Former Nate CEO Indicted for Faking AI to Attract Investors
The Justice Department charges Albert Saniger with fraud after he allegedly deceives investors by claiming his shopping app uses artificial intelligence when human workers actually handle the transactions.
The Justice Department indicts Albert Saniger, the former CEO of shopping startup Nate, for defrauding investors by falsely claiming his company uses artificial intelligence. Federal prosecutors state that Saniger exploits the hype around AI to build a completely false narrative of technological innovation that never actually exists.
Nate markets itself to consumers as an app that uses AI to let users skip the traditional online checkout process. However, the technology the company purchases from a third party achieves effectively zero percent automation, forcing the startup to rely on hundreds of human contractors in the Philippines and Romania to manually complete e-commerce purchases.
Acting U.S. Attorney Matthew Podolsky warns that this type of deception harms innocent investors and diverts crucial capital away from legitimate AI startups. Saniger faces one count of securities fraud and one count of wire fraud, with each charge carrying a maximum sentence of 20 years in prison.