The US Department of Justice (DOJ) has charged the former CEO of Nate, an AI-powered tool designed to automate online shopping checkouts, with defrauding investors.
Albert Saniger, Founder and CEO of Nate, claimed the company used AI to help users purchase products from e-commerce sites. These claims helped Nate raise over $40m from investors but are now alleged to be false.
An FBI investigation found that Nate did not actually use AI to navigate e-commerce checkouts and complete purchases. Instead, the company heavily depended on human workers to manually process transactions.
Matthew Podolsky, Acting US Attorney, stated: “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.
“This type of deception not only victimises innocent investors, it diverts capital from legitimate startups, makes investors skeptical of real breakthroughs, and ultimately impedes the progress of AI development. This Office and our partners at the FBI will continue to pursue those who seek to harm investors by touting false innovation.”
Reports state that Saniger employed hundreds of contractors at a call center in the Philippines to manually complete purchases made through the Nate app.
A majority of company employees were unaware of the truth, as the former CEO instructed them to keep Nate’s automation rates confidential. He allegedly limited access to the internal dashboard, which tracked automation performance and explained the secrecy with misleading claims, saying the data was a “trade secret”.
FBI Assistant Director in Charge Christopher G. Raia, said: “Albert Saniger allegedly defrauded investors with fabrications of his company’s purported AI capabilities while covertly employing personnel to satisfy the illusion of technological automation.
“Saniger allegedly abused the integrity associated with his former position as the CEO to perpetuate a scheme filled with smoke and mirrors.”
Saniger faces one count of securities fraud and one count of wire fraud. If found guilty of both charges, the Spaniard could be sentenced to up to 40 years in prison.
Raia concluded: “The FBI will continue to investigate any business owner who withholds material information to encourage additional investments.”
Last week, the DOJ announced it had dissolved its National Cryptocurrency Enforcement Team as it continues to strip back federal oversight on the sector.
