De Ford v. Koutoulas
U.S. District Court, Middle District of Florida (Orlando Division) · M.D. Fla. · Florida bar guidance
Conduct
Defendants, one of them a licensed attorney, submitted fabricated authority in at least eight filings, three of them after a written warning.
Consequence
Default judgment against Koutoulas and a fee award; fabricated authority was one ground among many, following an earlier written warning.
Lesson
A court's caution about hallucinated citations stays on the record, and later fabrications can join a broader case for terminating sanctions.
Verified September 28, 2026
- Citation
- De Ford v. Koutoulas, No. 6:22-cv-00652-PGB-DCI, Order (M.D. Fla. Aug. 4, 2026) (Byron, J.), ECF No. 682; Order (M.D. Fla. Dec. 2, 2025), ECF No. 531
- Decided
- August 4, 2026
Summary
In a certified securities class action over the "Let's Go Brandon" cryptocurrency, defendants James Koutoulas and LGBCoin, LTD argued in an amended summary judgment motion that LGBCoin was a meme coin rather than a security, citing "In re Dogecoin Securities Litigation" and "In re Shiba Inu Securities Litigation," which Judge Paul G. Byron could not locate; the Dogecoin case number led to an unrelated disability-rights suit. Plaintiffs identified a third, "In re Uniswap Labs Litigation," and defendants did not dispute that the citations were AI hallucinations. In a December 2, 2025 order denying summary judgment, the court cautioned that citing nonexistent cases is a misrepresentation sanctionable under Rule 11(c) and violates the Local Rules and Florida Bar Rules 4-1.1, 4-3.3, and 4-8.4. The August 2026 sanctions order found that "Defendants Koutoulas and LGBCoin LTD submitted fabricated authority across at least eight separate filings," three of which (a reconsideration motion and two bifurcation motions) were filed after the December warning. Per the docket, some of those filings were made through counsel; Koutoulas, a licensed attorney who described himself as LGBCoin's in-house counsel, later proceeded pro se after his lawyer resigned.
- AI tool:
- Not identified (the court said it "believes" the cited cases were "hallucinated from Artificial Intelligence" and later found fabricated authority in at least eight filings, but made no finding of AI use; no admission recorded)
- Sanction amount:
- Default judgment against defendant James Koutoulas on the Third Amended Complaint; plaintiffs' reasonable attorneys' fees and costs for his discovery violations, amount to be set on motion
What sanction did the court impose?
On August 4, 2026, the court granted plaintiffs' motion for sanctions and, under its inherent authority and Rule 37(b) and (c), directed entry of default judgment against Koutoulas on the Third Amended Complaint, finding his conduct "egregious" and "undertaken in bad faith." Plaintiffs were awarded reasonable attorneys' fees and costs for his discovery violations, in an amount to be determined on motion, and the order's introduction also grants leave to petition for fees under 28 U.S.C. section 1927. The fabricated citations, set out under the heading "Hallucinated Cases," were "just one of Defendant Koutoulas's many sanctionable acts"; the order also rests on his alteration of the court-approved class notice, disparaging of the court to class members, misrepresentations of law and fact, discovery violations, and years of vexatious litigation. Plaintiffs did not seek sanctions against LGBCoin, LTD.
Why does De Ford v. Koutoulas matter for law firms using AI?
De Ford shows a warning about fabricated citations followed by a terminating sanction. In December 2025, footnote 9 of the order denying the defendants’ amended summary judgment motion identified two cited securities cases the court “believes are hallucinated from Artificial Intelligence,” noted that the defendants had not denied the plaintiffs’ AI-hallucination allegations, and cautioned that “if Defendants continue to use such unethical practices in later briefings, the Court may impose appropriate sanctions against Defendants.” The August 2026 sanctions order found fabricated authority “across at least eight separate filings,” and observed that “[f]ederal courts around the country are taking a firm stance against AI-hallucinated case citations.”
The fabricated citations were not the principal ground for the default judgment. The court’s conclusion rests on a broader record: Koutoulas posted a modified version of the court-approved class notice, identified the presiding judge by name to class members, misrepresented legal materials in seeking reconsideration, violated discovery obligations, and litigated vexatiously for years. The hallucinated cases are “just one of Defendant Koutoulas’s many sanctionable acts.”
For firms, the relevant thread is status. Koutoulas “is a licensed attorney, and he persisted in advancing frivolous arguments pro se after his lawyer resigned,” and “is not a mere client in the instant action; he is actively serving as legal counsel for himself.” Firms documenting compliance may wish to consider that a court may weigh a lawyer-party’s professional status when it assesses that party’s filings.
Implications for your firm
Operational steps a firm reading this case may wish to consider documenting. Strategic and rule-application calls belong to your firm's attorneys.
- Document the response to any judicial caution about citations. Per the docket, three of the eight filings the court identified came after the December 2025 warning, and the August 2026 order counted the fabricated authority among Koutoulas's sanctionable acts.
- Consider how a lawyer-party's status affects a court's view of the record; the court noted Koutoulas 'cannot blame this on his lawyer' because he is a licensed attorney who persisted pro se after his lawyer resigned.
- Review in-house counsel verification practices where the lawyer is also a party; the court treated Koutoulas as counsel for himself, not as a mere client.
Sources
Primary sources
Further reading
Source PDF is a Westlaw printout mirrored from the Damien Charlotin hallucination database. We are working to add the underlying court docket (PACER, CourtListener, or court website) as a second source.