After Brendan Hoffman’s brief run as chief government officer of Wolverine Worldwide led to 2023, the veteran trend government had a “Moneyball” second throughout a gathering with Christine Hunsicker, the cofounder of CaaStle who raised greater than half a billion {dollars} arguing that attire manufacturers would do higher to lease stock out as a substitute of chopping value.
That second — a reference to the Michael Lewis guide on how the savvy use of knowledge modified baseball — altered the course of Hoffman’s profession and led him to hyperlink up with Hunsicker to cofound P180, which went on to forge a rental partnership with Elyse Walker, make an funding into Altuzarra and purchase management of Vince Holding Corp.
The run didn’t final lengthy.
In a lawsuit filed in New York State Courtroom on Friday, P180 stated CaaStle claimed to have over 500,000 rental subscribers and that it was processing over 4 million objects a month.
“In actuality, there have been merely a whole lot of subscribers, not a whole lot of 1000’s,” the swimsuit stated. “CaaStle was hemorrhaging cash. It appears to have spent upwards of $5 for each $1 it introduced in in income.”
The veil was torn again late final month when Hunsicker left CaaStle as CEO and was accused of exhibiting doctored financials to traders as she drummed up the cash wanted to maintain the corporate afloat.
Now CaaStle is working on bridge financing because it considers a Chapter 11 submitting and P180, which is 75 p.c owned by Hoffman, is suing CaaStle for fraud and extra, saying Hunsicker and others at CaaStle led it down a path it could have by no means adopted if it knew the corporate had been little greater than smoke and rented mirrors.
“Nothing about CaaStle was true,” stated P180 within the swimsuit. “CaaStle is without doubt one of the largest frauds in historical past and can dwell in infamy alongside the likes of Theranos, [Bernie] Madoff and Enron.”
That’s a really completely different look from just some months in the past.
“CaaStle gave the impression to be an enormous success — an progressive expertise firm managing an ecosystem of a whole lot of 1000’s of subscribers for a number of manufacturers with a whole lot of tens of millions of {dollars} in income and a valuation of over $1.4 billion,” the swimsuit stated.
However whereas the swimsuit stated CaaStle’s board realized of its “enormous monetary points” in December, P180 was saved at nighttime, and really pulled additional in because it made its largest deal but, securing management of Vince, the place Hoffman grew to become CEO for the second time.
Brendan Hoffman
Courtesy
“CaaStle, apparently determined to keep away from discovery of its personal fraud and to bilk much more individuals, defrauded P180,” the swimsuit claimed. “Most shockingly, throughout that interim interval —between December 2024 and March 2025, when CaaStle’s board indisputably had information of what occurred, CaaStle reiterated its fraudulent claims concerning earnings, monetary stability, subscribers, and community results and hid its precise, dire state of affairs from P180. It then fraudulently induced P180, amongst different issues, to boost capital and take out a number of loans within the expectation that P180 would purchase viable belongings, which P180 in the end did. It could then even attempt to drive P180 to merge with CaaStle.”
P180 stated it’s looking for “justice” and has been hit with greater than $58 million in hurt from CaaStle. By the swimsuit, the corporate is seeking to recuperate that cash and unwind company ties with CaaStle. Partly, P180 is suing itself as CaaStle owns 25 p.c of the corporate, which was first referred to as Mission 180 for a way it could flip the script on how the style enterprise works.
When it was based, P180’s board included Hoffman, Hunsicker and George Goldenberg, CaaStle’s chief working officer.
“What Hoffman didn’t know — and couldn’t have identified as a result of the knowledge was saved from him — was that CaaStle’s representations and guarantees had been nugatory,” the swimsuit stated. “CaaStle apparently believed it may cowl up its fraud — or a minimum of climate it — by buying attire manufacturers. However it couldn’t, nonetheless, do that itself as a result of any actual due diligence of CaaStle would presumably have revealed its fraudulent bookkeeping, ineffective expertise, lack of distribution infrastructure, and its utter lack of income and actual subscribers.”
Hunsicker remained a board member and infrequently CEO at P180 till the top of March, however spent final summer season elevating cash for the brand new enterprise, “on the promise that unifying attire shops with CaaStle expertise would create shareholder worth.”
Alongside the best way, P180 stated it was “repeatedly defrauded.”
“Maybe, CaaStle wished to make use of P180’s successes to prop up the fiction of CaaStle’s success,” the swimsuit alleged. “Maybe, it wished to create a captive buyer to additional falsify its data. Maybe, it wanted a separate car to acquire belongings it in any other case couldn’t get hold of. Maybe it wished to drive a merger to carry actual belongings into CaaStle.”
The swimsuit alleged that:
- CaaStle paid to safe a strategic relationship with Elyse Walker, however truly “transferred all however $1,700,000 away from P180” with none proper to take action. “Any further funding into Elyse Walker by no means occurred, nor may it have on condition that CaaStle was a sham from the start. Within the meantime, Hunsicker used P180’s successes in elevating Elyse Walker’s gross margin to perpetuate the parable that CaaStle’s purported platform and networks offered worth.”
- CaaStle financed a deal to purchase 25 p.c of Altuzarra, however now claims that the cash was a mortgage.
- Whereas shopping for a 65 p.c stake in Vince, P180 wanted to provide you with $25 million, however was about $5 million brief. “To lock within the capital and drive the acquisition of Vince, CaaStle ‘loaned’ P180 roughly $5 million. The mortgage paperwork, on their face, exhibit their fraud. It was a two-week observe at 10 p.c curiosity executed with lower than half a web page of documentation. Hoffman signed it as a result of Hunsicker particularly promised to boost the capital for P180 to pay it off. The debt was by no means meant to be repaid — however the deal was papered to provide CaaStle a cudgel to drive an eventual merger or acquisition.”
Alongside the best way, Hunsicker continued to “woo traders to P180 by touting the advantages of CaaStle’s distribution capability and buyer community.”
“In paperwork shared by CaaStle’s brokers, CaaStle valued P180 ‘pre-money’ at over $70 million,” the swimsuit stated. “CaaStle represented that after buying an attire enterprise or two, and deploying CaaStle’s expertise and community, that the worth of the corporate would attain north of $220 million after the $150 million funding spherical. That worth can be pushed by CaaStle’s distribution and companies, together with entry to its ecosystem of subscribers.
“With out the promised expertise or community, P180 merely owned an attire enterprise. Thus, the corporate that CaaStle and its brokers touted as having a price of over $70 million was, the truth is, price merely the worth of its shares in Vince and Altuzarra — lower than $15 million.”
A spokesperson for P180 stated, “Like many others, P180 is a sufferer of CaaStle’s fraud. P180 is assured in its case and appears ahead to prevailing.”
For only a second there final 12 months, P180 was a brand new concept or a brand new spin on the notion that rental may remake the style enterprise. And it was on an acquisition tear to show its case.
Now, it needs to show its case in court docket.
