29-04-2025
CaaStle hit with multiple lawsuits following fraud allegations
It's been one month since fashion tech company CaaStle told investors that they're likely victims of one of the largest financial frauds in U.S. history, with over $530 million up in smoke.
Now the lawsuits are beginning to fly, and the company is doubling down on its caginess.
Driving the news: CaaStle is being sued for fraud by P180, the fashion brand acquisition platform that was formed to leverage CaaStle's technology.
P180 argues that it never would have done several transactions, including this past January's purchase of apparel company Vince, had it known the truth of CaaStle's business and financials.
The complaint calls out CaaStle co-founder and former CEO Christine Hunsicker, who also was on the P180 board, and also current CaaStle board members George Goldenberg (CaaStle's interim CEO) and JP Singh (a computer science professor at Princeton).
It claims that CaaStle's lies caused P180 to incur debts (some of which weren't memorialized) that would be used to "force an eventual merger" — a concept that Singh would later extol in a video call with CaaStle shareholders.
In a statement to Axios, CaaStle says: "We take issue with some key factual assertions made by P180, we believe the claims are without merit and look forward to vigorously defending our position."
But wait, there's more: CaaStle also is being sued by EXP Topco, which holds the IP for clothing brand Express.
It claims that CaaStle infringed on EXP's trademarks by continuing to offer an Express-branded subscription service after EXP bought the IP.
The two sides reached a settlement, but CaaStle never paid. Moreover, the settlement was reached after CaaStle knew of the fraud, which allegedly means it never had the funds it had promised.
Coming attractions: There also are rumblings of a possible class action suit against an investment firm that funneled retail investors into CaaStle.
Behind the scenes: CaaStle last week told shareholders, via an unsigned letter, that it had hired a restructuring expert named Monica Blacker of Force 10 Partners as an independent director.
It was the only investor communication since April 7, when CaaStle claimed to have secured $2.75 million in bridge financing that would be used, in part, to plan for Chapter 11 process.
There is no mention of Chapter 11 in the Blacker announcement. Nor did the company address it when asked by Axios, although a source says it may be close to hiring financial advisers.
Two investors tell Axios that they've asked questions of CaaStle's board, via an email address designed for this purpose, but haven't received replies. The company says it's been "addressing shareholder inquiries on a regular basis."
