Albert Saniger, the former CEO of shopping app Nate, is now at the center of a major fraud case that’s turning heads across the tech industry. The U.S. Justice Department has charged Saniger with fraud after discovering that his so-called “AI-powered” e-commerce platform was powered not by cutting-edge technology—but by hundreds of human workers based in the Philippines and Romania.
Nate, a startup that once positioned itself as a revolutionary AI tool to simplify online shopping, promised users a one-click experience that skipped the usual checkout hassles. Shoppers believed artificial intelligence was seamlessly handling transactions behind the scenes. In reality, there was no real automation. Instead, Saniger allegedly relied on manual labor to process purchases, misleading both customers and investors.
According to prosecutors, the technology that Nate claimed could complete e-commerce transactions autonomously never actually worked. The app allegedly used a third-party tool that failed to deliver reliable automation. To keep the illusion alive, Saniger reportedly hired an army of overseas workers to manually carry out customer orders, all while continuing to market Nate as an AI-powered platform.
The Justice Department didn’t hold back in its criticism. Acting U.S. Attorney Matthew Podolsky said, “Saniger misled investors by exploiting the promise and allure of AI technology to build a false narrative about innovation that never existed.” The fallout, he added, damages not only investors’ trust but also the future of legitimate AI innovation by casting doubt on real progress in the field.
The scandal comes in the wake of a 2022 investigative report by The Information, which had already raised red flags about Nate’s claims. That report hinted at the company’s dependence on manual processes and revealed its unsustainable spending habits.
Now, Saniger faces serious legal consequences. He has been indicted on two felony counts: securities fraud and wire fraud. Each charge carries a maximum sentence of 20 years in prison. If convicted, this could mean the end of his startup career and a stark warning to other tech founders who consider faking it until they make it.
As the tech world becomes increasingly fascinated with artificial intelligence, this case serves as a cautionary tale about the hype-driven startup culture. Investors are reminded that not every company claiming to use AI is actually doing so. Due diligence has never been more important.
