Albert Saniger, the founder and former CEO of Nate, a company that allegedly launched an app with artificial intelligence for shopping and a “one-size-fits-all” checkout process, has been charged with defrauding investors, according to a press release from the U.S. Department of Justice.

Image Source: Hack Capital / unsplash.com

Founded in 2018, Nate has raised more than $50 million from investors including Coatue and Forerunner Ventures; its most recent funding round, led by Renegade Partners, raised $38 million in 2021. The company claimed that Nate’s app allowed people to buy from any marketplace with one click, with AI handling the checkout. In reality, the purchases were manually processed by contractors at a call center in the Philippines, according to the U.S. Attorney’s Office for the Southern District of New York.

Saniger raised millions of dollars in funding, claiming that Nate could conduct transactions online “without human intervention” except in rare cases. The company did acquire several AI solutions, but in reality, the agency said, the level of automation in the app’s operation was zero. In 2022, The Information conducted an investigation and found that the service used hired labor.

Nate eventually ran out of funds, was forced to sell its assets in January 2023, and investors lost “almost all” of their investment, according to the US Department of Justice indictment. Similar AI scams have been carried out by other startups, TechCrunch writes.

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