A tech founder who raised over $40 million pitching a cutting-edge AI shopping app has been charged in the U.S. with fraud after it was revealed the AI powering the app was a call center full of human workers in the Philippines.

Albert Saniger, 35, founder and former CEO of “nate,” allegedly misled investors by claiming the company’s e-commerce app used proprietary AI to automate online purchases. 

“Albert Saniger misled investors by exploiting the promise and allure of AI technology to build a false narrative about innovation that never existed,” Matthew Podolsky, Acting U.S. Attorney for the Southern District of New York, said.

“This type of deception not only victimizes innocent investors, it diverts capital from legitimate startups, makes investors skeptical of real breakthroughs, and ultimately impedes the progress of AI development.”

Launched around 2018, nate marketed itself as a universal shopping cart, offering users a single-tap checkout experience across any e-commerce site. 

Saniger told investors that nate’s tech could smartly fill in shipping details, select sizes, and complete purchases without human involvement.

For example, if a shopper found a pair of sneakers online, they could open the nate app, tap “buy,” and the app claimed it would handle the rest, including selecting the size, entering payment and shipping details, and completing the purchase using AI.

But much like Elizabeth Holmes’ Theranos blood testing devices, it didn’t work, and the “AI” couldn’t handle most transactions. 

So instead, nate quietly turned to humans and hired a call center of workers in the Philippines to mimic the automation users believed was happening behind the scenes.

Saniger has been charged with one count of securities fraud and one count of wire fraud, both of which carry a maximum sentence of 20 years. The U.S. Securities and Exchange Commission has filed a parallel civil action. 

A request for comment sent by Decrypt to nate’s press email bounced back.

Edited by Sebastian Sinclair