AI computer
iStockphoto/Autthapol-Champathong

The former CEO of technology company Nate Inc. has been charged with fraud in New York in connection with an alleged AI-washing scheme.

Albert Saniger has been charged with one count of securities fraud and one count of wire fraud for allegedly duping investors by making false claims about the company’s AI technology and capabilities when raising capital from them.

According to an indictment filed by the U.S. attorney’s office for the Southern District of New York, between 2019 and 2022, Saniger allegedly raised more than US$40 million from venture capital investors, based on false representations about the company’s AI capabilities. 

While the firm claimed to use AI to autonomously execute e-commerce transactions on behalf of clients, U.S. authorities alleged that the tech didn’t work — and that, instead, the company used offshore workers to manually process transactions.

After this was exposed, the company ultimately ran out of money in January 2023 and was forced to wind down and sell its assets.

“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. This type of deception not only victimizes innocent investors, it diverts capital from legitimate startups, makes investors skeptical of real breakthroughs, and ultimately impedes the progress of AI development,” said Matthew Podolsky, acting U.S. attorney for the SDNY, in a release.

The U.S. Securities and Exchange Commission also filed a parallel civil action in the case, the U.S. attorney’s office said.

None of the allegations have been proven.