace in the fashion-tech industry.
