Christine Hunsicker, the founder and CEO of fashion tech startup CaaStle, was arrested on Friday on federal fraud charges. She is accused of cheating investors out of $300 million. Federal prosecutors for the Southern District of New York allege that Hunsicker misrepresented CaaStle’s financial performance to investors.
They say she made false revenue projections of hundreds of millions of dollars. She also falsely claimed to have substantial cash reserves when the company was actually nearing collapse. “Christine Hunsicker defrauded investors of hundreds of millions of dollars,” said U.S. Attorney Jay Clayton in Friday’s announcement.
“She did this through document forgery, fabricated audits, and material misrepresentations about her company’s financial health.”
The indictment further alleges that Hunsicker continued her fraudulent activities even after CaaStle’s board removed her as chair. She also allegedly kept trying to raise new capital after being prohibited from soliciting investments. Hunsicker’s attorneys, Michael Levy and Anna Skotko, released a statement.
Hunsicker accused of massive fraud
It said: “Although Ms. Hunsicker has been fully cooperative and transparent with both the U.S. Attorney for the Southern District of NY and the SEC, they have chosen to present to the public an incomplete and very distorted picture in today’s indictment.
There is much more to this story, and we look forward to telling it.”
Hunsicker, 48, resigned in April after CaaStle’s board accused her of impropriety. The company, formerly known as Gwynnie Bee, filed for Chapter 7 bankruptcy in June. Hunsicker surrendered to authorities Friday morning and was expected to appear in federal court later that afternoon.
The charges against Hunsicker include one count of wire fraud, two counts of securities fraud, and one count of money laundering. Each of these carries a maximum sentence of 20 years in prison. She is also charged with one count of making false statements to a financial institution, which carries a maximum sentence of 30 years in prison.
Additionally, she faces a charge of aggravated identity theft, which carries a mandatory sentence of two years in prison.