Sullivan & Cromwell — one of America's most powerful and prestigious law firms — has been forced to apologize to a federal judge after artificial intelligence hallucinations contaminated a major court filing in the high-profile Prince Group case, misquoting federal law and fabricating case citations.

BY SAMUEL A. LÓPEZ ◆ USA HERALD ◆ INVESTIGATIVE DESK ◆ LEGAL & NATIONAL SECURITY

Here's something that should make every client of a major law firm stop and think twice: Sullivan & Cromwell — a firm with more than 900 lawyers and one of the most storied reputations in American corporate law — just admitted to a federal judge that artificial intelligence hallucinated its way into one of its court filings. And it wasn't caught by S&C's own team. It was caught by opposing counsel.

The firm's co-head of global restructuring, Andrew Dietderich, sent a letter on Saturday to U.S. Bankruptcy Judge Martin Glenn in New York, issuing a direct apology for a cascade of errors found in a filing dated April 9.

The mistakes — which included misquoting the US bankruptcy code and citing cases that were inaccurately summarized or incorrectly attributed — were the product of AI-generated content that slipped through what the firm now admits was a failed review process.

"We deeply regret that this has occurred. I apologize on behalf of our entire team."

— ANDREW DIETDERICH, CO-HEAD OF GLOBAL RESTRUCTURING, SULLIVAN & CROMWELL

Let that sink in. A firm that charges some of the highest billing rates in the world — a firm that corporations, governments, and billionaires trust with their most critical legal battles — let an AI system fabricate legal citations in a federal court filing. And no one on the S&C team caught it.

WHAT HAPPENED

The errors were uncovered by the law firm Boies Schiller Flexner (BSF), which was also working on the case. BSF flagged multiple instances in which S&C had filed inaccurately summarized conclusions drawn from other cases — the kind of subtle, authoritative-sounding distortions that AI language models are notorious for producing.

In his letter, Dietderich acknowledged that S&C maintains "comprehensive policies and training requirements governing the use of AI tools in legal work" — safeguards specifically designed to prevent exactly this kind of catastrophic error.

The problem? Those policies were not followed. And a secondary review process, which should have served as a backstop, also failed to catch the inaccurate AI-generated citations.

⚠ CRITICAL DISCLOSURE

The letter did not identify which AI program was used, which lawyers prepared the filing, or whether any internal disciplinary action has been taken against those responsible. These are questions the public — and every client of Sullivan & Cromwell — deserves answered.

S&C later filed a corrected version with the court. Lawyers are not prohibited from using AI tools, but under professional ethics rules, they are absolutely bound to ensure the accuracy and integrity of every document submitted to a court. There are no exceptions. There is no "the AI made me do it" defense.

THE CASE: PRINCE GROUP & CHEN ZHI

This wasn't some routine matter. The filing at the center of this scandal involves S&C's representation of liquidators appointed by legal authorities in the British Virgin Islands who are pursuing actions against Prince Group — a company owned by the Chinese-born businessman Chen Zhi.

⚡ FAST FACTS: THE PRINCE GROUP CASE

• US prosecutors charged Chen Zhi with wire fraud and money laundering, alleging he directed forced-labour scam compounds across Cambodia that stole billions of dollars from victims in the United States and worldwide.
• Prince Group has denied the allegations, calling them baseless, and stated that Chen committed no wrongdoing.
• US prosecutors separately filed legal action to seize nearly $9 billion in Bitcoin alleged to represent proceeds of Prince Group's criminal activity — one of the largest crypto seizure actions in history.
• Chen Zhi was arrested earlier this year in Cambodia and subsequently extradited to China upon the request of Chinese authorities.

• Sullivan & Cromwell's corrupted filing was dated April 9; the errors were flagged by Boies Schiller Flexner and reported to Judge Martin Glenn on April 19.

THE BIGGER PICTURE

I've been watching the intersection of artificial intelligence and the legal system for years now, and let me be direct with you: this is not an isolated incident. It is the continuation of a pattern that courts, clients, and the legal profession refuse to take seriously enough — until something like this happens in a case of this magnitude.

We've seen AI hallucinations produce fake case citations before. We've seen lawyers embarrassed before judges. But Sullivan & Cromwell is not a small firm or a solo practitioner caught off guard by new technology. This is one of the most powerful law firms on the planet, with the resources to build ironclad review protocols. And still, the system failed — catastrophically and publicly.

The question every corporate client, every federal judge, and every legal ethics board should now be asking is this: If it can happen at Sullivan & Cromwell, where can't it happen?

Dietderich wrote that he personally called BSF on Friday to thank them for catching the errors and to apologize directly. That's a gracious gesture. But gratitude doesn't restore the integrity of a filing that went before a federal judge riddled with fabricated legal authority. It doesn't answer the questions about which AI tool was used, who approved the document, and what accountability, if any, is being applied internally.

The legal system runs on trust — trust that what is submitted to a court is accurate, verified, and honest. AI hallucinations are a direct assault on that trust. And the legal profession can no longer afford to treat this as a cautionary tale to share at bar association dinners. It is an active, ongoing crisis.

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