| The daily disasters, glitches, and money pits of the AI boom. |
| TUESDAY, OCTOBER 27, 2026 |
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| DAMAGE REPORT |
| How millions get wasted by AI. |
| 35 of 42 | citations in one HHS brief that a labor board found fake, wrong or beside the point |
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| $5.5B | top end of the AI data center IPO Firmus pulled this month |
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| 13,300+ | Texas reading test scores raised on rescore; computers first graded 58% |
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| 2,217 | court cases with AI-invented law, as of Sunday |
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| TODAY'S DISASTER |
| HHS Filed a Brief With 35 Bad Citations Out of 42 |
| When did you last check a footnote? I check every one that goes into this letter… and today I’m glad I do. |
| Last year the U.S. health department, HHS, told its union staff to be back at their desks full time. Their union, the National Treasury Employees Union, said that broke its deal. And in January an arbitrator, Michael J. Falvo, agreed… he told HHS to let them work from home again. |
| So HHS took it to the Federal Labor Relations Authority. Let me show you what it filed. |
| The brief carried 42 legal or record citations. The board found 35 of them “fictitious, erroneous, or irrelevant.” Read that again. Ten were pure fiction. One pointed to a 2001 Air Force case, 57 FLRA 469… from the board’s own books. It doesn’t exist. |
| No engineer told the software to invent a case. It wrote what a case sounds like. The board thinks HHS used an AI writing tool… and HHS sent the brief anyway. |
| So who caught it? Chairman Colleen Duffy Kiko and Member Anne Wagner. Their board checked all 42 citations. Last Wednesday it threw out every point HHS made. But HHS has until December 21 to appeal. |
| AI CAUGHT LYING |
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| I check one list before I write this part of the letter. Damien Charlotin counts every court case where a machine made up the law… and as of Sunday, he’s at 2,217. Let me show you three that came with a bill to pay. |
| Start in Oregon. Lawyer Stephen Brigandi filed three briefs in a fight between a woman and her two brothers over the family winery. They held 15 cases that don’t exist and eight made-up quotes. When the other side flagged them, he cut the fakes and filed again… and Judge Mark D. Clarke called that a cover-up attempt. On December 12 last year he told Brigandi to pay $80,000 in fees, with fines on top of that. |
| Then Toronto. Justice Frederick Myers couldn’t find several cases in a brief from lawyer Mary Hyun-Sook Lee. She told the court her staff used ChatGPT behind her back. But she’d written it herself. On July 16 the Law Society Tribunal suspended her for six months, with C$10,000 in costs. |
| And Ontario again. Shahryar Mazaheri, a suspended lawyer, fought the Law Society with papers that AI wrote for him. The tribunal called the result “gibberish”… and ordered him to pay C$31,150 in costs. I can’t top that one. |
| AI CASH BURN |
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| Firmus planned to raise as much as $5.5 billion for AI data centers. Then it pulled the IPO. |
| I’ve watched this one since early October, and here’s how it went. Bloomberg reported the $5.5 billion top end on October 8. A few days later Firmus called it off and blamed the shaky market. The Wall Street Journal says it would have been Australia’s biggest IPO in 30 years… and its backers include Coatue and Blackstone. |
| And Firmus isn’t alone. AirTrunk, another Blackstone bet, pushed its US$1.5 billion Singapore listing into next year. SoftBank’s SB Energy put off its IPO too… its filing showed no data centers running, with over $400 billion in signed orders on the books. Would you buy a landlord with no buildings? I wouldn’t. |
| Then look at what happened last Thursday. The chip stock index fell 6.3% in one day on fears about AI costs… and the Nasdaq dropped 2.68%. So the people with the money are getting warier… and I don’t blame them one bit. |
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| AI ROLLBACK TRACKER |
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| › South Africa pulled its draft national AI policy in late April. Can you picture an AI policy with sources made up by AI? News24 found at least six of its 67 research sources don’t exist… and the journals said those pieces never ran. So Minister Solly Malatsi took it back, and some staff were suspended. |
| › New Brunswick is fixing its 12-year education plan this month. Microsoft 365 Copilot set up the reading list and slipped in two wrong entries. Vincent Geiger, who teaches in Australia, found an article with his name on it, in a journal he’d never heard of. And the department admits the people who read it over missed both. |
| › The Los Angeles school district switched off its “Ed” chatbot on June 14, 2024. The district had a $6 million, five-year deal with AllHere and had put $4 million in… and AllHere sent most of its staff home that same day. AllHere blamed its finances. |
| › CNET paused its AI writer in January 2023, after Futurism broke the story. Did you read one back then? CNET ended up fixing 41 of the 77 stories the tool wrote… money pieces like “What Is Compound Interest?” among them. |
| AI VIDEO SLOP |
| The week in machine-made video. Watch the hands. |
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| ► X, OCT 24, NO VIEW COUNT PUBLISHED |
| An X account posing as a doctor posted footage of the inside of your throat. @Doctors__squad, posting as “Dr Honey choudhary,” showed food vanish… then slide from the food pipe into the windpipe. Your body doesn’t work that way. Hive scored the clip 99.9% likely AI. Would you have known? Lead Stories did, and it said so. Lead Stories › |
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INDIA
A FAKE
SECURITY CHIEF |
| ► X, 380K+ VIEWS |
| An X user posted a fake video of India’s top security aide, Ajit Doval, making threats. The fake Doval went after two activists, Saurav Das and Ashutosh Ranka. But the pictures came from a 2019 video… and Hive scored the voice 99.4% likely AI. PIB Fact Check and The Quint called it. The Quint › |
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| ► X, OCT 5, NO VIEW COUNT PUBLISHED |
| A ship swamped by a giant wave went around X as a wonder of medieval sailing. @BroWire_ posted it on October 5 and asked how anybody crossed an ocean that way. The oldest copy Lead Stories found came from an AI account, @innovate.oi… and that one was labeled AI. Hive scored it 81.1% likely AI. That voyage never happened. Lead Stories › |
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| ALSO MAKING THE ROUNDS |
| Daniel Wong’s campaign shared an AI video of Black supporters praising him, in the race for Fort Bend County Judge in Texas. The campaign says a fan from outside the campaign made it and sent it in. But his rival, Dexter McCoy, wants the DA to look into it, and FOX 26 reported it Monday. |
| The Senate Leadership Fund paid for an AI ad of Sen. Jon Ossoff in a salon chair, getting his hair and makeup done… a scene that never happened. Ossoff called deepfake ads “deeply troubling.” |
| A fake Lt Gen Girish Kalia told X that China had taken parts of Arunachal Pradesh. He never said it. The pictures came from a 2023 talk he gave the press in Kupwara… and that one was about the Line of Control. So the Indian Army’s own fact-check team said it was fake on Sunday. |
| And would you trust a bull? A Facebook reel sold an AI clip as camera film of a bull shoving a young man out of harm’s way. The first page to post it had put an AI label on it… and CyberPeace flagged the fake. |
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| AI IMAGE SLOP |
| Pictures a computer drew, and a brand paid for. |
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SAN DIEGUITO
A BAKE-SALE
CANDIDATE |
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| School chief David Ray Miyashiro’s flyer put his rival behind a table of baked goods. The flyer calls Amy Flicker a “Non-profit volunteer”… and him a “District superintendent.” Flicker is running for the same seat. Tiny print at the bottom says the image is AI-made or altered. So the San Dieguito Faculty Association, the teachers’ union, called it sexist. FOX 5 › |
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FINLAND
A HALLOWEEN VILLAGE
IN A GARAGE |
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| Sadepäivä sold a Halloween village in Finland with AI art. About 3,000 people paid 20 euros each to walk a parking garage at the Mylly mall in Raisio. What did they find? A few cheap props. Owner Mika Metsämäki told Yle he’ll offer a free return visit… but no refunds. Yle › |
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MADISON
TWO STATE
CAPITOLS |
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| Madison’s police monitor put an AI skyline with two state Capitols on her yearly report. Wisconsin has one, as you know. The acting monitor, Meeka Glass, owned up and swapped the cover after people in town spoke up. Last week the city council fired her, 14 to 6… over a list of other complaints. WPR › |
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| BEST OF THE COMMENTS |
| Three people who said it better than we could. |
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| The Indiana Fever let an AI tool mangle Caitlin Clark’s hand in a team graphic. |
| “New hand alert.” |
| Caitlin Clark, commenting under the Fever’s own Instagram post on April 30. The team took the graphic down. |
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| A Texas campaign shared an AI video of supporters praising its candidate. |
| “Obviously, it’s AI-generated, we all know that.” |
| Bobby Eberle, communications director for Fort Bend County Judge Daniel Wong’s campaign, to FOX 26. |
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| New Brunswick’s education plan credited a professor with an article he never wrote. |
| “a bit of a mishmash of things I have worked on in the past” |
| Vincent Geiger, Australian Catholic University, to CBC News. |
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| Found a comment worth printing? Hit reply and send me the screenshot. |
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| Let me put an old sales pitch next to this morning’s news. |
| LexisNexis sold its Lexis+ AI on “hallucination-free linked legal citations.” But in May 2024, a Stanford study found legal research tools built for lawyers made things up 17% of the time. |
| And this morning? Charlotin’s count sits at 2,217… and a U.S. agency handed a labor board 35 bad citations out of 42. I don’t know which tool HHS used, and nobody’s said. But here’s what I believe: if a machine wrote the footnote, a person has to read the case. |
| Keep a hand near the switch. |
| Gus Lehman |
| EDITOR, ARTIFICIAL INCOMPETENCE |
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| SOURCES: FLRA decision, U.S. Dep’t of Health and Human Services and NTEU, 74 FLRA No. 87 (Oct 21) · Government Executive (Oct 21), FEDweek (Oct 22) and Above the Law (Oct 23) on the HHS brief · Bloomberg Law (Oct 8), investingLive citing The Wall Street Journal (Oct 14) and W.Media (Oct 14) on Firmus, AirTrunk and SB Energy · Texas Tribune via KSAT on STAAR rescoring (Oct 7) · Damien Charlotin, AI Hallucination Cases database (updated Oct 25) · ABA Journal on the Oregon sanctions (Apr 17) · Law Times on Law Society of Ontario v. Lee (Jul 21) · Canadian HR Reporter on Mazaheri v. Law Society of Ontario (Jun 18) · Reuters via Business Day on the Oct 22 selloff · The Register (Apr 27), The Next Web and TechSpot on South Africa’s AI policy · CBC News (Oct 15) and Vibe Graveyard on the New Brunswick plan · Wikipedia on LAUSD’s Ed chatbot · The Verge via The Machine Learning Times and Talking Biz News on CNET (Jan 25, 2023) · Lead Stories · The Quint · FOX 26 Houston · WRDW · NewsMeter · CyberPeace · FOX 5 San Diego · Yle and Daily Northern · WPR and The Cap Times · Front Office Sports · Legal Dive on the Stanford study (May 24, 2024) · Images: Lead Stories, Lead Stories |
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| ARTIFICIAL INCOMPETENCE |
Sent every weekday morning.
Nothing here is investment advice. Do your own homework. |
