Christine Hunsicker, founder of clothing rental company Caastle, was arrested Friday on federal fraud charges, accusing her of cheating investors of $300 million.
Federal prosecutors in southern New York said Hunsicker misrepresented Caastle's financial performance to investors, allegedly making false revenue forecasts for hundreds of millions of dollars in false revenue forecasts and falsely claiming when hundreds of millions of dollars of cash had been encountered, according to prosecutors.
“Christine Hunsicker deceived hundreds of millions of dollars of investors through document forgery, resulting in audits and significant statements about the financial status of her company,” U.S. Attorney Jay Clayton said in a part of the announcement Friday.
The indictment also claimed that even after Castle's board of directors put her as chairman “and forbid her to solicit investments,” Hensk “continues her fraudulent activities and attempts to raise new capital.”
The founder and CEO of Gwynnie Bee Christine Hunsicker discusses the runway: “Fashion Startup Star” at Power Salon Power Salon in Hearst Tower, New York City on November 7, 2016.
Roy Rochlin/Getty Images
“While Ms. Hunsicker is fully collaborative and transparent with American attorneys in the Southern New York Region and SEC, they still choose to show the public the incomplete and very distorted images of today’s indictment. There are more stories to this story, and we look forward to it.
Hunsicker, 48, resigned in April after accused her of misconduct in Caastle's board of directors, a civil lawsuit accused her and her company of allegedly elaborate fraud. The company, formerly known as Gwinnie Bee, filed for Chapter 7 bankruptcy in June.
Hunsicker surrendered to authorities Friday morning and is expected to appear in federal court on Friday afternoon.
The indictment is a shocking development for someone who once was an executive who had previously boasted about working with Ralph Lauren, Ann Taylor, Banana Republic and other major brands to provide rental services to consumers.
The indictment charged Hensk with one count of wire fraud, two counts of securities fraud and one count of money laundering, each with a maximum sentence of 20 years in prison. She was also charged with making false statements to financial institutions, which sentenced up to 30 years in prison and aggravated identity theft, and the institution was sentenced to two years in prison.