The founder of a fashion tech startup has been indicted for allegedly defrauding investors out of more than $300 million, authorities announced July 18.
Christine Hunsicker, the founder of clothing tech company CaaStle, has been charged with wire fraud, securities fraud, money laundering, creating false statements to a financial institution and aggravated identity theft, according to a press release from the U.S. Attorney’s Office for the Southern District of New York.
The founder allegedly falsely promoted CaaStle as a growing business valued at more than $1.4 billion in order to secure more funding from investors. In reality, the company “was in financial distress with limited cash and significant expenses,” according to the indictment.
Hunsicker’s attorneys, Michael Levy and Anna Skotko, stated in a statement that Hunsicker has “been fully cooperative and transparent” with authorities, but they “nonetheless have chosen to present to the public an incomplete and very distorted picture.”
“There is much more to this story, and we see forward to informing it,” the statement stated.
According to the indictment, Hunsicker falsified documents and lied to investors about the financial state of the company launchning in 2019.
These allegedly documents included “falsely inflated income statements, fake audited financial statements, fictitious bank account records, and sham corporate records.”
On one occasion, according to the indictment, an audit firm confronted Hunsicker about a fake review she provided to an investor. She stated she created the audit for a lecture at Princeton University and mistakenly sent it to the investor. But the lecture didn’t exist, authorities state.
After surrfinishering on July 18, Hunsicker pleaded not guilty and was released on $1 million bond, court records reveal.
CaaStle promotes itself as “a catalyst for brands and retailers to propel digital growth and profitability across their business,” according to its website.
“We support creators launch their own clothing rental services,” its Instagram account states.
Hunsicker resigned from CaaStle and another company she owned, P180, in March after CaaStle’s board of directors notified its investors that she had falsified documents, per the indictment against her. It also stated CaaStle filed for Chapter 7 bankruptcy in June.
Jay Clayton, U.S. attorney for the Southern District of New York, warned investors in a statement to “be aware” about potential fraud schemes tied to businesses that haven’t issued an initial public offering.
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