AI Music Fraudster Michael Smith Pleads Guilty to Wire Fraud, Faces Up to 5 Years

Michael Smith, a 54-year-old man from North Carolina, pleaded guilty on Thursday to one count of conspiracy to commit wire fraud in a case involving AI-generated music.

The plea was entered before US District Judge John G. Koeltl, and carries a maximum prison sentence of five years. Smith also agreed to forfeit $8,091,843.64. His full sentencing is scheduled for July 29.

Federal prosecutors say Smith created hundreds of thousands of songs using artificial intelligence and then used thousands of bot accounts to stream the songs billions of times.

By distributing streams across multiple accounts, he avoided detection by major music services including Amazon Music, Apple Music, Spotify, and YouTube Music. Through this scheme, Smith collected over $8 million in royalties, RollingStone reported

"Michael Smith generated thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times," said Jay Clayton.

"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.

Smith's brazen scheme is over, as he stands convicted of a federal crime for his AI-assisted fraud."

Michael Smith Used Over 1,000 Accounts to Stream

The Department of Justice indicated that Smith could also face up to three years of supervised release and a maximum fine of $250,000.

While the DOJ will not prosecute Smith further, it may investigate potential tax violations between 2017 and 2024.

A Rolling Stone investigation revealed the scale of Smith's operation. He allegedly used 1,040 accounts, each streaming approximately 636 AI-generated songs daily.

According to Yahoo, that totals 661,440 streams per day, potentially earning him $3,307 daily, $99,216 monthly, and over $1.2 million annually.

US Attorney Damian Williams emphasized that Smith stole royalties that should have gone to legitimate musicians, songwriters, and rights holders.

An attorney for Smith, Noell Tin, declined to comment on the case.

Tags

Fraud