Founder of clothing tech startup CaaStle pleads guilty in $300 million fraud case
The U.S. flag, a judge gavel and a vintage scale are seen in this illustration taken August 6, 2024. REUTERS/Dado Ruvic/Illustration
NEW YORK, March 4 : The once-prominent entrepreneur of bankrupt clothing technology startup CaaStle pleaded guilty on Wednesday in connection with her scheme to defraud investors out of more than $300 million, federal prosecutors said.
Christine Hunsicker, 48, of Lafayette, New Jersey, pleaded guilty to one count of securities fraud and agreed to forfeit nearly $300 million before U.S. District Judge Paul Oetken in Manhattan. She will be sentenced on August 5, and faces up to 20 years in prison.
Lawyers for Hunsicker did not immediately respond to requests for comment. The defendant was charged last July with six criminal counts, one month after CaaStle filed for Chapter 7 bankruptcy liquidation.
Investigators said Hunsicker touted CaaStle as a rapidly growing, more than $1.4 billion "Clothing-as-a-Service" business that could help companies rent apparel to consumers with an option to buy, despite knowing it was financially distressed and short of cash.
The alleged bogus financials included a representation that CaaStle earned $66.3 million on revenue of $439.9 million in 2023, when it actually lost $81 million on revenue of $15.7 million.
Prosecutors said the six-year fraud began in 2019, three years after Hunsicker was named one of Inc. magazine's "Most Impressive Women Entrepreneurs" and Crain's New York Business' "40 Under 40."
“Christine Hunsicker fashioned a massive fraud scheme, built on forged documents, fabricated audits and material misrepresentations to hundreds of venture capital investors,” U.S. Attorney Jay Clayton said in a statement. "Individuals who exploit investor trust for personal gain will be held accountable."
