A North Carolina man has been arrested in the first criminal case involving AI-generated music streaming fraud. Accused of using bots to inflate streams and steal $10 million in royalties, he now faces up to 20 years in prison.
A North Carolina man has been arrested in what is believed to be the first criminal case of its kind—using artificial intelligence (AI) to inflate music streaming numbers and illegally pocket millions in royalties.
Michael Smith, 52, is accused of manipulating streaming platforms to generate billions of fake streams for songs he created using AI, netting over $10 million through this elaborate scheme. Smith now faces charges of wire fraud, conspiracy, and money laundering, all of which could result in significant prison time.
The U.S. Attorney for the Southern District of New York, Damian Williams, announced the indictment against Smith, who allegedly developed software to create fake accounts, or “bot accounts,” on popular streaming services such as Spotify, Apple Music, Amazon Music, and YouTube Music. These bots continuously played songs owned by Smith, all of which were generated using AI, leading to an enormous number of fake streams.
Authorities claim that Smith produced hundreds of thousands of songs with the help of AI technology, spreading fake streams across various tracks to avoid detection. By not concentrating streams on just a few songs, Smith was able to fly under the radar of streaming platforms’ anti-fraud measures. He allegedly boasted of generating over 600,000 fake streams per day at one point, accumulating royalties that should have gone to real musicians and songwriters.
The scheme is not entirely surprising, as AI technology has been misused across various areas of life. From generating harmful content such as child sexual abuse material (CSAM) to creating fake obituary websites, cybercriminals have been exploiting this technology for malicious purposes for some time now.
According to a United States Department of Justice (DoJ) press release, this scheme took a disturbing turn in 2018 when Smith, in collaboration with the CEO of an AI music company and a music promoter, ramped up the production of AI-generated songs.
Thousands of these tracks were created weekly and given nonsensical names—both for the songs and the fictitious artists performing them. Authorities provided examples such as song titles like “Zygotes” and artist names such as “Calliope Bloom,” which were entirely fabricated to look legitimate.
By flooding streaming platforms with these AI-created tracks, Smith reportedly manipulated billions of fake plays and collected hefty royalty checks, depriving genuine artists of their rightful earnings. His scheme extended to creating fake user accounts to make it appear as though real people were listening to his music.
FBI Acting Assistant Director Christie Curtis commented on the case, saying that Smith’s actions played on the vulnerabilities of the music industry, adding that the FBI remains committed to stopping those who abuse technology for financial gain. Smith’s arrest marks a turning point in how technology, particularly AI, can be exploited in fraudulent ways within the entertainment sector.
If convicted, Smith could face up to 20 years in prison for each of the charges he faces.
