LA Film School Whistleblower Lawsuit Thrown Out After Plaintiffs Use ChatGPT on Filing

Skip to content The lawsuit was dismissed with prejudice on grounds that the claims that the school inflated its job placement figures happened outside the statue of limitations October 26, 2026 @ 3:47 PM Credit: Los Angeles Film School A whistleblower lawsuit accusing the Los Angeles Film School of student loan fraud has been dismissed with prejudice as the plaintiff’s attorney has been fined for filing a brief written by ChatGPT. The lawsuit alleged that the Los Angeles Film School had paid outside vendors to hire its students to jobs with little meaningful career advancement to inflate its placement figures and maintain its qualification for federal student aid. To qualify for federal student aid, higher education institutions must prove that at least 70% of its graduates are able to find work in their chosen field. Former admissions VP Ben Chaib and former career advancement VP Dave Phillips accused LAFS of hiding the extent of its fraud from Department of Education auditors, with whom the school reached a $1 million settlement to resolve the matter. Phillips and Chaib alleged that LAFS owner James “Bill” Heavener and LAFS CEO Diana Dercyz-Kessler instructed school officials “to focus strictly on the appearance of compliance” with the 70% benchmark. To that end, they financed indie productions with the plan to use them to hire LAFS graduates for jobs that only lasted for a few days, just long enough that they could claim that their graduates had found gainful employment. But in a ruling on Friday, Judge Stanley Blumenfeld ruled that the alleged conduct happened outside the six-year statute of limitations and dismissed the lawsuit with prejudice, meaning that it cannot be filed again. Blumenfeld also found that an April filing from the plaintiffs contained a nonexistent case and two additional cases that were real but irrelevant to the legal arguments being made. Phillips admitted that he had drafted the filing using ChatGPT and provided it to his attorney, Mark Kleiman, who has been fined $5,000 for using an AI-written filing. “Kleiman filed an obviously deficient brief that he had not even fully read and for which he did not check whether the citations were to real cases — let alone that they supported the brief’s assertions — despite knowing that his nonlawyer clients had prepared the brief using AI,” the judge wrote. TheWrap has reached out to LAFS for comment.