The man at the center of what’s been described as the first-ever criminal prosecution for AI-assisted streaming fraud in the United States has pleaded guilty.
Michael Smith, of Cornelius, North Carolina, pleaded guilty today (March 19) to one count of conspiracy to commit wire fraud before U.S. District Judge John G. Koeltl in the Southern District of New York.
The charge carries a maximum sentence of five years in prison. Smith has also agreed to pay over $8 million in forfeiture.
Smith is scheduled to be sentenced by Judge Koeltl on July 29.
US Attorney Jay Clayton said: “Michael Smith generated thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times.
“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.”
“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.”
US Attorney Jay Clayton
Smith was first indicted and arrested in September 2024 in what was the first criminal case of its kind in the US.
At that time, he was charged with three felony counts: wire fraud, wire fraud conspiracy, and money laundering conspiracy, each carrying a maximum sentence of 20 years in prison.
As MBW reported, Smith initially pleaded not guilty in front of Judge Koeltl in September 2024, and was released on $500,000 bail.
You can see the indictment here.
Today’s guilty plea to a single conspiracy count, carrying a maximum of five years rather than the combined 60 years he previously faced, represents a significant reduction in Smith’s legal exposure.
According to the charging documents and statements made in court, Smith created thousands of bot accounts on streaming platforms including Amazon Music, Apple Music, Spotify, and YouTube Music, and used software to cause those accounts to continuously stream songs that he owned.
Smith spread his automated streams across thousands of songs to avoid triggering the platforms’ anti-fraud detection systems.
To obtain the volume of tracks needed for the scheme to work, Smith turned to AI, using it to generate hundreds of thousands of songs. Those songs were streamed by his bot accounts billions of times, allowing him to fraudulently collect more than $8 million in royalties.
At the peak of his operation, according to the DOJ, Smith estimated that his bots could generate approximately 661,440 streams per day, yielding annual royalties of over $1.2 million.
The Mechanical Licensing Collective (The MLC), which distributes mechanical royalties from streaming in the US, played a key role in identifying the fraud scheme.
In a statement following today’s guilty plea, The MLC said: “Today’s news highlights the serious threat that streaming fraud poses to the music industry and the important role The MLC plays in confronting it.
“We appreciate the Department of Justice’s swift action, recognizing that The MLC identified the fraud early, challenged Smith and his representatives, and prevented the diversion of mechanical royalties away from rightful songwriters.
“The MLC will continue to invest in anomaly detection and fraud prevention to protect our Members, and we will continue to collaborate with other industry organizations and law enforcement to protect all songwriter royalties.”
“Today’s news highlights the serious threat that streaming fraud poses to the music industry and the important role The MLC plays in confronting it.”
The MLC
The MLC had previously raised concerns about Smith’s catalog, questioning how he could produce such a high volume of music so quickly. Smith and his representatives denied at the time that the works were AI-generated.
The case was prosecuted by the Complex Frauds and Cybercrime Unit of the U.S. Attorney’s Office for the Southern District of New York. Assistant U.S. Attorneys Nicholas W. Chiuchiolo and Kevin Mead led the prosecution.
The original indictment named unnamed co-conspirators — including the CEO of an AI music company and a music promoter — who helped Smith produce the AI-generated tracks. Their legal status has not been publicly disclosed.
Smith’s case is the highest-profile criminal prosecution for streaming fraud globally, but it is not the only one.
In Denmark, a man was sentenced to 18 months in prison in March 2024 after being found guilty of data fraud and copyright infringement for using bots to inflate the stream count on 689 tracks uploaded to platforms including Apple Music, Spotify, and YouSee Musik. That sentence was subsequently increased to 24 months by the Western High Court of Denmark in February 2025, after judges found evidence of more extensive fraud than initially proven.
Music Business Worldwide
Michael Smith, a resident of Cornelius, North Carolina, has made headlines as the central figure in what has been termed the first criminal prosecution for AI-assisted streaming fraud in the United States. On March 19, Smith pleaded guilty to a single count of conspiracy to commit wire fraud before U.S. District Judge John G. Koeltl in the Southern District of New York. The charge carries a maximum sentence of five years in prison. As part of his plea agreement, Smith has also committed to forfeiting over $8 million, with his sentencing scheduled for July 29.
U.S. Attorney Jay Clayton emphasized the gravity of Smith’s actions, stating that he generated thousands of fake songs using artificial intelligence, which were then streamed billions of times. Although the songs and the listeners were not real, the financial repercussions were substantial, as Smith diverted millions of dollars in royalties from legitimate artists and rights holders.
Smith’s legal troubles began when he was indicted and arrested in September 2024, marking the first case of its kind in the U.S. Initially facing three felony counts—wire fraud, wire fraud conspiracy, and money laundering conspiracy—each carrying a maximum sentence of 20 years, Smith initially pleaded not guilty and was released on a $500,000 bail. However, his guilty plea to a single conspiracy count represents a significant reduction in his potential legal exposure, from a possible 60 years in prison to a maximum of five years.
Court documents reveal that Smith employed a scheme involving the creation of thousands of bot accounts on popular streaming platforms such as Amazon Music, Apple Music, Spotify, and YouTube Music. He utilized software to automate the streaming of songs that he owned, spreading these streams across thousands of tracks to bypass the platforms’ anti-fraud detection systems. To generate the vast number of songs required for his scheme, Smith turned to artificial intelligence, producing hundreds of thousands of AI-generated tracks. His operations were lucrative, reportedly yielding over $8 million in royalties, with his bots capable of generating approximately 661,440 streams per day at the peak of his activities.
The Mechanical Licensing Collective (MLC), which oversees mechanical royalties in the U.S., played a crucial role in uncovering Smith’s fraudulent scheme. Following Smith’s guilty plea, the MLC highlighted the serious threat posed by streaming fraud to the music industry, commending the Department of Justice for its swift action. The MLC had previously raised concerns about Smith’s catalog, questioning the speed at which he could produce such a high volume of music. Initially, Smith and his representatives denied that the works were AI-generated.
The prosecution of Smith was handled by the Complex Frauds and Cybercrime Unit of the U.S. Attorney’s Office for the Southern District of New York, with Assistant U.S. Attorneys Nicholas W. Chiuchiolo and Kevin Mead leading the case. The original indictment hinted at unnamed co-conspirators, including the CEO of an AI music company and a music promoter, who allegedly assisted Smith in producing the AI-generated tracks; however, their legal status remains undisclosed.
While Smith’s case stands out as the highest-profile criminal prosecution for streaming fraud globally, it is not an isolated incident. In Denmark, for instance, a man was sentenced to 18 months in prison in March 2024 for data fraud and copyright infringement after similarly using bots to inflate the stream count on 689 tracks across various platforms. This sentence was later increased to 24 months by the Western High Court of Denmark in February 2025, following revelations of more extensive fraud than initially proven.
Smith’s actions and subsequent prosecution underscore the emerging challenges posed by AI technology in the music industry, raising questions about copyright, fraud, and the integrity of streaming platforms. His case serves as a cautionary tale regarding the potential for misuse of AI in creative fields, as well as the need for robust measures to protect artists and their work from fraudulent activities. The outcome of Smith’s sentencing will likely have implications for future legal frameworks addressing AI-related fraud in the music industry and beyond.
