Latest news with #ChristineHunsicker
Yahoo
6 hours ago
- Business
- Yahoo
Christine Hunsicker Indicted in $300M Fashion Rental Fraud Case
The next shoe has fallen for Christine Hunsicker — who built CaaStle up to be the future of fashion rental only to have it all disappear into scandal, a Chapter 7 liquidation, a host of lawsuits and, now, a $300 million federal indictment for fraud. The U.S. Attorney's office in Manhattan unsealed an indictment against Hunsicker on Friday, laying out charges of wire fraud, securities fraud, money laundering, making false statements to a financial institution and aggravated identity theft. More from WWD CaaStle Files for Chapter 7 Bankruptcy, Setting Up Liquidation Vince Meets Expectations With Slight Q1 Declines CaaStle Meltdown: P180 Sues 'The Hunsicker Enterprise' for Conspiracy Hunsicker, 48, surrendered herself to authorities on Friday morning and was due to appear before a U.S. magistrate judge later in the day. The wire fraud, securities fraud and money laundering charges each carry a maximum sentence of 20 years in prison while the making false statements to a financial institution charge could cost her as much as 30 years in prison. A lawyer representing her on a separate federal case did not immediately return a WWD request for comment. Not very long ago Hunsicker was an on-the-rise entrepreneur in fashion, very practiced at selling herself and the future of rental and seen as a very smart fundraiser. More than a little too smart, according to the indictment, a separate suit by the Securities and Exchange Commission on Friday and pending cases against her and CaaStle in federal and New York state court. While a certain amount of hyperbole is generally tolerated when chief executive officers of private companies tout their businesses and cite revenue figures that are, well, optimistic, things necessarily get real and the financials are laid bare when investors buy in. But according to the growing stack of legal paperwork, Hunsicker was not just tiptoeing across the line, but sprinting past it, doctoring audit reports, falsifying other documents, faking a screen shot of CaaStle's bank accounts and overstating revenues by more than 7,300 percent. 'Christine Hunsicker allegedly submitted fraudulent financial statements to swindle investors and banks of more than $300 million,' FBI assistant director in charge Christopher Raia said in a statement Friday. 'This alleged scheme was stitched together with repeated deception and misinformation, ultimately betraying the trust of the defendant's clients.' The indictment shines a harsh light on Hunsicker, but might take some of the heat off of CaaStle's board, which was responsible for overseeing her. 'From the indictment, I think the board gets a little relief,' said Douglas Hand, an attorney who specializes in fashion. 'Hunsicker was really rogue here, beyond what a board or audit committee could easily catch. You don't often see this kind of egregious behavior in fashion deals but often do from tech deals — it underscores for me that the company was a tech platform first and foremost.' While there are any number of people in tech and fashion looking to raise money for their companies, Hunsicker was much more successful than most, selling her dreams to well-known and sophisticated players, reportedly investor Bill Ackman among them. 'Hunsicker solicited investments from prominent venture capitalists — including investors located in Manhattan, New York — and, at times, valued the CaaStle business at more than $1.4 billion,' the attorney general's statement said. 'In fact, and as Hunsicker well knew, CaaStle was in financial distress with limited available cash and significant expenses.' In one case, Hunsicker sent an investor an income statement showing CaaStle had an operating profit of nearly $24 million in the second quarter of 2023, when operating profits actually tallied less than $30,000. She is charged with fraudulently inducing more than $275 million in investments between February 2019 and March this year — more than half the $520.9 million CaaStle raised since it was founded 14 years ago. There were some close calls along the way. In October 2023, Hunsicker was almost caught when an auditor approached her about a false report that she gave to an investor. 'During a call with the audit firm, Hunsicker falsely claimed that she had created the fake audit in connection with a lecture that she gave at Princeton University, and that sending the audit to Investor-2 had been a one-time error, unrelated to the solicitation of any investment,' the indictment said. 'In fact, there was no such lecture, and Hunsicker had provided two fabricated audits to Investor-2 while soliciting an investment from Investor-2. Just a few hours before the call with the audit firm, Hunsicker had conducted internet searches for 'fraud,' 'created an audit firm fake.'' A year later, Hunsicker was out in the market with a new venture — P180, a partnership with industry veteran Brendan Hoffman. Hoffman was keen to invest in fashion brands, plug them into CaaStle and use rental to boost profits by side stepping steep markdowns on slow-moving inventory. P180 did start to do its dealmaking, linking up with Altuzarra last year. But as P180 was gearing up for its biggest deal — buying control of the publicly traded Vince Holdings — Hunsicker's role at CaaStle was already unraveling. She was removed as chairman of CaaStle in December and, although she remained chief executive officer, she was prohibited from taking any actions on behalf of the company. Hunsicker is alleged to have had other motives for P180. The government said Hunsicker 'intended to sell millions of P180 securities — in the form of shares and convertible notes — to existing CaaStle investors and then to funnel that money back to CaaStle disguised as payments by P180 for the use of CaaStle's technology.' 'But just as she had done to raise money for CaaStle, Hunsicker attempted to raise money for P180 by providing prospective investors with false information regarding CaaStle's commercial success,' the indictment said. 'In addition to repeating affirmative misstatements about CaaStle's revenue, income, and operating profit, Hunsicker also failed to disclose that her prior representations regarding CaaStle's financial performance — including those made through fake documents – had been false and thus that P180 would not have the strong commercial engine in CaaStle that Hunsicker claimed.' Hunsicker used false information about CaaStle's success to raise about $30 million for P180, as well as a $20 million personal loan from a bank, according to the indictment. Even as the wheels were coming off, Hunsicker tried to sell $19 million in CaaStle shares in February to an investor, whom she continued to court even after law enforcement officials seized her electronic devices in March. When P180 sued the rental company in New York state court in April, the company said: 'Nothing about CaaStle was true. CaaStle is one of the largest frauds in history and will live in infamy alongside the likes of Theranos, [Bernie] Madoff and Enron.' CaaStle filed for Chapter 7 bankruptcy on June 20 and is expected to be liquidated. For Hunsicker, who was once a judge on a 'Project Runway' spin-off, featured on Crain's New York Business '40 Under 40' list and selected as one of Inc.'s 'Most Impressive Women Entrepreneurs,' it's been a hard fall and one that is still reverberating through fashion — although without the impact that it would have had if CaaStle's business were really as large as advertised. 'Given that both fashion brands and women entrepreneurs have a harder time attracting investment capital than stereotypical tech guys with a startup, this may have indirect negative effects for the industry,' said Susan Scafidi, founder and director of the Fashion Law Institute at Fordham Law School. 'Whatever the ultimate truth of the allegations, it's sad to see another female founder go up in flames.' 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Yahoo
18 hours ago
- Business
- Yahoo
Christine Hunsicker, CEO of a Bankrupt Fashion Tech Startup, Charged for Alleged $300M Fraud Scheme
NEED TO KNOW Christine Hunsicker allegedly ran a fraud scheme that raked in over $300 million for her now-bankrupt fashion tech startup The CaaStle founder and CEO was charged with wire fraud, securities fraud, money laundering, making false statements to a financial institution and aggravated identity theft Hunsicker pleaded not guilty to all chargesChristine Hunsicker, the founder and CEO of fashion tech startup CaaStle, has been indicted on fraud-related charges after she allegedly defrauded investors out of more than $300 million. In an indictment unsealed on Friday, July 18, more details tied to Hunsicker's alleged fraud scheme, which raised money for both CaaStle, a clothing-rental company, and another venture, P180, were revealed, according to the office of the United States Attorney for the Southern District of New York. Through the alleged scheme, Hunsicker, 48, defrauded CaaStle and P180 investors out of more than $300 million 'through false statements, misleading claims, and fabricated documents,' according to the attorney's office. The newly unsealed indictment charges the New Jersey native and Princeton University alum with wire fraud and securities fraud, as well as money laundering, making false statements to a financial institution and aggravated identity theft. Hunsicker self-surrendered on July 18. Later that same day, she pleaded not guilty to all charges, according to the Associated Press. In a statement obtained by PEOPLE, the entrepreneur's lawyers, Michael Levy and Anna Skotko, said, "There is much more to this story.' "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 nonetheless have chosen to present to the public an incomplete and very distorted picture in today's indictment,' they continued. 'There is much more to this story, and we look forward to telling it," the lawyers' statement added. While CaaStle — which filed for bankruptcy in June — was in 'financial distress with limited cash and significant expenses,' Hunsicker allegedly 'grossly overstated' its financial situation, instead promoting the venture as a 'rapidly growing business valued at more than $1.4 billion,' according to the attorney's office. She used falsified statements, bank records and other documents to do so, the indictment alleges. One fake bank account screenshot, which Hunsicker allegedly provided to an investor, showed that CaaStle had nearly $200 million in available cash, the attorney's office said. At the time, the real figure was less than $200,000. Hunsicker kept up the scheme even after she was 'confronted' over providing an investor with a fake audit in October 2023, claiming it was a 'one-time error,' the attorney's office alleges. She had actually provided two fake audits to the investor, the office claims, and later repaid them 'to prevent the public disclosure of her fraud.' The scheme included not only false bank statements and audits, but also falsified signatures, the attorney's office claims. In 2024, the entrepreneur allegedly forged a board director signature to raise more than $20 million for CaaStle. Around the same time, Hunsicker formed P180 to infuse CaaStle with cash before her fraud scheme came to life, and used 'false information about CaaStle's success to raise approximately $30 million' for the new venture, per the attorney's office. She also allegedly provided false information to obtain a personal bank loan of $20 million. is now available in the Apple App Store! Download it now for the most binge-worthy celeb content, exclusive video clips, astrology updates and more! In total, Hunsicker raked in more than $275 million in investments through her fraudulent behavior — which continued even after CaaStle 'prohibited her from soliciting investments' and 'after law enforcement agents seized her electronic devices' earlier this year, according to the attorney's office. Hunsicker faces one count of wire fraud, one count of money laundering and two counts of securities fraud, which carry maximum prison sentences of 20 years a piece. Making false statements to a financial institution, for which she faces one count, carries an even longer maximum sentence of 30 years. Aggravated identity theft, meanwhile, carries a mandatory prison sentence of two years. Read the original article on People Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
a day ago
- Business
- Yahoo
Founder of bankrupt clothing tech startup charged with defrauding investors out of $300M
A prominent entrepreneur who founded the now-bankrupt clothing technology startup CaaStle was criminally charged on Friday with defrauding investors out of more than $300 million, the Justice Department said. Authorities said Christine Hunsicker, 48, of Lafayette, NJ, promoted CaaStle to investors as a more than $1.4 billion 'Clothing-as-a-Service' business that helped companies rent apparel to consumers with an option to buy, despite knowing it was financially distressed and short of cash. The alleged fraud spanned six years starting in 2019, three years after the Princeton University alumna was named one of Inc magazine's 'Most Impressive Women Entrepreneurs' and Crain's New York Business' '40 Under 40.' Hunsicker was charged in a six-count indictment with wire fraud, securities fraud, money laundering, making false statements to a bank and aggravated identity theft. She turned herself in to authorities, and could face decades in prison if convicted. The Securities and Exchange Commission filed a related civil lawsuit. In a joint statement, Hunsicker's lawyers Michael Levy and Anna Skotko said the indictment presented 'an incomplete and very distorted picture,' despite their client being 'fully cooperative and transparent' with prosecutors. 'There is much more to this story, and we look forward to telling it,' the lawyers added. Authorities said Hunsicker falsified CaaStle's financial statements and bank records to raise capital. This included alleged representations 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. Hunsicker was also accused of falsely telling investors their money would go toward buying discounted shares from existing shareholders who needed liquidity, including after the 2022 collapse of the FTX cryptocurrency exchange. In one instance, Hunsicker allegedly raised more than $20 million after forging a CaaStle director's signature authorizing the issuance of stock options to an investor. Prosecutors said Hunsicker fraudulently raised more than $275 million for CaaStle and $30 million for a related venture, P180. CaaStle filed for Chapter 7 bankruptcy liquidation in Delaware on June 20. 'The promise of pre-IPO technology companies can be fertile ground for fraudsters who play on investor euphoria,' US Attorney Jay Clayton in Manhattan said in a statement.
San Francisco Chronicle
a day ago
- Business
- San Francisco Chronicle
Fashion startup founder charged with $300 million fraud
NEW YORK (AP) — A former chief executive of two clothing technology companies who was once portrayed as an on-the-rise fashion entrepreneur has surrendered to face charges in an indictment unsealed Friday alleging that she cheated investors of over $300 million over the last six years. Christine Hunsicker, 48, of Lafayette, New Jersey, was charged with six counts, including fraud, aggravated identity theft and false statement charges in the indictment in Manhattan federal court. U.S. Attorney Jay Clayton said in a release that Hunsicker forged documents, fabricated audits and made material misrepresentations about her company's financial condition to defraud investors in CaaStle Inc. and P180. The indictment said she portrayed CaaStle as a high-growth, private company with substantial cash on hand when she knew it faced significant financial distress. In a statement, defense lawyers Michael Levy and Anna Skotko said prosecutors 'have chosen to present to the public an incomplete and very distorted picture in today's indictment,' despite Hunsicker's efforts to be 'fully cooperative and transparent' with prosecutors and the Securities and Exchange Commission. 'There is much more to this story, and we look forward to telling it,' they said. According to the indictment, Hunsicker continued her fraudulent scheme even after the CaaStle board of directors removed her and prohibited her from soliciting investments or taking other actions on the company's behalf. She 'persisted in her scheme' even after law enforcement agents confronted her over the fraud, the indictment said. Before the fraud allegations emerged, Hunsicker seemed to be a rising star in the fashion world after she was named to Crain's New York Business '40 under 40' lists, was selected as one of Inc.'s 'Most Impressive Women Entrepreneurs' and was recognized by the National Retail Federation as someone shaping the future of retail, the indictment noted. At a time when the business was in financial distress with limited cash available and significant expenses, CaaStle was valued by Hunsicker at $1.4 billion, the indictment said. Hunsicker was lying to investors in February 2019 and continued to do so through this March, prosecutors alleged. They said she fed investors falsely inflated income statements, fake audited financial statements, fictitious bank account records and sham corporate records. She allegedly told one investor in August 2023 that CaaStle reported an operating profit of nearly $24 million in the second quarter of 2023 when its operating profit that quarter was actually less than $30,000. The indictment alleged that she carried out the majority of the fraud by bilking CaaStle investors of $275 million before forming P180 last year to infuse CaaStle with cash before its investors could discover her fraud. Through misrepresentations and omissions, she cheated P180 investors out of about $30 million, the indictment said. It said CaaStle filed for Chapter 7 bankruptcy last month, leaving hundreds of investors holding now-worthless CaaStle shares.
The Independent
2 days ago
- Business
- The Independent
Fashion startup founder charged with $300 million fraud
A former chief executive of two clothing technology companies who was once portrayed as an on-the-rise fashion entrepreneur has surrendered to face charges in an indictment unsealed Friday alleging that she cheated investors of over $300 million over the last six years. Christine Hunsicker, 48, of Lafayette, New Jersey, was charged with six counts, including fraud, aggravated identity theft and false statement charges in the indictment in Manhattan federal court. U.S. Attorney Jay Clayton said in a release that Hunsicker forged documents, fabricated audits and made material misrepresentations about her company's financial condition to defraud investors in CaaStle Inc. and P180. The indictment said she portrayed CaaStle as a high-growth, private company with substantial cash on hand when she knew it faced significant financial distress. In a statement, defense lawyers Michael Levy and Anna Skotko said prosecutors 'have chosen to present to the public an incomplete and very distorted picture in today's indictment,' despite Hunsicker's efforts to be 'fully cooperative and transparent' with prosecutors and the Securities and Exchange Commission. 'There is much more to this story, and we look forward to telling it,' they said. According to the indictment, Hunsicker continued her fraudulent scheme even after the CaaStle board of directors removed her and prohibited her from soliciting investments or taking other actions on the company's behalf. She 'persisted in her scheme' even after law enforcement agents confronted her over the fraud, the indictment said. Before the fraud allegations emerged, Hunsicker seemed to be a rising star in the fashion world after she was named to Crain's New York Business '40 under 40' lists, was selected as one of Inc.'s 'Most Impressive Women Entrepreneurs' and was recognized by the National Retail Federation as someone shaping the future of retail, the indictment noted. At a time when the business was in financial distress with limited cash available and significant expenses, CaaStle was valued by Hunsicker at $1.4 billion, the indictment said. Hunsicker was lying to investors in February 2019 and continued to do so through this March, prosecutors alleged. They said she fed investors falsely inflated income statements, fake audited financial statements, fictitious bank account records and sham corporate records. She allegedly told one investor in August 2023 that CaaStle reported an operating profit of nearly $24 million in the second quarter of 2023 when its operating profit that quarter was actually less than $30,000. The indictment alleged that she carried out the majority of the fraud by bilking CaaStle investors of $275 million before forming P180 last year to infuse CaaStle with cash before its investors could discover her fraud. Through misrepresentations and omissions, she cheated P180 investors out of about $30 million, the indictment said. It said CaaStle filed for Chapter 7 bankruptcy last month, leaving hundreds of investors holding now-worthless CaaStle shares.
