AI Music Fraud: Michael Smith Pleads Guilty to Streaming Scheme, Forfeits $8 Million
Michael Smith, a North Carolina man, has pleaded guilty to defrauding music streaming services using AI-generated songs and bot networks. He faces a maximum of five years in prison and has agreed to forfeit over $8 million in ill-gotten gains.
Michael Smith, a 54-year-old from North Carolina, has admitted to defrauding music streaming services with AI-generated tracks. He pleaded guilty to one count of conspiracy to commit wire fraud before U.S. District Judge John G. Koeltl on Thursday. The charge carries a maximum sentence of five years in prison. Smith has agreed to forfeit $8,091,843.64. Judge Koeltl will sentence Smith this summer.
Smith confessed to creating hundreds of thousands of AI-generated songs and using thousands of bots to artificially inflate their streams. This allowed him to collect royalties from platforms like Amazon Music, Apple Music, Spotify, and YouTube Music while evading detection.
According to U.S. Attorney for the Southern District of New York, Jay Clayton, "Michael Smith generated thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times. Although the songs and listeners were fake, the millions of dollars Smith stole was real…millions of dollars in royalties that Smith diverted from real, deserving artists and rights holders. Smith’s brazen scheme is over, as he stands convicted of a federal crime for his AI-assisted fraud.” (An attorney for Smith, Noell Tin, declined to comment.)
The Department of Justice indicated that in addition to forfeiting his earnings and the maximum prison sentence, Smith could also face three years’ supervised release and a maximum fine of $250,000. Sentencing is scheduled for July 29. The DOJ stated it would not prosecute Smith further but may consider tax violations between 2017 and 2024 if discovered.
A Rolling Stone investigation revealed that Smith used 1,040 accounts to stream around 636 of his AI-generated songs daily, totaling 661,440 streams. This could have earned him an estimated $3,307.20 per day, $99,216 per month, and over $1.2 million per year. U.S. Attorney Damian Williams commented, “Smith stole millions in royalties that should have been paid to musicians, songwriters, and other rights holders whose songs were legitimately streamed,” when Smith was indicted.
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