Judge Chastises Gary Ng for Inaccurate AI Legal Filings
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Justice Alexander Ilchenko of the Ontario Superior Court of Justice in Bankruptcy and Insolvency ruled on March 2 that Gary Ng's conduct was "improper, unnecessary, taken through negligence" and lengthened proceedings unnecessarily, after Ng "admitted using AI to generate his materials" and submitted them "literally at the 11th hour" without reading the cases cited
- Justice Ilchenko said he could not locate a reference matching one case Ng submitted, and the lawyer for trustee KSV Restructuring Inc. told the court there "may have been several other hallucinatory AI citations" in the filings
- Ng, a former co-owner of failed private lender Bridging Finance Inc. who bought a 50-per-cent stake in 2019, was declared bankrupt in April 2023 owing $27.2 million; his trustee has recovered only about $131,000, mostly from selling his car for $119,000 and auctioning his vintage wine collection for $9,200
- In a December 2024 trustee interview, Ng "plainly admitted" to bribing Bridging's husband-and-wife leaders David and Natasha Sharpe with "a couple hundred grand here and there," a gold Rolex, and a diamond necklace to bypass due diligence on more than $113 million in loans where he had lied about the collateral
- Justice Ilchenko rejected Ng's request to impose "guardrails" on KSV, calling the motion "doomed to failure" at four separate points, and ordered Ng to pay $12,366.72 in costs by April 2; Ng abandoned the motion the day after the hearing
- A CIRO predecessor fined Ng $5 million in 2022 for fraudulent conduct related to loan financing, plus $194,000 in costs, and he still has not paid; he also faces pending criminal fraud and money laundering charges laid in 2022 by the RCMP's Integrated Market Enforcement Team, with a court appearance set the day after the bankruptcy ruling
Why it matters: The decision is one of the first Canadian court rulings to explicitly penalize AI-fabricated legal citations with a cost award, and it lands on a bankrupt who has repaid essentially nothing of his $27.2 million in debts despite owing the bulk to victims of the Bridging Finance collapse. For creditors and the bankruptcy estate, the $12,366.72 cost order is a small but tangible recovery from an estate where the trustee has so far netted only ~$131,000 — and it telegraphs to self-represented filers that judges will treat AI-hallucinated cases as sanctionable conduct, not harmless shortcuts.
