The founder of shopping automation startup Nate faces serious federal charges for allegedly defrauding investors by falsely claiming his app used AI technology, when in reality it relied on hundreds of human workers in the Philippines. Albert Saniger, former CEO of Nate, has been indicted by the U.S. Department of Justice on securities fraud and wire fraud charges, each carrying potential 20-year prison sentences.
Founded in 2018, Nate raised tens of millions from prominent investors including a $38 million Series A round in 2021 led by Renegade Partners, with participation from Forerunner Ventures and Coatue Management. The company claimed its proprietary AI could complete online purchases across any e-commerce site with a single click, positioning itself as a universal shopping assistant powered by artificial intelligence.
However, according to the DOJ indictment, Nate’s technology never achieved meaningful automation. While Saniger acquired third-party AI and hired data scientists, the app’s actual automation rate was “effectively zero percent.” Instead, the company allegedly employed hundreds of Filipino contractors in a call center to manually complete purchases through the app—a fact prosecutors say Saniger concealed from investors and most employees.
“Saniger misled investors by exploiting the promise of AI to build a false narrative about innovation that never existed,” said Acting U.S. Attorney Matthew Podolsky. The indictment alleges Saniger restricted access to internal dashboards that would reveal the app’s true automation rates while continuing to tout nonexistent AI capabilities to investors.
The case highlights growing scrutiny of AI claims in startup fundraising. Nate collapsed in early 2023 after running out of funds, leaving investors with near-total losses. Saniger, now listed as a managing partner at VC firm Buttercore Partners, faces allegations that his deception harmed not just investors but the broader tech ecosystem by diverting capital from legitimate AI ventures.
Key Details:
- Nate claimed 100% AI-powered checkout automation
- Actually used manual labor for 100% of transactions
- $38M Series A raised from top-tier VCs in 2021
- Founder faces 40 years maximum prison time
The charges come amid increasing regulatory focus on AI transparency, with the SEC recently warning against “AI washing” in corporate disclosures. The case serves as a cautionary tale for startups making exaggerated claims about their technology’s capabilities.