In a case that casts fresh scrutiny on AI hype in the enterprise space, the founder of a once-buzzy fintech startup is now facing federal fraud charges. Albert Saniger, founder and former CEO of New York-based company Nate, has been indicted for allegedly misleading investors about the true capabilities of the company’s “AI-powered” shopping app.
The Pitch: AI That Could Shop for You
Nate launched in 2018 with a bold promise: a universal online checkout system powered by artificial intelligence, enabling users to purchase from any e-commerce site with a single tap. The technology was marketed as fully autonomous — capable of completing transactions without human help.
That vision attracted more than $50 million in venture funding from high-profile firms such as Coatue Management and Renegade Partners. A 2021 Series A round brought in $38 million alone.
But according to the U.S. Department of Justice, it was all a façade.
The Reality: Human-Powered from the Start
The DOJ alleges that Nate’s operations were not driven by AI at all — but rather by a large team of human contractors based in the Philippines. These workers manually executed transactions on behalf of users, making the automation pitch a gross misrepresentation. Prosecutors say the actual AI automation rate was virtually zero.
Despite hiring data scientists and acquiring some AI components, the company leaned almost entirely on human labor while pitching its app as an advanced, intelligent system.
The fraud allegations also claim that Saniger personally assured investors that the AI worked reliably and required manual help only in rare “edge cases.” The indictment states that this false narrative allowed the company to secure funding, even as its internal processes remained far from the automated vision it sold.
The Collapse and Industry Repercussions
Nate’s financial runway ran dry by early 2023, forcing it to offload assets and leaving investors with “near total losses.” Saniger has not publicly responded to the charges and is currently listed as a managing partner at Buttercore Partners, a VC firm that has also declined comment.
This incident echoes other cases in the tech industry where companies overstated their AI capabilities. In recent years, multiple startups have come under fire for quietly relying on manual labor behind AI-branded products. Industry watchdogs and investors are increasingly sounding alarms over “pseudo-AI” — tools marketed as intelligent but powered by people behind the curtain.
Lessons for Enterprise Leaders and Investors
For the enterprise and investment community, this case is a sharp reminder of the need for technical due diligence. As AI becomes a centerpiece of enterprise strategy, so too does the risk of overpromising and underdelivering.
It’s also a signal to investors: not all that glitters in AI is gold — and in a market driven by rapid innovation and bold claims, verifying what’s actually under the hood is more important than ever.