A distinguished entrepreneur who based the now-bankrupt clothes know-how startup CaaStle was criminally charged on Friday with defrauding traders out of greater than $300 million, the Justice Division mentioned.
Authorities mentioned Christine Hunsicker, 48, of Lafayette, NJ, promoted CaaStle to traders as a greater than $1.4 billion “Clothing-as-a-Service” enterprise that helped firms hire attire to shoppers with an possibility to purchase, regardless of figuring out it was financially distressed and in need of money.
The alleged fraud spanned six years beginning in 2019, three years after the Princeton College alumna was named one in every of Inc journal’s “Most Impressive Women Entrepreneurs” and Crain’s New York Enterprise’ “40 Under 40.”
Hunsicker was charged in a six-count indictment with wire fraud, securities fraud, cash laundering, making false statements to a financial institution and aggravated identification theft.
She turned herself in to authorities, and will face many years in jail if convicted. The Securities and Change Fee filed a associated civil lawsuit.
In a joint assertion, Hunsicker’s legal professionals Michael Levy and Anna Skotko mentioned the indictment offered “an incomplete and very distorted picture,” regardless of their shopper being “fully cooperative and transparent” with prosecutors.
“There is much more to this story, and we look forward to telling it,” the legal professionals added.
Authorities mentioned Hunsicker falsified CaaStle’s monetary statements and financial institution data to boost capital.
This included alleged representations that CaaStle earned $66.3 million on income of $439.9 million in 2023, when it truly misplaced $81 million on income of $15.7 million.
Hunsicker was additionally accused of falsely telling traders their cash would go towards shopping for discounted shares from present shareholders who wanted liquidity, together with after the 2022 collapse of the FTX cryptocurrency alternate.
In a single occasion, Hunsicker allegedly raised greater than $20 million after forging a CaaStle director’s signature authorizing the issuance of inventory choices to an investor.
Prosecutors mentioned Hunsicker fraudulently raised greater than $275 million for CaaStle and $30 million for a associated enterprise, P180.
CaaStle filed for Chapter 7 chapter liquidation in Delaware on June 20.
“The promise of pre-IPO technology companies can be fertile ground for fraudsters who play on investor euphoria,” US Legal professional Jay Clayton in Manhattan mentioned in a press release.
