North Carolina musician jailed 18 months for $8m music streaming fraud
Michael Smith of Cornelius, NC, was sentenced to 18 months in the first-ever federal music streaming fraud case, netting $8.1m via AI-generated songs and bots.
First federal music streaming fraud conviction nets North Carolina man 18-month prison term
A 54-year-old musician from Cornelius, North Carolina, has been sentenced to 18 months in federal prison for running a fraudulent music streaming scheme that generated more than $8 million in royalty payments, wunc.org reports.
Michael Smith was sentenced Tuesday by New York federal Judge John G. Koeltl after pleading guilty to conspiracy to commit wire fraud. The sentencing marks the first federal criminal case of its kind involving music streaming fraud. In addition to the prison term, Smith received two years of supervised release and must repay approximately $8.1 million.
"Michael Smith exploited super intelligence technology to generate a fraud," U.S. Attorney Jamie McDonald said in a statement. "By flooding music streaming platforms with automated bots in the place of consumers, and fake songs in the place of creativity, Smith robbed millions in royalty payments from genuine artists and their fans."
The U.S. Attorney's Office uses the term "super intelligence" rather than the more widely used phrase artificial intelligence.
Smith operated the scheme from 2017 to 2024. He created thousands of fraudulent accounts on music streaming platforms using debit cards obtained under false pretences from a financial services company that normally issues payment cards to corporate employees. He then used automated software — commonly known as bots — to stream hundreds of thousands of AI-generated songs through those accounts.
To register the fake streaming accounts, Smith enlisted individuals both inside the United States and abroad to sign up under fictitious names, according to the indictment. Around 2018, he began collaborating with the chief executive of an AI music company to produce the volume of tracks he needed, at one point receiving thousands of new songs per week for upload to streaming platforms.
In an email to alleged co-conspirators cited in the indictment, Smith wrote: "We need to get a TON of songs fast to make this work around the anti-fraud policies these guys are all using now."
To avoid triggering fraud detection systems — which flag sudden spikes in streams for a single track — Smith spread his automated plays across thousands of songs simultaneously. Federal prosecutors said his bot accounts streamed the AI-generated music billions of times in total, with no actual listeners, generating the royalty income he then pocketed.
Prosecutors offered a comparison to illustrate the scale of the operation. In April 2023, the entire catalogue of Taylor Swift received 9.3 million streams on YouTube Music family plans. That same month, Smith's AI-generated music recorded 81 million streams from family plans.
Smith was originally charged in 2024 with wire fraud, wire fraud conspiracy and money laundering. He reached a plea agreement with authorities in March, admitting guilt only on the wire fraud conspiracy charge.
The case was handled by the Complex Frauds and Cybercrime Unit at the U.S. Attorney's Office for the Southern District of New York, with Assistant U.S. Attorneys Nicholas W. Chiuchiolo and Kevin Mead serving as lead prosecutors.
Source: Google News MT — Crime (en)