The founder of fashion platform CaaStle Inc. has been charged by federal prosecutors with defrauding investors out of more than $300 million following the collapse her tech startup.
Christine Hunsicker, 48, turned herself in to face the charges on Friday morning, pleaded not guilty during an afternoon court appearance in Manhattan and was released on a $1 million bail package. The Securities and Exchange Commission also filed a lawsuit against her in the same court.
The legal moves come months after Hunsicker resigned as CaaStle’s chief executive officer over allegations she lied to investors about the company’s financial success. She faces charges including securities fraud, identity theft and money laundering.
In an indictment unsealed Friday, prosecutors said that Hunsicker defrauded investors in CaaStle and Brendan Hoffman’s fashion investment platform P180 out of more than $300 million. She allegedly fabricated documents to present CaaStle as a “high-growth, private company with substantial available cash” when in truth, it faced significant financial stress from February 2019 up to around March 2025, according to the indictment.
Lawyers for Hunsicker said that she had fully cooperated with the federal probes, but prosecutors “nonetheless has 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,” the lawyers, Michael Levy and Anna Skotko, said in a statement. Hunsicker is expected to appear in federal court on Friday.
The company was rattled earlier this year when the board told shareholders that Hunsicker had allegedly handed over misstated financial statements exaggerating CaaStle’s revenue to certain investors. Hunsicker stepped down as CEO and CaaStle sought Chapter 7 protection — where a company’s assets are sold off to repay creditors — in June, declaring $10-$50 million worth of liabilities.
Prosecutors allege, however, that Hunsicker once valued the CaaStle business at more than $1.4 billion.
Hunsicker’s lies included highly inflated income statements and digitally altered images showing larger amounts in CaaStle’s bank accounts than there really were, the indictment states. At one point in August 2023, she allegedly told an investor that CaaStle had an operating profit of nearly $24 million in the second quarter when in fact it was less than $30,000.
Manhattan US Attorney Jay Clayton warned investors that pre-IPO companies were not subject to the regulatory rigors of the SEC.
“The promise of pre-IPO technology companies can be fertile ground for fraudsters who play on investor euphoria,” he said in a statement.
Beginning as Gwynnie Bee Inc., before changing its legal name in 2018, CaaStle worked with brands and retailers like Express, Ann Taylor, Loft and Bloomingdale’s to rent clothes to consumers.
Hunsicker has also been sued by some investors and by P180, which she co-founded. P180 accused Hunsicker of fabricating subscribers and revenue and inducing the firm to obtain assets that could be leveraged to continue the CaaStle fraud.
The SEC sued Hunsicker on Friday in the same court, alleging that she created and sent to investors false financial statements from February 2019 to at least March while raising more than $250 million through the offer and sale of preferred stock and common warrants.
SEC Lawsuit
The SEC said that while Hunsicker claimed CaaStle enjoyed “rapid and steady growth” after a rebrand of the business in 2018 and had become profitable by December 2022, its revenues were decreasing, losses were rising and the company never turned a profit.
The SEC said that as investors increasingly began to seek audited financial statements in 2022 as CaaStle neared profitability, Hunsicker took the final audit report for the fiscal year ending in September 2021, downloaded it, altered the numbers and made other changes and sent it to investors.
By Ava Benny-Morrison and Jill R. Shah with assistance from Chris Dolmetsch.
Learn more:
Why So Many Brands Gave Up on Clothing Rental
Ralph Lauren, American Eagle Outfitters and Banana Republic are among the retailers that briefly experimented with the concept. The implosion of CaaStle, which provided logistics for many of these services, is the clearest sign yet that rental’s future lies elsewhere.
