U.S. prosecutors have charged a tech founder with fraud after alleging he relied on human contractors in the Philippines to mimic artificial intelligence, exposing how outsourced labour can be used to sustain misleading automation claims.
Albert Saniger, former chief executive of Nate Inc., was indicted in New York for allegedly misleading investors about the company’s use of proprietary AI to power its shopping app, which promised users the ability to complete online purchases with a single tap.
According to prosecutors, the app’s touted automation was effectively non-existent, with transactions instead carried out manually by teams of workers, many based in a call centre in the Philippines.
The setup allowed the company to maintain the appearance of an AI-driven service while raising more than $40 million from venture capital investors.
Investigators said Saniger concealed the lack of automation from investors and most employees by restricting access to internal metrics and describing performance data as a trade secret.
He also allegedly directed the development of basic bots in 2021 to support the largely manual operation during peak periods.
U.S. Attorney Matthew Podolsky said the case highlights the risks of false narratives around emerging technologies, while the Federal Bureau of Investigation described the scheme as relying on “smoke and mirrors” to sustain the illusion of automation.
The case also underscores the growing role of outsourced “human-in-the-loop” labour in global tech operations, particularly in markets such as the Philippines, a major hub for business process outsourcing.
While such models are widely used to train and support AI systems, the allegations point to how they can be misrepresented as fully automated solutions.
Saniger faces charges of securities fraud and wire fraud, each carrying a potential maximum sentence of 20 years. The U.S. Securities and Exchange Commission has filed a parallel civil case.
The charges are allegations, and Saniger is presumed innocent unless proven guilty.
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