U.S. prosecutors have charged a tech founder with fraud over allegedly overstating his company’s artificial intelligence capabilities, in a case that also highlights the use of human contractors in the Philippines to mimic automation.
The former chief executive of Nate, Inc., Albert Saniger, was indicted in New York for allegedly misleading investors about the company’s use of proprietary AI to power its shopping app, U.S. authorities said.
According to prosecutors, Saniger promoted Nate as a universal shopping cart app capable of completing online purchases autonomously using artificial intelligence, allowing users to “skip checkout” with a single tap. The claims helped the company raise more than $40 million from venture capital investors.
However, investigators allege that the app’s automation rate was effectively zero, with transactions instead being carried out manually by teams of workers—many based in a call centre in the Philippines—who processed purchases behind the scenes.
The indictment said Saniger concealed the lack of automation from investors and even from most employees, restricting access to internal metrics and describing the data as a “trade secret.” He also allegedly directed the development of basic bots in 2021 to supplement manual operations during peak shopping periods.
U.S. Attorney Matthew Podolsky said the case underscores the risks of “false narratives about innovation,” warning that such conduct can divert capital away from legitimate startups and undermine trust in emerging technologies. The Federal Bureau of Investigation (FBI) said the scheme relied on “smoke and mirrors” to sustain the illusion of automation.
Saniger faces charges of securities fraud and wire fraud, each carrying a potential maximum sentence of 20 years. The U.S. Securities and Exchange Commission has also filed a parallel civil case.
The charges are allegations, and Saniger is presumed innocent unless proven guilty.
Business News Asia
