The board of flashy fashion tech startup CaaStle discovered its CEO had defrauded investors out of $283 million – and then allowed her to stay on as the top exec for three months, according to a report.
Christine Hunsicker was the co-founder and CEO of CaaStle, an online fashion rental company valued at $1.25 billion at its peak in 2018. The company raked in more than $600 million from big-name investors like Bill Ackman and Henry Kravis.
But in the spring of 2025, the company revealed that Hunsicker had been grossly overvaluing CaaStle’s financial earnings, and this March, she pleaded guilty to securities fraud.
CaaStle is now facing several lawsuits alleging the board – which historically had only three directors, one of which was Hunsicker – failed to notice obvious red flags, and then kept Hunsicker on for months without alerting investors, according to the New York Times.
A representative for Hunsicker did not immediately respond to The Post’s request for comment.
The lawsuits largely focus on Jaswinder Pal Singh, another co-founder of the company who was seen as CaaStle’s software whiz and a longtime computer science professor at Princeton University.
Around October 2024, when investors started questioning the startup’s finances, Singh sold $6 million worth of CaaStle stock back to the company, according to a lawsuit filed in March by bankruptcy trustee George Miller.
A source close to the company told The Post that the stock buyback was planned before and completed prior to any questions being raised by investors.
Singh then allegedly played a key role in keeping Hunsicker’s fraud from investors and allowing her to remain as the chief executive over the next three months, according to the suit.
One lawsuit, citing Hunsicker’s ex-husband, alleged Singh and Hunsicker had an affair two decades ago, so Singh had “a strong personal interest in protecting” her.
“JP [Singh] was a cofounder and major shareholder who rejoined the board after several years away from the company in hopes of stabilizing the company, contributing months of uncompensated effort and voluntarily providing capital to pay employees and help preserve stakeholder value for everyone,” a spokesperson for Singh told The Post.
“The board, with the advice of legal counsel, responsibly exercised its business judgment regarding available options and communications with shareholders.”
Singh has not been charged with a crime, and there is no evidence he was aware of Hunsicker’s fraudulent scheme.
He had allegedly helped win over major investors, like Bill Ackman, whose children attended Dalton School – the prestigious Manhattan prep school where Singh served as a trustee.
A spokesperson for Ackman told the Times he currently owns “substantially less than 1 percent of the company,” and declined to provide further comment.
Singh also allegedly told other investors that the company received a substantial investment from venture capitalist Jim Breyer. Breyer declined to comment.
In 2011, Hunsicker founded Gwynnie Bee, an online fashion rental company similar to Rent the Runway – allowing customers to rent a handful of clothing items each month at a fixed subscription rate – that was geared toward plus-size women.
But employees feared the business model would fail, since it relied on referrals – and “Plus-size women didn’t want to refer other plus-size women because you are essentially calling other women fat,” Kaeya Majmundar, Hunsicker’s former apprentice, told the New York Times.
It rebranded in 2018 to CaaStle – with the first four letters standing for “clothing as a service” – and sought to serve as the tech and logistics platform for major clothing brands, signing deals with Ann Taylor, Express and Vince.
According to Hunsicker’s plea deal, she started sharing fraudulent financial documents with investors in 2019.
The discrepancies were egregious. A new audit obtained by the Times showed the company had reported net revenues of nearly $440 million to some investors in fiscal year 2023 – when the real figure was a mere $15.7 million.
But the board did not notice anything was amiss until 2024, when someone managing Kravis’ investment flagged their suspicions to John Hennessy.
Hennessy – chairman of Alphabet’s board and a computer scientist known as the “godfather of Silicon Valley” – was a director on CaaStle’s board. But a week after Kravis’ team raised alarms, Hennessy said he was no longer a member of the board – and that he had actually resigned three years earlier, according to the lawsuit filed by Miller.
“Mr. Hennessy is a very well-respected person and carried himself with integrity throughout his distinguished career. Mr. Hennessy did not engage in wrongdoing and did not condone any wrongdoing,” a spokesperson for Hennessy told The Post. “In fact, he was a victim.”
Hennessy’s absence meant Scott Callon, a Tokyo-based asset manager, was the only voting member of the board aside from Hunsicker.
In December 2024, Hunsicker admitted to the fraud during a video call with Callon and Singh – but she refused to step down, saying she would not leave the board unless Singh took her place at the company, according to the lawsuit filed by Miller.
“As the other board member, I had no options to remove Christine from these roles unilaterally,” Callon told the Times in a statement, confirming he complied with her demand.
Callon did not immediately respond to The Post’s request for comment.
