Albert Saniger, the founder and former CEO of US-based e-commerce startup Nate, has been charged with securities and wire fraud for allegedly deceiving investors about the use of artificial intelligence (AI) in the company’s app.
Prosecutors claim Saniger misrepresented Nate’s technology as fully AI-driven, when in fact, online transactions were being completed manually by call center agents in the Philippines.
According to the indictment, the app’s automation rate was “effectively zero”.
Nate, which launched in 2018, promoted itself as a “universal shopping cart” that allowed customers to buy from any online retailer with a single tap.
Saniger reportedly told investors the app could automatically select product sizes, input payment details, and complete transactions using proprietary AI.
However, US prosecutors allege that the technology did not deliver the promised automation and instead relied on hundreds of overseas contractors mimicking the functions the app claimed to perform.
The startup raised more than $40 million from investors based on these claims.
Acting US attorney Matthew Podosky said the alleged deception harmed both investors and the wider tech ecosystem.
“This type of deception not only victimises innocent investors, it also diverts capital from legitimate startups,” he said.
“As alleged, Saniger misled investors by exploiting the promise and allure of AI technology to build a false narrative about innovation that never existed.”
The indictment also alleges that Saniger restricted employee access to internal automation data and falsely claimed such metrics were protected trade secrets.
Christopher Raia, assistant director in charge at the FBI, said Saniger “allegedly abused the integrity associated with his former position as the CEO to perpetuate a scheme filled with smoke and mirrors.”
Saniger is charged with one count of securities fraud and one count of wire fraud, each carrying a maximum sentence of 20 years in prison. The US Securities and Exchange Commission has also filed a parallel civil suit.
