(NEW YORK) — Christine Hunsicker, the founder of clothing-rental company CaaStle, was arrested Friday on federal fraud charges accusing her of cheating investors out of $300 million.
Federal prosecutors for the Southern District of New York said that Hunsicker misrepresented CaaStle’s financial performance to investors, allegedly making false revenue projections of hundreds of millions of dollars and falsely claiming to have hundreds of millions of dollars in cash on hand when in truth, according to prosecutors, the company was 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 Friday’s announcement, in part.
The indictment also alleges that Hunsicker “continued her fraudulent activities and attempted to raise new capital” even after CaaStle’s board removed her as chair “and prohibited her from soliciting investments.”
Hunsicker, 48, resigned in April after CaaStle’s board accused her of impropriety, and civil lawsuits accused her and the company of elaborate fraud. The company, formerly known as Gwinnie Bee, filed for Chapter 7 bankruptcy in June.
Hunsicker surrendered to authorities Friday morning and was expected to appear in federal court Friday afternoon, according to the announcement.
The indictment is a startling development for a once-celebrated executive who previously boasted of partnering with Ralph Lauren, Ann Taylor, Banana Republic and other major brands to offer consumers rental services.
The indictment charges Hunsicker with one count of wire fraud, two counts of securities fraud, and one count of money laundering, each of which carries a maximum sentence of 20 years in prison. She’s also charged with one count of making false statements to a financial institution, which carries a maximum sentence of 30 years in prison, and aggravated identity theft, which carries a mandatory sentence of two years in prison.
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