A First-of-Its-Kind AI Music Fraud Prosecution
A 54-year-old Cornelius, North Carolina resident named Michael Smith received an 18-month prison term after prosecutors alleged he employed artificial intelligence to produce music and deployed thousands of bots to illegally obtain over $8 million in streaming royalties. He admitted guilt in March to a single wire fraud conspiracy charge and was sentenced on Oct. 6, per the U.S. Attorney's Office for the Southern District of New York. Prosecutors called it the Justice Department's first criminal case involving AI-assisted music streaming fraud.[S1][S2][S3]
How the Scheme Worked
Prosecutors said that between 2017 and 2024, Smith set up thousands of fraudulent accounts on services such as Amazon Music, Apple Music, Spotify, and YouTube Music. He employed automated tools to play his own songs on repeat, many created with AI, so he could earn royalties from plays that weren't from actual listeners. According to prosecutors, Smith sometimes ran up to 10,000 bot accounts at once and distributed the fake plays over thousands of tracks to evade the platforms' fraud detection measures.[S1]
The Scale of the Fraud
The operation's magnitude was especially clear in April 2023. That month, Smith's bots produced 80.9 million fraudulent YouTube Music streams via family plans, whereas Taylor Swift's full catalog got 9.3 million family-plan streams on the same platform, prosecutors said. Authorities stated the scheme brought in over $8 million in fraudulent royalties overall.[S1]
Sentence and Forfeiture
Along with the 18-month prison term, Smith received two years of supervised release and was ordered to forfeit $8,091,843.64. FOX Business was unable to immediately reach Smith's attorneys for comment.[S1]
