Albert Saniger, chief executive officer of the U.S.-based shopping app Nate, has been charged with fraud by the Federal Bureau of Investigation and the Attorney for the Southern District of New York. According to the FBI, Saniger “covertly” employed personnel from an unnamed call center in the Philippines to manually complete customer transactions on the app in the guise of artificial intelligence (AI).
The U.S. Department of Justice (DoJ) reports that in pitch materials sent to venture capital firms, Saniger said Nate could process transactions using AI and without human intervention, ultimately raising $40 million or P2.3 billion from multiple investors.
“In truth, Nate relied heavily on teams of human workers primarily located overseas to manually process transactions in secret, mimicking what users believed was being done by automation,” said the DoJ in a release statement. “Saniger used hundreds of contractors, or ‘purchasing assistants,’ in a call center located in the Philippines to manually complete purchases occurring over the app.”
U.S. Attorney Matthew Podolsky said, “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.”
Saniger launched Nate in 2018 as a one-stop “universal shopping cart” that lets users purchase items from different e-commerce sites. The Economic Times says the app claimed to do everything “from choosing sizes to entering billing and shipping details” using its own AI.
The indictment says that Saniger and a Nate employee set up a second call center in Romania in October 2021 after a natural disaster in the Philippines created a backlog of customer purchases on the app.
Saniger is charged with one count of securities fraud and one count of wire fraud and potentially faces 40 years in prison.
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