Philippine Workers Behind the 'AI Washing', App Founder Faces $40M Fraud Charges

- Albert Saniger, Founder of Nate, Indicted for Defrauding $40 Million in AI-Based E-commerce App Scam - Facing Potential 20-Year Prison Sentence for Deceiving Investors and Exposing Manual Operations with Filipino Workforce [Unblock Media] Albert Saniger, founder and former CEO of Nate, has been charged by U.S. authorities with securities and wire fraud for deceiving investors regarding an AI-based e-commerce app and subsequently defrauding over $40 million. He claimed that the Nate app completely automated online purchases through AI, but it was revealed that transactions were manually handled by a workforce in the Philippines. This incident highlights the regulatory authorities' strong crackdown on exaggerated AI claims, known as "AI Washing," and has significant implications for the tech industry at large. According to the U.S. Department of Justice, Barcelona-born Albert Saniger misled investors into believing the Nate app, launched in 2020, operated as a fully functional "universal shopping cart" powered by AI, but the actual automation rate was nearly zero. Acting U.S. Attorney for the Southern District of New York, Podolsky, stated that Saniger exploited the allure and promise of AI technology to portray an innovative image while instructing his employees to conceal the manual processing by Filipino call center contractors. For these fraud charges, Saniger faces up to 20 years in prison. The SEC (U.S. Securities and Exchange Commission) has requested the court to ban him from participating in similar ventures and to return the investors' funds. Following media scrutiny over the app's functionality, Nate ceased operations in January 2023 and laid off all its employees. This indictment occurs amid increased enforcement by U.S. regulatory authorities (DOJ, SEC) against "AI Washing," where tech companies overstate their AI capabilities. The authorities view deceitful practices that mislead investors about AI technology as damaging to market trust and genuine innovation, indicating severe legal consequences for those involved. Acting Attorney Podolsky emphasized that such fraud harms innocent investors, distorts the capital that should benefit legitimate startups, and undermines trust in actual AI advancements. AI-related fraud cases like Nate's severely undermine trust in the development and broader industry of AI technology. Financial sectors are already experiencing deepfake fraud, and biased AI algorithms in hiring and healthcare are causing fairness issues across various industries. While the industry is making multifaceted efforts in detection technology development, ensuring algorithm fairness, and increasing transparency, the Nate incident could detract from these efforts. In conclusion, this case underscores the importance of actual implementation capability and transparent information disclosure for companies promoting AI technology for investment. It also signifies the necessity for strict oversight and accountability to ensure healthy progress in AI technology and to protect investors.