Law firm Sullivan & Cromwell has admitted to a U.S. bankruptcy court that a recent filing in a high-profile case contained AI-generated errors, including fabricated citations. The firm's restructuring head, Andrew Dietderich, wrote to Judge Martin Glenn acknowledging "hallucinations" that produced fictitious authorities and distorted existing ones. The disclosure occurred in a letter to the U.S. Bankruptcy Court for the Southern District of New York, where the firm represents court-appointed liquidators. The mistakes appeared in an April 9 motion, and the firm stated its AI use rules were not followed.
The case involves efforts by liquidators to pursue claims tied to Prince Group and its owner, Chen Zhi. Prosecutors allege Chen directed scam compounds targeting victims globally and are seeking billions in cryptocurrency linked to these activities. Chen was detained earlier this year in Cambodia and repatriated to China.
Through Chapter 15 proceedings, the liquidators seek recognition of their authority for creditors and alleged victims. Prince Group has been linked by U.S. authorities to large-scale fraud operations in Southeast Asia and sanctioned by the UK and U.S. governments.
A corrected submission revealed the April filing misstated case law and included citations without supporting propositions, some with no basis at all. The firm withdrew the original motion and filed a revised version. Lawyers for Prince Group and Chen initially identified the errors, noting language attributed to the U.S. Bankruptcy Code could not be found and authorities were mischaracterized. They argued the timing of the correction was prejudicial as it followed their objections.
Sullivan & Cromwell stated its policies require AI training and independent verification of all output, emphasizing the risks of "hallucinations" and instructing lawyers to "trust nothing and verify everything."