AI Music Fraud: Man Convicted of $8M Streaming Royalties Scheme

A North Carolina man pleaded guilty Thursday to federal charges stemming from a multi-million dollar scheme to defraud streaming music services using artificially generated songs and automated streaming, federal prosecutors announced. Michael Smith, 54, admitted to one count of conspiracy to commit wire fraud before U.S. District Judge John G. Koeltl, with a sentencing date set for July 29.

Smith’s scheme, which ran from 2017 to 2024, involved creating hundreds of thousands of songs using artificial intelligence and then employing a network of bots to stream those songs billions of times, mimicking legitimate user behavior. The goal, according to court documents, was to generate royalties from platforms like Spotify, Apple Music, Amazon Music, and YouTube Music. The Attorney’s Office stated Smith’s bots were capable of streaming 661,440 songs daily, generating approximately $1,207,128 annually in fraudulent royalties.

The operation was designed to circumvent anti-fraud measures implemented by streaming services. Smith reportedly understood that a single song accumulating a billion streams would likely trigger scrutiny. However, he believed that distributing fake streams across a vast catalog of songs – each receiving a smaller number of plays – would be more difficult to detect. In 2018, Smith emailed co-conspirators, stating, “We need to receive a TON of songs fast to make this work around the anti-fraud policies these guys are all using now,” according to the Attorney’s Office.

The fraudulent activity drained funds from royalty pools intended for legitimate artists and rights holders. Streaming platforms allocate a portion of their revenue to distribute to musicians based on the number of streams their songs receive. The influx of artificially generated streams diverted those funds, impacting genuine creators. Deezer, a streaming platform, has actively worked to combat this issue, developing an AI-music detection tool to identify and flag mass-produced, AI-generated content. In 2025, Deezer reported detecting and tagging over 13.4 million AI-tracks.

Smith agreed to forfeit $8,091,843.64 as part of his plea agreement. The charge carries a maximum sentence of five years in prison. He was initially charged in September 2024, following an investigation into the widespread apply of AI-generated music and bot-driven streaming to inflate royalty earnings.

Prior to the scheme, Smith had a background in the music industry, having produced songs for various artists, including those associated with the rap collective Nappy Roots, and rappers Crooked I and Juicy J. He also owned several medical clinics, according to reports.