Michael Smith faces prison for $8 million AI music fraud scheme

Federal prosecutors are seeking a prison sentence of at least 46 months for Michael Smith, a North Carolina man who used artificial intelligence to orchestrate a massive music streaming fraud scheme. Smith allegedly used AI to generate thousands of fictitious songs attributed to invented artists, then employed bot accounts to stream the tracks billions of times to siphon millions of dollars from royalty pools.

According to prosecutors, the scheme lasted over six years and resulted in Smith collecting more than $8 million in unearned royalties. The fraud was so effective that Smith’s share of subscription-funded royalty pools on platforms such as Spotify, Apple Music, Amazon Music, and YouTube Music occasionally exceeded those of major industry stars. For instance, in April 2023, Smith’s catalog reportedly amassed 80.9 million streams from YouTube Music family-plan subscribers, compared to 9.3 million for Taylor Swift’s catalog.

In a letter filed in Manhattan federal court, Assistant U.S. Attorneys Nicholas W. Chiuchiolo and Kevin B. Mead argued that a stiff sentence is necessary to provide just punishment and to deter future white-collar crimes involving streaming fraud. While prosecutors are pushing for nearly four years in prison, Smith’s defense has requested probation, and federal probation officials have recommended a 24-month sentence. Smith is scheduled to be sentenced on October 6.