| Christine Hunsicker, founder of the fashion-rental and technology company CaaStle Inc., was sentenced to five years in prison for defrauding investors out of $300 million. The prison term was much shorter than the 12 1/2 years sought by prosecutors, who compared Hunsicker to Theranos Inc. founder Elizabeth Holmes. Holmes, who is serving a 10-year sentence for an $800 million fraud tied to her blood-testing startup, and Hunsicker both "destroyed more wealth than most people could imagine," the government said in a court filing. US District Judge J. Paul Oetken sentenced Hunsicker Thursday in Manhattan federal court, saying she was guilty of "a massive scheme of defrauding investors." Oetken also imposed three years of supervised release and ordered Hunsicker to pay $283.3 million in forfeiture and restitution. According to the government, Hunsicker deceived hundreds of investors into thinking that she'd successfully transformed a clothing-rental business based on Rent the Runway Inc. into an enterprise software company worthy of a valuation in the billions. She lied about CaaStle's economic performance and used faked financial statements to hide its dire financial trouble, prosecutors said. In arguing for a longer sentence, Assistant US Attorney Alexandra Rothman focused the judge's attention on evidence showing the depth of the fraud. Hunsicker forged the signatures of two CaaStle board members on documents on two separate occasions in 2024, the prosecutor said. Hunsicker pleaded guilty in March to a single charge of securities fraud carrying a maximum of 20 years in prison. Her team argued she should get just two years, saying she didn't spend investors' money on herself but instead to try to keep CaaStle afloat. Hunsicker herself lost almost $20 million to CaaStle, her lawyer, Michael Levy, told the judge. Levy also said her criminal conduct was partly due to a brain injury she suffered in 2017. In an income statement for the first two quarters of 2023, CaaStle reported operating profit of almost $24 million, when the true figure was less than $30,000, according to the government. Later that year, Hunsicker sent a screenshot to an investor showing the company had $50 million in the bank, prosecutors said. The true number was less than $1 million. In addition to Holmes, prosecutors compared Hunsicker in court papers to Charlie Javice, who was sentenced to seven years in September for defrauding JPMorgan Chase in its $175 million acquisition of her student-finance startup, Frank. She's appealing the conviction. Levy argued that basing Hunsicker's sentence on those received by Holmes and Javice betrayed an "implicit bias" toward harshly punishing women who "deceive wealthy, powerful men with political connections." Hunsicker attracted high-end investors but also individuals who went into their retirement funds to back CaaStle, some drawn by her appearances on the popular television show Project Runway. More than two dozen investors filed victim statements with the court. ALSO READ: Preparations Complete For Imran Khan's Transfer From Jail To Islamabad Hospital; Security Beefed Up "The impact of being defrauded was both emotionally and financially devastating," wrote a former investor who lost $250,000 from a retirement account, adding, "It is hard to imagine someone could lie so easily to us over and over and have no shame or guilt about it." The case is US v. Hunsicker, 25-cr-00318, US District Court, Southern District of New York (Manhattan). |
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