On Tuesday, New York federal Judge John G. Koeltl sentenced 54-year-old Cornelius, North Carolina resident Michael Smith to 18 months in federal prison for running an automated music streaming fraud scheme that netted him $8 million in illicit royalties. This marks the first-ever federal criminal case involving music streaming fraud.
Michael Smith Gets Prison for AI Music Fraud
- The Sentence: Michael Smith received 18 months in prison followed by two years of supervised release, alongside an order to pay back almost $8.1 million.
- The Scale: Between 2017 and 2024, Smith used bots to stream AI-generated songs billions of times, outpacing major acts like Taylor Swift on specific plan metrics.
- The Charges: After being charged in 2024 with wire fraud, wire fraud conspiracy, and money laundering, Smith pleaded guilty to wire fraud conspiracy in March.
How Michael Smith Automated AI Songs to Drain Royalties
Operating from 2017 to 2024, Smith built a systematic operation designed to bypass the fraud detectors utilized by digital streaming platforms. The North Carolina musician utilized a small catalogue of his own songs while collaborating with the CEO of an AI music company starting around 2018. This partnership yielded hundreds of thousands of AI-generated tracks, with Smith receiving thousands of new songs each week to upload.
To avoid triggering platform red flags for abnormal streaming spikes on a single track, Smith distributed the automated plays across thousands of distinct tracks. Prosecutors noted that in an email to alleged co-conspirators, Smith wrote that they needed to generate a high volume of songs quickly to circumvent anti-fraud policies.
The Network of Phony Accounts and Stolen Cards
Generating billions of streams without human listeners required a vast infrastructure of fake profiles. Smith enlisted individuals both inside the United States and abroad to register thousands of accounts under false names on major streaming platforms. Smith funded these accounts using debit cards he obtained under false pretenses from a financial services company that typically provides corporate payment cards for employee expenses.
U.S. Attorney Jamie McDonald stated that Smith exploited super intelligence technology to substitute genuine consumer engagement with automated bots and real creativity with fake tracks, ultimately robbing millions in royalties from working artists and their fans.
Comparing AI Streaming Volume to Global Superstars
Federal prosecutors from the Complex Frauds and Cybercrime Unit at the U.S. Attorney’s Office for the Southern District of New York highlighted the massive scale of the operation by comparing Smith’s bot-generated numbers to mainstream music consumption data. In April 2023, the entire recorded catalogue of Taylor Swift received 9.3 million streams on YouTube Music family plans, according to prosecutorial filings. By contrast, Smith’s network of AI-generated tracks pulled in 81 million streams on family plans during that exact same month.
| Catalog / Entity | Streaming Metric & Platform | Timeframe |
|---|---|---|
| Taylor Swift (Full Catalogue) | 9.3 million streams (YouTube Music family plans) | April 2023 |
| Michael Smith (AI-Generated Tracks) | 81 million streams (YouTube Music family plans) | April 2023 |
| Michael Smith Fraud Scheme | Billions of total streams / ~$8.1 million amassed | 2017 – 2024 |
Service Providers Update Protocols to Catch AI Manipulation
The prosecution was led by Assistant U.S. Attorneys Nicholas W. Chiuchiolo and Kevin Mead. Because certain artificial intelligence programs can quickly generate realistic audio files, digital service providers continue to update their security protocols to catch automated manipulation.
