Christine Hunsicker, founder of the clothing-rental company CaaStle, was arrested Friday on federal charges alleging she orchestrated a $300 million scheme to defraud investors.
According to federal prosecutors for the Southern District of New York, Hunsicker repeatedly misrepresented CaaStle’s financial performance. She allegedly provided investors with false revenue projections in the hundreds of millions and falsely claimed the company had substantial cash reserves when it was actually nearing 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,” U.S. Attorney Jay Clayton said in a statement.
The indictment charges Hunsicker with one count of wire fraud, two counts of securities fraud, and one count of money laundering, each carrying a maximum sentence of 20 years in prison. She also faces one count of making false statements to a financial institution, with a maximum 30-year sentence, and one count of aggravated identity theft, which carries a mandatory two-year sentence.
Prosecutors allege that Hunsicker continued her fraudulent activities, including attempts to raise new capital, even after CaaStle’s board removed her as chair and prohibited her from soliciting investments.
Hunsicker, 48, resigned in April amid accusations of impropriety from the board and civil lawsuits alleging elaborate fraud. The company, formerly known as Gwynnie Bee, filed for Chapter 7 bankruptcy in June.
In a statement, Hunsicker’s attorneys, Michael Levy and Anna Skotko, said prosecutors presented “an incomplete and very distorted picture” despite their client’s full cooperation. “There is much more to this story, and we look forward to telling it,” they added.
The arrest marks a dramatic downfall for the once-celebrated executive, who had previously secured high-profile partnerships with major brands such as Ralph Lauren, Ann Taylor, and Banana Republic to offer clothing rental services. Hunsicker surrendered to authorities Friday morning and was expected to appear in federal court.
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