Nate Founder Charged With Fraud Over False AI Claims

Albert Saniger, the founder and former CEO of the e-commerce app Nate, has been charged with securities and wire fraud by US authorities. The charges stem from allegations that Saniger deceived investors by falsely marketing his shopping app as powered by artificial intelligence, when in reality, it relied on human workers in the Philippines to process transactions.

Saniger, who is 35 and from Barcelona, Spain, founded Nate around 2018 and launched the app in July 2020. He marketed Nate as an AI-powered universal shopping cart that could complete online retail transactions automatically, handling all checkout details including shipping information and sizing without human input. However, authorities claim that the app's actual automation rate was "effectively zero percent," despite claims of proprietary AI technology.

According to court documents, Saniger used hundreds of contractors, or ‘purchasing assistants,’ in a call center located in the Philippines to manually complete purchases occurring over the Nate app. The deception allegedly helped Saniger raise more than $40 million from venture capital firms. The company did acquire AI technology from a third party and employed data scientists to develop it. But authorities claim the app never achieved the ability to consistently complete e-commerce purchases.

Saniger allegedly instructed employees to keep the true automation rate secret and restricted access to the company’s “automation rate dashboard.” During the busy 2021 holiday shopping season, Saniger reportedly directed Nate’s engineering team to develop bots to automate some transactions. These bots worked alongside human workers to create the illusion of AI-powered automation. Saniger allegedly told employees to hide the true source of Nate’s operations, keeping most employees in the dark about how the app actually functioned.

The fraud charges came after an investigation in 2022 questioned Nate’s AI claims. The DOJ indictment states that Nate ran out of money and sold its assets in January 2023, leaving investors with “near total” losses. Nate ceased operations in January 2023, and Saniger terminated all employees after media reports cast doubt on the app’s capabilities. Saniger’s LinkedIn profile indicates he left his CEO position at Nate in 2023.

Saniger is currently listed as a managing partner at a New York VC firm. Neither Saniger nor the firm responded to requests for comment about the charges. Each fraud charge against Saniger carries a maximum sentence of 20 years in prison. The SEC is also seeking to ban Saniger from holding office in any similar company and return investor funds.

This case highlights the growing trend of tech companies being accused of exaggerating their AI capabilities. It serves as a reminder of the importance of transparency and honesty in the tech industry, especially when it comes to investments and the use of advanced technologies. The case is being handled by the Southern District of New York’s Securities and Commodities Fraud Task Force and Complex Frauds and Cybercrime Unit.