A fintech startup, nate, once boasting about its AI prowess and securing a whopping $40 million in funding, is now facing serious allegations. Federal prosecutors claim the company was built on smoke and mirrors, allegedly deceiving investors with promises of cutting-edge AI while secretly relying on human workers. Albert Saniger, the 35-year-old founder and former CEO, stands accused of orchestrating a scheme to defraud investors by making false statements about nate’s AI capabilities.
The nate app, marketed as an e-commerce solution streamlining online shopping with a single AI-powered tap, was allegedly far from the AI marvel it claimed to be. Saniger reportedly lured investors with promises of custom-built “deep learning models” capable of lightning-fast transactions. However, the indictment reveals a different story: the app heavily leaned on overseas workers manually processing transactions, giving users a false impression of automation.
To keep up the illusion, Saniger allegedly instructed employees to conceal the reliance on human labor while touting an AI-driven product capable of handling thousands of daily transactions. When a tropical storm disrupted operations at a Philippines call center in 2021, a new center was established in Romania to manage the backlog. Transactions from investors were even prioritized to avert suspicion.
The Justice Department has slammed Saniger, accusing him of abusing his position to perpetuate a scheme built on deception. The company’s downfall in 2023 resulted in near-total losses for investors.
This case highlights a growing concern: the gap between the AI hype and the reality. While AI investment surges and market share expands, companies are increasingly leveraging cheap overseas labor to simulate AI functionality. Nate isn’t alone; reports have exposed ‘digital sweatshops’ refining AI models for major tech companies. The case serves as a harsh reminder that not everything that glitters is gold, and investors need to look beyond the hype.