Feds say AI music fraudster who ‘stole’ $8M in streams deserves prison

Feds say AI music fraudster who ‘stole’ $8M in streams deserves prison Michael Smith’s catalog logged 80.9 million YouTube Music streams from family-plan subscribers in April 2023 – nearly nine times Taylor Swift’s 9.3 million - Bookmark Become an Independent member to bookmark this article Already a member? Log in A North Carolina man who used AI-generated songs and bots to rack up billions of fake streams should spend nearly four years in prison, federal prosecutors say. Michael Smith, 54, of Cornelius, pleaded guilty in March to one count of conspiracy to commit wire fraud. Prosecutors say he created hundreds of thousands of AI-generated songs, uploaded them to Apple Music, Spotify, Amazon Music and YouTube Music, then used thousands of accounts and bots to repeatedly stream them. The six-year scheme generated more than $8 million in unearned royalties, prosecutors said, diverting money from legitimate artists and songwriters. Smith “stole from hard-working (and often underpaid) songwriters, artists, and other rightsholders,” prosecutors wrote in a letter filed Tuesday and obtained by Rolling Stone ahead of his October 6 sentencing. Smith agreed to forfeit $8,091,843.64 as part of his plea deal. In the letter, prosecutors asked a Manhattan judge to sentence Smith to at least 46 months in prison. His attorneys are seeking probation instead. The scale of the alleged fraud was enormous. In April 2023, Smith’s catalog generated about 80.9 million streams from YouTube Music family-plan subscribers – nearly nine times the 9.3 million streams generated by Taylor Swift’s entire catalog among the same group that month. In a March press release, the DOJ explained how the scam worked: “Each time a song is streamed through one of the Streaming Platforms, the songwriter who composed the song, the musician who performed it, and in certain cases other rights holders, are entitled to small royalty payments. “Royalty payments are made proportionately to musicians and songwriters from a pool of funds. As a result, streaming fraud diverts funds from musicians and songwriters whose songs were legitimately streamed by real consumers to those who use automation to falsely create the appearance of legitimate streaming.” Smith created thousands of bot accounts that he used to continuously stream the hundreds of thousands of AI-generated songs he created, the DOJ said. Prosecutors called the scheme a “massive fraud” and argued that a lengthy sentence is necessary “to provide just punishment” and deter similar white-collar crimes. “Imposing a substantial term of incarceration will send a clear message that defrauding social services programs, no matter who you are, will result in significant punishment,” Assistant U.S. Attorneys Nicholas W. Chiuchiolo and Kevin B. Mead wrote in their letter to the court, Rolling Stone reports. “If the public is watching this case, as the defendant claims, a lenient sentence will send precisely the wrong message: streaming fraud will not result in meaningful punishment.” Meanwhile, Smith's attorneys have asked the judge not to send him to prison. They acknowledged that he eventually engaged in deceptive conduct but argued that his initial efforts were not intended to be criminal. “He believed his initial efforts to be lawful,” his attorneys Noell P. Tin and Justine Harris wrote. “Indeed, Mr. Smith consulted with a well-known music attorney with extensive experience in legal operations at music publishing companies. Although he ultimately ended up rationalizing conduct that he knew was wrong — false statements to distributors and increasingly deceptive conduct to avoid scrutiny — his conduct began at a time when the legal parameters were unsettled.” His attorneys also argued that the financial harm was spread among a large pool of artists and rights holders, making the impact on any individual musician relatively small. Prosecutors dispute that argument, saying the number of victims does not diminish the scale of the alleged fraud. “Michael Smith generated thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times,” U.S. Attorney Jay Clayton said when Smith pleaded guilty. “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 was arrested in 2024 and initially faced multiple charges before pleading guilty to one count of conspiracy to commit wire fraud. The charge carries a maximum five-year prison sentence, while federal guidelines recommend 46 to 57 months for Smith, Billboard reports. However, a pre-sentencing report used by the judge recommended a 24-month sentence.