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HomeCasesStrategic Funding Source, Inc. v. STI-NY, LLC
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Corpus matter record

Strategic Funding Source, Inc. v. STI-NY, LLC

SC New York · May 28, 2026

NY / stateEditorial impact: mediumfake citationsmisrepresented authoritycontracttrialMonetary
Direct answer

What happened in this matter?

The court sanctioned defense counsel for submitting multiple erroneous and fabricated case citations in motion papers. Counsel admitted to using AI in the drafting process and failed to comply with the court's directive to correct the record. The court ordered counsel to reimburse the plaintiff's reasonable expenses and fees, not to exceed $2,000.

Why the court cared
The court found that counsel's submission of multiple erroneous and fabricated citations, coupled with a failure to respond to the court's directive to address these errors, constituted a lack of diligence warranting sanctions under 22 NYCRR 130-1.1(c)(3).
Why it matters now
This case illustrates the judicial consequences of failing to verify AI-generated legal research. It highlights that counsel remains responsible for the accuracy of all filings, regardless of the drafting tools used, and that failure to rectify identified errors can lead to monetary sanctions.

Why this matter is tracked

In a motion to vacate a default judgment, the Supreme Court of New York identified multiple erroneous and fabricated case citations in the defendants' submissions. During oral argument, defense counsel acknowledged the use of AI in drafting the motion papers, claiming oversight by a paralegal or law student. Despite the court granting counsel 24 hours to address the identified citation errors, counsel failed to provide any response. Finding that counsel's conduct violated 22 NYCRR 130-1.1(c)(3) due to a lack of diligence, the court denied the motion to vacate and sanctioned defense counsel, Jerome G. Lee, Jr., ordering reimbursement of the plaintiff's reasonable expenses and counsel fees, capped at $2,000.00.

Operational lesson

This case illustrates the judicial consequences of failing to verify AI-generated legal research. It highlights that counsel remains responsible for the accuracy of all filings, regardless of the drafting tools used, and that failure to rectify identified errors can lead to monetary sanctions.

Record details

New YorkSingle-state evidence scope
Explore NYOpen its source-linked jurisdiction page and related matters.
CourtSC New York
Jurisdictionstate
Circuit2nd Circuit
DateMay 28, 2026
UN
AI toolUnidentified
Party typeLawyer
OutcomeMotion to vacate denied; defense counsel sanctioned to pay plaintiff's reasonable expenses and fees up to $2,000.
Known amount$2,000
Professional sanctionCounsel sanctioned for lack of diligence under 22 NYCRR 130-1.1(c)(3).
Attribution boundary

What the record establishes about AI use

admitted

Tool not specified in the court order.

Procedural posture

Motion to vacate default judgment; cross-motion to extend time to refile judgment.

Correction behavior

Correction behavior is not separately verified in the current record.

Tracked discrepancy record

10 citation, quotation, or authority issues are recorded in the source dataset.

  1. Misrepresented: Case Law | Defendants cited Citibank, N.A. v Velazquez, 150 AD3d 813, 814 [2d Dept 2017], but the correct authority is Citibank, N.A. v Wood, 150 AD3d 813, 814 [2d Dept 2017]; court rejected the miscitation.
  2. Misrepresented: Case Law | Defendants cited Deutsche Bank Natl. Trust Co. v Guevara, 137 AD3d 460, 461 [1st Dept 2016], but the proper citation is D. Penguin Bros. Ltd. v Natl. Black United Fund, Inc., 137 AD3d 460, 461 [1st Dept 2016]; court found the citation does not support defendants' proposition.
  3. Misrepresented: Case Law | Defendants cited 'Fidelity Natl. Title, Ins. Co. v Valtech Research, Inc., 73 AD3d 521, 522 [1st Dept 2010]' which yielded no results; Westlaw/Lexis correct the cite to Popowich v Korman, 73 AD3d 515, 522 [1st Dept 2010].
  4. Misrepresented: Case Law | Defendants cited Deutsche Bank Natl. Trust Co. v Russo, 121 AD3d 506, 507 [1st Dept 2014] for a proposition not found in the reported decision; the court identified the actual decision as Sari v Alishaev Bros., Inc., 121 AD3d 506 [1st Dept 2014] which does not support defendants' claim.
  5. Misrepresented: Case Law | Defendants cited OneWestBank, FSB v Kanapathipillai, 188 AD3d 982, 984 [2d Dept 2020], but the proper citation is Citimortgage, Inc. v Zaibak, 188 AD3d 982, 983 [2d Dept 2020]; court noted the miscitation and inapplicability.
  6. Misrepresented: Case Law | Defendants cite 'Deutsche Bank Natl. Trust Co. v Russo, 121 AD3d 506, 507 [1st Dept 2014]' to support a proposition, but the decision at that citation is Sari v Alishaev Bros., Inc., 121 AD3d 506, 506 [1st Dept 2014], which does not support the asserted point.
  7. Misrepresented: Case Law | Paper cites 'OneWestBank, FSB v Kanapathipillai, 188 AD3d 982, 984 [2d Dept 2020]' but the correct decision at that citation is Citimortgage, Inc. v Zaibak, 188 AD3d 982, 983 [2d Dept 2020]; miscitation noted.
  8. Misrepresented: Case Law | Defendants cited 'Citibank, N.A. v Velazquez, 150 AD3d 813, 814 [2d Dept 2017]' when the correct citation is to Citibank, N.A. v Wood, 150 AD3d 813, 814 [2d Dept 2017]; the case was misattributed.
Show 2 additional discrepancies
  1. Misrepresented: Case Law | Paper cites 'Deutsche Bank Natl. Trust Co. v Guevara, 137 AD3d 460, 461 [1st Dept 2016]' but the correct decision at that citation is D. Penguin Bros. Ltd. v Natl. Black United Fund, Inc., 137 AD3d 460, 461 [1st Dept 2016]; proposition asserted is unsupported.
  2. Fabricated: Case Law | Citation 'Fidelity Natl. Title, Ins. Co. v Valtech Research, Inc., 73 AD3d 521, 522 [1st Dept 2010]' yields no results and was corrected by court to Popowich v Korman, 73 AD3d 515, 522 [1st Dept 2010]; appears fabricated/miscited.

Questions this record answers

What happened in Strategic Funding Source, Inc. v. STI-NY, LLC?
The court sanctioned defense counsel for submitting multiple erroneous and fabricated case citations in motion papers. Counsel admitted to using AI in the drafting process and failed to comply with the court's directive to correct the record. The court ordered counsel to reimburse the plaintiff's reasonable expenses and fees, not to exceed $2,000.
Why does Strategic Funding Source, Inc. v. STI-NY, LLC matter for legal AI risk?
This case illustrates the judicial consequences of failing to verify AI-generated legal research. It highlights that counsel remains responsible for the accuracy of all filings, regardless of the drafting tools used, and that failure to rectify identified errors can lead to monetary sanctions.
What does the public record establish about Strategic Funding Source, Inc. v. STI-NY, LLC?
The record summarizes the outcome described in the linked public source. The recorded document is hosted in the upstream publisher archive. This page is not a substitute for the complete docket, subsequent history, or jurisdiction-specific advice.
Which source supports this Strategic Funding Source, Inc. v. STI-NY, LLC summary?
The recorded source is Damien Charlotin case archive. It is classified as publisher document archive; review the linked material and subsequent docket history before relying on this summary.

Related matters

Related by court, jurisdiction, tool, or classified failure pattern. Similarity does not imply the same facts or outcome.

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