Strategic Funding Source, Inc. v. STI-NY, LLC
SC New York · May 28, 2026
- Jurisdiction
- state
- Court
- SC New York
- Record ID
- strategic-funding-source-inc-v-sti-ny-llc-2026-05-28
- Observed outcome
- Motion to vacate denied; defense counsel sanctioned to pay plaintiff's reasonable expenses and fees up to $2,000.
- Known monetary consequence
- $2,000
Why this matter warrants attention
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.
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).
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.
Failure modes and consequences
- Fake Citations
- Misrepresented Authority
- Contract
- Trial
- Monetary
- AI attribution
- Admitted
- Recorded tool
- Unidentified
- Known monetary consequence
- $2,000
- Procedural posture
- Motion to vacate default judgment; cross-motion to extend time to refile judgment.
Damien Charlotin case archive
Publisher document archive. The recorded document is hosted in the upstream publisher archive.
Open underlying sourceA recorded source link is not a substitute for checking the underlying order, filing, opinion, or disciplinary record.
What this record does—and does not—establish
Tool not specified in the court order.
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.
Latest evidence review: Primary Document Verified (high confidence).
Controls suggested by the public record
- Implement mandatory human verification for all case citations generated by AI tools.
- Establish a formal review process for AI-drafted submissions to ensure legal authority supports the asserted propositions.
- Ensure counsel directly supervises and verifies the work of paralegals or law students using AI tools.
- Respond promptly and substantively to court directives regarding identified errors in filings.