Former Nate CEO Charged with Fraud Over Fake AI Claims

Albert Saniger, founder and ex-CEO of the AI shopping startup Nate, has been charged with defrauding investors by falsely claiming the app offered fully automated, AI-powered checkouts.

The U.S. Department of Justice (DOJ) unsealed the indictment on Wednesday, revealing that Saniger misled backers about the company’s core technology.

Founded in 2018, Nate attracted more than $50 million in venture capital, with high-profile investors like Coatue, Forerunner Ventures, and Renegade Partners—who led its $38 million Series A in 2021. The app promised a one-click checkout experience across all e-commerce platforms, supposedly driven by artificial intelligence.

But according to federal prosecutors in New York, the reality was far less futuristic. Instead of AI, the app relied almost entirely on hundreds of human contractors based in the Philippines to manually complete purchases.

Saniger allegedly told investors Nate used AI to perform transactions “without human intervention”, insisting only edge cases required human help. But prosecutors claim the actual automation rate was “effectively 0%”. Despite hiring data scientists and acquiring some AI tech, the app’s functionality never matched its promises.

Nate’s reliance on manual labour first came to light in a 2022 report by The Information, which detailed its dependence on human workers behind the scenes.

According to the DOJ, Nate ran out of money and sold its assets in early 2023, leaving investors with “near total” losses. Saniger, who has since moved on to become a managing partner at VC firm Buttercore Partners, has not commented on the charges. Buttercore also declined to respond.

The case highlights growing scrutiny around startups falsely marketing themselves as AI-powered. Similar revelations have surfaced in other industries, including an “AI” drive-through software startup that was, in fact, also powered by people behind the curtain.

Saniger’s indictment is the latest cautionary tale as investor appetite for AI surges—raising new questions about what counts as true innovation in the age of artificial intelligence.

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