Tech App Founder Charged with Fraud Over AI Claims

According to Cointelegraph, U.S. authorities have charged Albert Saniger, the founder and former CEO of the tech company Nate, with securities fraud and wire fraud. The charges stem from allegations that his e-commerce app, marketed as powered by artificial intelligence, actually relied on human workers based in the Philippines. The U.S. Department of Justice announced the charges on April 9, while the Securities and Exchange Commission (SEC) has filed a parallel civil action. Saniger, who founded Nate in 2018 and launched the app in July 2020, promoted it as an AI-driven universal shopping cart capable of completing online retail transactions without human intervention. However, the Justice Department claims that the app's operations were largely manual, with hundreds of contractors in the Philippines completing purchases. Acting U.S. Attorney for New York, Matthew Podolsky, accused Saniger of misleading investors by exploiting the appeal of AI technology to create a false narrative of innovation. Under this pretense, Saniger allegedly secured over $40 million in investments from venture capital firms, instructing employees to conceal the true nature of the app's automation. The Justice Department further alleged that Nate acquired AI technology from a third party and employed data scientists to develop it, but the app never achieved the capability to autonomously complete e-commerce transactions. During a busy holiday season in 2021, Saniger reportedly directed Nate's engineering team to develop bots to automate some transactions alongside human workers. Nate ceased operations in January 2023, and Saniger terminated all employees following media scrutiny of the app's capabilities, as noted in the SEC's court filing. The charges of securities and wire fraud each carry a potential maximum sentence of 20 years in prison. The SEC's civil suit seeks to bar Saniger from holding office in any similar company and demands the return of investor funds. Cointelegraph reached out to Nate for comment, but information regarding Saniger's legal representation was not immediately available.