A prominent entrepreneur who founded the now-bankrupt clothing technology startup CaaStle has been criminally charged with defrauding investors out of more than $300 million, the US Department of Justice announced on Friday.

Christine Hunsicker, 48, of Lafayette, New Jersey, allegedly promoted CaaStle to investors as a more than $1.4 billion "Clothing-as-a-Service" business that helped companies rent apparel to consumers with an option to buy, despite knowing the company was financially distressed and short of cash.

The alleged fraud spanned six years starting in 2019, three years after the Princeton University alumna was named one of Inc magazine's "Most Impressive Women Entrepreneurs" and Crain's New York Business' "40 Under 40."

Hunsicker was charged in a six-count indictment with wire fraud, securities fraud, money laundering, making false statements to a bank and aggravated identity theft. She turned herself in to authorities and could face decades in prison if convicted. The Securities and Exchange Commission also filed a related civil lawsuit.

In a joint statement, Hunsicker's lawyers Michael Levy and Anna Skotko said the indictment presented "an incomplete and very distorted picture," despite their client being "fully cooperative and transparent" with prosecutors. "There is much more to this story, and we look forward to telling it," the lawyers added.

Authorities said Hunsicker falsified CaaStle's financial statements and bank records to raise capital. This included alleged representations that CaaStle earned $66.3 million on revenue of $439.9 million in 2023, when it actually lost $81 million on revenue of $15.7 million.

Hunsicker was also accused of falsely telling investors their money would go toward buying discounted shares from existing shareholders who needed liquidity, including after the 2022 collapse of the FTX cryptocurrency exchange.

In one instance, Hunsicker allegedly raised more than $20 million after forging a CaaStle director's signature authorising the issuance of stock options to an investor. Prosecutors said Hunsicker fraudulently raised more than $275 million for CaaStle and $30 million for a related venture, P180.

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 resigned in April after CaaStle's board accused her of impropriety, and civil lawsuits accused her and the company of elaborate fraud. CaaStle, formerly known as Gwynnie Bee, filed for Chapter 7 bankruptcy liquidation in Delaware on 20 June.

"The promise of pre-IPO technology companies can be fertile ground for fraudsters who play on investor euphoria," US Attorney Jay Clayton in Manhattan said in a statement. He added that "Christine Hunsicker defrauded investors of hundreds of millions of dollars through document forgery, fabricated audits and material misrepresentations about her company's financial health."

The charges carry severe penalties. Hunsicker faces one count of wire fraud, two counts of securities fraud, and one count of money laundering, each carrying a maximum sentence of 20 years in prison. She is also charged with making false statements to a financial institution, which carries a maximum sentence of 30 years, and aggravated identity theft, which carries a mandatory two-year sentence.

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