Albert Saniger, founder and former CEO of AI-based shopping startup Nate, has been charged with defrauding investors by falsely claiming that his app used artificial intelligence to enable seamless online purchases, the U.S. Department of Justice (DOJ) announced on Wednesday. Launched in 2018, Nate positioned itself as a cutting-edge fintech tool that allowed users to buy products from any online retailer with a single click, using AI to complete transactions. The company attracted significant attention in the startup ecosystem, raising more than ₹415 crore from high-profile venture capital firms, including Coatue and Forerunner Ventures. Its most notable funding came in 2021, when it secured approx. ₹315 crore in a Series A round led by Renegade Partners.
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However, federal prosecutors from the Southern District of New York allege that Nate’s much-hyped AI was virtually non-existent. Instead of relying on artificial intelligence, the app depended heavily on a large team of human contractors based in the Philippines who manually processed purchases behind the scenes.
According to the indictment, Saniger misled investors by claiming the app functioned autonomously and that human involvement was limited to rare exceptions. In reality, prosecutors say the platform’s automation rate was effectively zero. Though Nate had acquired some AI tools and hired data science professionals, the core operations continued to rely on manual labor. This operational model had come under scrutiny before. A 2022 investigation by The Information had highlighted Nate’s reliance on offshore call centers, casting doubt on its AI claims.
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Saniger, who stepped down as CEO in 2023, is currently listed as a managing partner at Buttercore Partners, a venture capital firm. Neither he nor the firm responded to requests for comment. The DOJ also revealed that Nate’s financial troubles led to its collapse in January 2023, forcing the company to sell off its assets and leaving investors with what officials described as “near total losses.”
This case adds to a growing list of AI-focused startups accused of exaggerating their technological capabilities. Similar revelations have surfaced about other companies, including those in the fast food and legal tech industries, where human workers were quietly performing tasks marketed as automated. The charges against Saniger underscore a rising concern among regulators and investors about the AI startup boom and the potential for misleading claims in pursuit of funding.