Michael Smith, a musician from North Carolina, has pleaded guilty to orchestrating a massive fraud scheme that used artificial intelligence and bot accounts to steal over $10 million in streaming royalties. Between 2017 and 2024, Smith manipulated platforms like Spotify and Amazon Music by streaming hundreds of thousands of AI-generated tracks billions of times to illicitly collect payouts.
A 54-year-old musician from North Carolina named Michael Smith has admitted to a complex wire fraud conspiracy that allowed him to siphon more than $10 million from major music streaming platforms. By collaborating with an AI music company executive and a promoter, Smith acquired a vast library of computer-generated songs to populate his fraudulent accounts. This operation targeted industry giants including Apple Music, YouTube Music, Amazon Music, and Spotify, effectively diverting royalties away from legitimate artists.
To bypass the sophisticated anti-fraud measures used by these digital platforms, Smith utilized virtual private networks and a massive network of automated bots. At the height of his scheme, he managed over 1,000 bot accounts spread across dozens of cloud service providers. His strategy relied on quantity over quality, spreading out millions of fake streams across a huge volume of songs to avoid triggering red flags associated with a single viral hit.
Internal communications unsealed during the legal proceedings revealed that Smith meticulously calculated his potential earnings based on the number of streams his bots could generate daily. He estimated that his network could produce over 660,000 streams every 24 hours, which translated to more than $1.2 million in annual revenue. Despite the music and the listeners being entirely fabricated, the financial gain was significant and consistently deposited into his accounts for several years.
United States Attorney Jay Clayton characterized the case as a brazen theft that harmed real creators who rely on royalty payments for their livelihood. By the time the scheme was dismantled, Smith boasted in private emails that his library had surpassed 4 billion streams. Prosecutors noted that this case represents a significant milestone in prosecuting crimes involving the intersection of artificial intelligence and digital financial fraud.
Following his guilty plea to conspiracy to commit wire fraud, Smith now faces a maximum of five years in federal prison. As part of his plea agreement, he has been ordered to forfeit over $8 million in criminal proceeds. This resolution marks the end of a seven-year operation that serves as a warning to those attempting to exploit emerging technologies to manipulate the global music economy.
Source: https://www.justice.gov/usao-sdny/media/1366241/dl