North Carolina Man admits guilt in AI-driven music streaming fraud scheme
CORNELIUS, NC (WWAY) — Jay Clayton, United States Attorney for the Southern District of New York, announced that Michael Smith has pleaded guilty for his role in a scheme that defrauded music streaming platforms and artists out of royalty payments. Smith admitted to creating hundreds of thousands of songs using artificial intelligence and using automated programs, or “bots,” to stream those tracks billions of times in order to imitate legitimate listener activity. He entered his guilty plea before U.S. District Judge John G. Koeltl on a charge of conspiracy to commit wire fraud.
Clayton stated that while both the songs and the listeners were fabricated, the financial impact was very real. Smith’s actions diverted millions of dollars in royalties away from legitimate artists and rights holders. With his guilty plea, Clayton noted, Smith’s fraudulent scheme has come to an end.
According to court filings and statements made during proceedings, music streaming platforms such as Amazon Music, Apple Music, Spotify, and YouTube Music pay small royalties each time a song is played. These payments are distributed proportionally from a shared pool to songwriters, performers, and other rights holders. Fraudulent streaming artificially inflates plays, redirecting money away from artists whose work is genuinely streamed.
Smith created thousands of fake accounts on these platforms and used software to continuously stream songs he controlled. To avoid detection, he spread the activity across a large number of tracks rather than concentrating streams on a few songs. To sustain the volume needed, he relied on artificial intelligence to generate hundreds of thousands of songs that he could repeatedly stream.
Through this operation, Smith’s bot accounts generated billions of plays of his AI-created music, allowing him to collect more than $8 million in fraudulent royalties.
Smith, 54, of Cornelius, North Carolina, pleaded guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of five years in prison. He also agreed to forfeit $8,091,843.64. His sentencing is scheduled for July 29, 2026, and will be determined by the judge.
Clayton also commended the Federal Bureau of Investigation for its work on the case, which is being handled by the Southern District’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Nicholas W. Chiuchiolo and Kevin Mead are leading the prosecution.
