A former chief executive of two clothing technology companies was released on $1 million bail Friday after pleading not guilty to charges alleging she cheated investors out of over $300 million over the past 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.
“As alleged, Christine Hunsicker defrauded investors of hundreds of millions of dollars through document forgery, fabricated audits, and material misrepresentations about her company’s financial condition,” Clayton said in a statement on Friday. “The promise of pre-IPO technology companies can be fertile ground for fraudsters who play on investor euphoria.”
The indictment said Hunsicker, once portrayed as an on-the-rise fashion entrepreneur, portrayed CaaStle as a high-growth, private company with substantial cash on hand when she knew it faced significant financial distress.
AP Photo/Larry Neumeister 
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.
Hunsicker did not comment as she left the courthouse with Skotko after entering the not-guilty plea and agreeing to the rules of her $1 million bail, which included not having any contact with former or current investors or employees.
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. Hunsicker was forced to resign from CaaStle’s board in December and formally resigned as chief executive in March.
In a related civil filing, the SEC said Hunsicker’s “fake financials” supported her narrative that CaaStle was nearing an initial public offering or sale in late 2022 as it enjoyed rapid and steady revenue growth after launching a new monetization model called “Clothing-as-a-Service.”
“In reality, CaaStle’s revenues were shrinking, its losses were increasing, and the company was never profitable,” the lawsuit said. “Not a single existing or prospective CaaStle investor received accurate monthly, quarterly, or annual CaaStle financial statements from Hunsicker.”
Before CaaStle, Hunsicker launched Gwynnie Bee, a subscription service renting everyday clothes to women sizes 10 to 32.
“We want it to be a place where managing a rotating wardrobe is actually the way the majority of people interact with clothing,” Hunsicker told CBS News in 2016 when discussing the company.
Previously, Hunsicker was also the COO and president of Right Media, an online advertising startup that sold to Yahoo! for $850 million, and then became the COO of Drop.io, an online file sharing service that was purchased by Facebook.
