North Carolina Man Pleads Guilty To Music Streaming Fraud Aided By Artificial Intelligence

United States Attorney for the Southern District of New York, Jay Clayton, announced the guilty plea today of MICHAEL SMITH for his role in a scheme to defraud music streaming platforms and musicians of royalty payments. To carry out the scheme, SMITH created hundreds of thousands of songs with artificial intelligence and used automated programs called "bots" to fraudulently stream his AI-generated songs billions of times, in an effort to mimic the genuine streaming activity of real consumers. SMITH pled guilty today to conspiracy to commit wire fraud before U.S. District Judge John G. Koeltl.

"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."

According to the charging documents and statements made in public filings and public court proceedings:

Music can be streamed through music streaming platforms such as Amazon Music, Apple Music, Spotify, and YouTube Music (the "Streaming Platforms"). 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 accounts on the Streaming Platforms (the "Bot Accounts") that he could use to stream songs. He then used software to cause the Bot Accounts to continuously stream songs that he owned.

SMITH spread his automated streams across thousands of songs to avoid anomalous streaming as to any single song, which would likely cause the Streaming Platforms to discover his scheme. To obtain the necessary number of songs for his scheme to succeed, SMITH turned to artificial intelligence, which he used to create hundreds of thousands of AI-generated songs for which he could manipulate the streams.

SMITH's hundreds of thousands of AI-generated songs were streamed by his Bot Accounts billions of times, which allowed him to fraudulently obtain more than $8 million in royalties.

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SMITH, 54, of Cornelius, North Carolina, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of five years in prison. SMITH also agreed to pay $8,091,843.64 in forfeiture.

The maximum potential sentence in this case is prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. SMITH is scheduled to be sentenced by Judge Koeltl on July 29, 2026.

Mr. Clayton praised the outstanding work of the Federal Bureau of Investigation.

The case is being prosecuted by the Office's Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Nicholas W. Chiuchiolo and Kevin Mead are in charge of the prosecution.