Tech CEO charged with fraud for “AI” app run by Philippine call center
FLORIDA, UNITED STATES — Albert Saniger, founder and former CEO of shopping and fintech app Nate, has been charged with defrauding investors after allegedly misrepresenting his company’s AI capabilities.
According to the U.S. Department of Justice, Saniger raised over $50 million by claiming his app used artificial intelligence to provide a universal checkout experience, when in reality it relied on human workers in the Philippines.
The AI illusion that attracted millions
Founded in 2018, Nate quickly attracted significant venture capital, including a $38 million Series A round in 2021 led by Renegade Partners, with participation from notable investors like Coatue and Forerunner Ventures.
The app promised to revolutionize online shopping by allowing users to purchase from any e-commerce site with a single click, supposedly powered by sophisticated AI technology.
“As alleged, Albert Saniger misled investors by exploiting the promise and allure of AI technology to build a false narrative about innovation that never existed,” said Matthew Podolsky, acting U.S. attorney for the Southern District of New York.
The DOJ’s indictment reveals that despite Saniger’s claims that Nate could transact online “without human intervention,” the app’s actual automation rate was “effectively zero percent.” Instead, hundreds of contractors at a call center in the Philippines manually completed the purchases that users believed were being processed by AI.
Growing trend of AI misrepresentation in tech
This case highlights a concerning pattern in the tech industry. The FBI described Nate as a “scheme filled with smoke and mirrors.”
Christopher Raia, Assistant Director in Charge of the FBI, stated: “In reality, Nate depended significantly on teams of human workers—mainly situated overseas—to manually process transactions covertly, simulating what users assumed was being managed by automation.”
Nate isn’t the only company accused of exaggerating its AI capabilities. Presto Automation, an “AI” drive-through software startup was similarly revealed to be powered largely by humans in the Philippines. AI legal tech unicorn EvenUp allegedly used humans for much of its work.
By January 2023, Nate had run out of money and was forced to sell its assets, according to the DOJ. Saniger, who stepped down as CEO that same year, now faces serious consequences. If convicted, he could face up to 20 years in prison.
This case serves as a cautionary tale about the hype surrounding AI technology and raises important questions about due diligence in tech investments during the current AI boom.
