A North Carolina man has been sentenced to 18 months in prison for using thousands of bot accounts and hundreds of thousands of AI-generated songs to defraud music streaming platforms of more than $8 million in royalties, in what US prosecutors described as the Justice Department's first criminal case involving AI-assisted music streaming fraud.
Forbes reported that Michael Smith, 54, pleaded guilty in March to conspiracy to commit wire fraud. A US District Judge John G. Koeltl sentenced him to 18 months in prison, followed by two years of supervised release. Smith was also ordered to forfeit $8,091,843.64, according to the US Attorney's Office for the Southern District of New York.
According to prosecutors, Smith's fraud ran from 2017 through 2024 and targeted major streaming platforms including Amazon Music, Apple Music, Spotify and YouTube Music.
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The scheme relied on three key steps. Smith first created thousands of fraudulent accounts that could be used to generate streams. He then deployed software to continuously play songs he owned, many of which were generated using AI. The resulting streams were used to claim royalty payments.
Smith reportedly operated as many as 10,000 bot accounts at a time. Prosecutors said he used fake email accounts and fraudulently obtained debit cards to create and maintain those accounts.
To keep the activity from attracting attention, Smith spread the streams across a vast catalogue rather than repeatedly streaming a small number of songs. He told associates in an email that he needed a “TON of songs fast” to get around the streaming platforms' anti-fraud measures.
He ultimately used AI to generate hundreds of thousands of songs, which were then streamed billions of times by his automated accounts.
The scale of the operation was particularly striking when compared with established music stars. In April 2023, Smith's bot accounts generated 80.9 million streams for his AI-generated catalogue through YouTube Music family plans, prosecutors said. By comparison, Taylor Swift's entire catalogue generated 9.3 million family-plan streams on the platform that month, according to the US Attorney's Office.
Streaming royalties are distributed among songwriters, performers and other rights holders based on streams. Fraudulent plays can therefore divert money from legitimate artists whose music is consumed by real listeners.
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US Attorney Jamie McDonald said Smith had exploited super intelligence technology to create a fraud by replacing consumers with automated bots and genuine creativity with machine-generated music.
The terminology in the Justice Department's release also reflects a broader policy shift. US President Donald Trump recently directed federal agencies to use super intelligence instead of artificial intelligence in official communications. Forbes reported that the Justice Department has instructed employees to follow the terminology in its work, including court filings where appropriate.
Smith's sentence underscores the growing legal scrutiny around the use of AI in the music industry, particularly when automated systems are used to manipulate streaming metrics and extract royalty payments.
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