Michael Smith of Cornelius, North Carolina, pleaded guilty on Mar. 19 to conspiracy to commit wire fraud for his involvement in a scheme that used artificial intelligence and automated programs to defraud music streaming platforms and musicians of royalty payments. The announcement was made by United States Attorney for the Southern District of New York, Jay Clayton.
The case highlights concerns about the misuse of technology in the music industry, where fraudulent activity can divert funds from legitimate artists and rights holders. According to charging documents and public court filings, Smith created hundreds of thousands of songs using artificial intelligence and then employed automated programs known as “bots” to stream these AI-generated songs billions of times. This activity was designed to mimic genuine consumer behavior on platforms such as Amazon Music, Apple Music, Spotify, and YouTube Music.
“Michael Smith generated thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times,” said U.S. Attorney Jay Clayton. “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.”
Smith set up thousands of accounts on streaming platforms—referred to as “Bot Accounts”—and used software to continuously stream his own AI-created songs across these accounts. By spreading streams across many different tracks, he sought to avoid detection by making it less likely any single song would appear suspiciously popular.
Through this method, Smith fraudulently obtained more than $8 million in royalties from streaming services. He has agreed to pay $8,091,843.64 in forfeiture as part of his plea agreement. The charge carries a maximum sentence of five years in prison; sentencing is scheduled for July 29 before U.S. District Judge John G. Koeltl.
Clayton praised the work of the Federal Bureau of Investigation in bringing the case forward. The prosecution is being handled by Assistant U.S. Attorneys Nicholas W. Chiuchiolo and Kevin Mead from the Office’s Complex Frauds and Cybercrime Unit.
