The Watch Mother Fuckers Onlineformer CEO of fintech app Nate has been charged with fraud for making misleading claims about the app's artificial intelligence technology — or lack thereof.
In a bizarre twist from the usual AI narrative, the FBI alleges that this time human beings were doing the work of AI, and not the other way around.
According to a press release from the U.S. Attorney's Office, Southern District of New York, Albert Saniger has been indicted for a scheme to defraud investors. “As alleged, Albert Saniger misled investors by exploiting the promise and allure of AI technology to build a false narrative about innovation that never existed," Acting U.S. Attorney Matthew Podolsky said in the release.
Government attorneys say Nate claimed to use AI technology to complete the e-commerce checkout process for customers. In reality, they allege the company hired a team of human contractors in the Philippines to do the work. In total, Saniger raised more than $40 million from investors.
"In truth, Nate relied heavily on teams of human workers — primarily located overseas — to manually process transactions in secret, mimicking what users believed was being done by automation," said FBI Assistant Director in Charge Christopher G. Raia. "Saniger used hundreds of contractors, or 'purchasing assistants,' in a call center located in the Philippines to manually complete purchases occurring over the Nate app."
Nate isn't the only startup accused of masking human labor as "AI automation." Drive-thru company Presto, with clients like Carl's Jr., Hardee's, Del Taco, and Checkers, claimed to automate drive-thru orders with AI, but reportedly relied on outsourced workers (also in the Philippines) for 70 percent of its orders, as Bloombergreported in 2023. And legal startup EvenUp, which purportedly automated personal injury claims, "relied on humans to complete much of the work," according to a 2024 Business Insider report.
Credit: Erik Von Weber / Getty Images The much-hyped AI industry promises to reduce labor costs and increase efficiency across industries. In turn, this has incentivized sketchy startup practices as opportunistic entrepreneurs market their apps based on future-facing potential.
The Information first reported that the Nate app might have "exaggerated tech capabilities to investors" back in 2022. At the time, e-commerce was experiencing a "pandemic-fueled shopping boom," the outlet reported, making fintech startups irresistibly appealing to venture capitalists. According to the new indictment, Saniger "concealed" the app's near zero percent automation rate from investors and even his own employees, restricting Nate's automation data as a "trade secret."
The "fake it till you make it" mentality is a well-established doctrine in the startup playbook, but clearly a risky one, at least, according to the FBI and the U.S. Attorney's Office.
Instead of raising money, Saniger is now facing one charge each of securities fraud and wire fraud; both charges carry maximum sentences of 20 years in prison.
Mashable attempted to contact Saniger, and we'll update this article if we get a response.
Topics Artificial Intelligence Government
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