Man Gets 18 Months in Prison for $8 Million AI Streaming Fraud

Michael Smith stole $8 million in music royalties with songs nobody ever heard. A federal judge sentenced him to 18 months in prison on Tuesday.

Smith, 54, of Cornelius, North Carolina, ran the scheme from 2017 through 2024. He generated hundreds of thousands of songs with artificial intelligence, then played them billions of times using thousands of fake accounts on Spotify, Apple Music, Amazon Music and YouTube Music.

U.S. District Judge John G. Koeltl handed down the sentence in Manhattan federal court. Smith also got two years of supervised release and must forfeit $8,091,843.64.

The Justice Department called it the first criminal prosecution of its kind. Smith pleaded guilty in March to one count of conspiracy to commit wire fraud.

At times, Smith ran up to 10,000 bot accounts at once, prosecutors said, using fake emails and debit cards to keep them alive.

The numbers were staggering. In April 2023, the entire Taylor Swift catalog drew 9.3 million family-plan streams on YouTube Music. In that same month, Smith’s bot accounts pulled 80.9 million fraudulent streams of his own AI-generated tracks.

He boasted about it. In a February 2024 email to accomplices, Smith wrote that his songs had generated “over 4 billion streams and $12 million in royalties since 2019.”

Lighter than prosecutors wanted

Federal prosecutors asked for 46 months. Smith’s lawyers wanted probation, arguing no artist suffered any perceptible harm.

Koeltl landed in the middle. In court, Smith choked up at times and told the judge, “I betrayed the music community I care so much about.”

How the scheme worked

Smith was indicted in September 2024 on wire fraud, wire fraud conspiracy and money laundering conspiracy. Each charge carried up to 20 years. At the time, prosecutors said he had taken more than $10 million.

Prosecutors said Smith worked with the CEO of an unnamed AI music company and a music promoter to produce the songs. They estimated his bots could generate about 661,440 streams a day, worth more than $1.2 million a year in royalties.

The Mechanical Licensing Collective eventually flagged irregularities in Smith’s streaming data and held back the related royalties. Streaming services pay rightsholders from a finite pool of revenue, so every fake stream siphoned money from real artists.

The industry reacts

The global music trade body IFPI said the sentence “sends a clear message that streaming fraud is a crime and has serious consequences.” The industry’s Streaming Integrity Initiative works to detect and disrupt the fraud before it pays out.

U.S. Attorney Jamie McDonald put it this way: “By flooding music streaming platforms with automated bots in the place of consumers, and fake songs in the place of creativity, Smith robbed millions in royalty payments from genuine artists and their fans.”