Halpern v. Federal Reserve Bank of New York
U.S. District Court, Northern District of Illinois, Western Division · N.D. Ill. · Illinois bar guidance
Conduct
Pro se plaintiff cited a real case (Metrocentre) for a quotation that does not appear in the opinion or anywhere else.
Consequence
Action dismissed for lack of standing; pro se admonishment with explicit warning of sanctions exposure for future similar conduct.
Lesson
Judge Johnston treats a fabricated quotation from a real case as a Mode-2 hallucination meriting an on-the-record sanctions warning.
Verified May 7, 2026
- Citation
- Halpern v. Federal Reserve Bank of New York, No. 3:25-cv-50381 (N.D. Ill. Dec. 17, 2025) (Johnston, J.)
- Decided
- December 17, 2025
Summary
Pro se plaintiff Gregory Halpern brought eight counts against all twelve regional Federal Reserve Banks. In his motion response, supplemental memorandum, and motion for clarification he repeatedly cited Fed. Rsrv. Bank of St. Louis v. Metrocentre Improvement Dist. #1, 657 F.2d 183, for a quotation about the scope of 12 U.S.C. Section 632. Judge Iain D. Johnston found that the case citation was incorrect and that the quotation Halpern used "does not exist in that case or elsewhere." The court further observed that Metrocentre "does not even purport to discuss 12 U.S.C. Section 632."
- AI tool:
- Unspecified generative AI (court flagged "hallucinated by Artificial Intelligence" as the likely source)
What sanction did the court impose?
Action dismissed without prejudice for lack of Article III standing. Halpern given until January 15, 2026 to file an amended complaint. Defendants' motion to dismiss or consolidate denied as moot. The court declined to impose monetary sanctions, citing Halpern's pro se status, but admonished him "that quotations attributed to cases should only come directly from those cases" and noted he "has subjected himself to the possibility of sanctions" for any future similar conduct.
Why does Halpern v. Federal Reserve Bank of New York matter for law firms using AI?
Halpern is a Mode-2 hallucination case in the failure-mode taxonomy: the cited authority (Fed. Rsrv. Bank of St. Louis v. Metrocentre Improvement Dist. #1) is real, but the quoted language does not appear in the opinion and the case does not address the legal question for which it was cited. Judge Johnston named the likely AI provenance explicitly: “Whether this quotation was hallucinated by Artificial Intelligence, which seems likely to be the case, or whether it ‘reflects a widely circulated secondary description’ of the Metrocentre decisions, its use was improper, its attribution was wrong, and Halpern has subjected himself to the possibility of sanctions.”
The procedural posture matters for partners reading the case: the court did not sanction Halpern because of his pro se status, but the explicit warning that he “subjected himself to the possibility of sanctions” creates a record that any future filing in the matter, or any filing by Halpern in any related action, can be measured against. For firms with W.D. Ill. matters opposed by pro se filers, the case adds Judge Johnston to the list of N.D. Ill. judges willing to name AI hallucinations on the record and to issue prospective sanctions warnings. The opinion is short (six pages) and quotable, and the admonition (quotations attributed to cases should only come directly from those cases) is a useful in-house drafting standard regardless of jurisdiction.
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.
- Train staff to distinguish citation accuracy from quotation accuracy; AI tools commonly produce real cases paired with quotes that do not appear in the opinion.
- When briefing in N.D. Ill. cite the deepest source URL for any quoted language so opposing counsel and the court can verify the quote against the primary.
- Adopt the Halpern admonition as the in-house standard: quotations attributed to a case must come directly from that case.
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.