A North Carolina man was sentenced to 18 months in prison and ordered to pay $8,091,843.64 in forfeiture after using AI-generated music and automated bots to defraud streaming platforms, according to multiple U.S. outlets.
Michael Smith, 54, was convicted for creating millions of fake music streams through automated accounts, siphoning revenue from legitimate artists and platforms like Spotify, Apple Music, Amazon Music, and YouTube Music.
How the Fraud Worked
Smith’s scheme relied on automated bots instead of consumers and fake songs instead of creative artists,
as prosecutors described it. He used thousands of fake accounts to simulate real user activity, generating 80.9 million fraudulent streams in April 2023 alone, according to the U.S. Attorney’s Office. The bots distributed plays across hundreds of thousands of songs to avoid detection, with Smith’s catalog earning over $8 million in royalties.
According to the U.S. Attorney’s Office, Smith created up to 10,000 automated accounts using falsified emails and debit cards obtained illicitly. These bots played a catalog of hundreds of thousands of AI-generated songs, with daily streams exceeding 600,000. The operation was uncovered by the FBI’s Complex Frauds and Cyber Crimes Unit and the U.S. Attorney’s Office for the Southern District of New York. Smith’s activities led to 80.9 million fraudulent streams in April 2023, a figure that contrasted sharply with Taylor Swift’s 9.3 million streams during the same period.
Smith’s actions violated anti-fraud laws by siphoning funds from real artists and manipulating streaming metrics. The case marks the first U.S. criminal conviction tied to AI-driven music fraud.
A North Carolina man was sentenced to 18 months in prison after making over $8 million from AI-generated songs.Michael Smith, 54, used bots to play his music billions of times and collect money from fake streams. Prosecutors say this took money away from real artists.📷:… pic.twitter.com/DjYftygvtc
Legal Consequences and Broader Implications
In addition to prison time, Smith received two years of supervised release and an order of forfeiture superior to $8 million. The case highlights growing regulatory scrutiny of AI in creative industries. The European Union’s AI Act now requires transparency for synthetic audio content, while U.S. authorities warn against fraudulent uses of the technology.
Smith stole millions in royalties from legitimate artists and their fans,
said Jamie McDonald, a federal prosecutor. The case triggers questions about how platforms like YouTube Music and Spotify handle automated activity, as demonstrated by the fraud scheme involving Michael Smith. The U.S. Attorney’s Office noted that the fraud impacted not only platforms but also real musicians by reducing their share of royalty funds.
Smith’s defense argued for probation, claiming the prosecution targeted him for industry-wide issues. However, the court upheld the sentence, citing the scale of the fraud. The case was prosecuted by the U.S. Attorney’s Office for the Southern District of New York, with Judge John G. Koeltl presiding. Smith’s sentencing on October 6, 2026, followed his guilty plea on March 19, 2026, for electronic fraud conspiracy.
What’s Next?
The U.S. Attorney’s Office stated that Smith’s case sets a precedent for prosecuting AI-facilitated fraud. While the tech itself is not banned, the filing emphasizes that using AI to produce music does not automatically constitute a criminal offense. The outcome may influence future regulations on AI-generated content and streaming revenue distribution. In Argentina, the Copyright Law (11.723) penalizes unauthorized reproduction of phonograms, while the EU’s AI Act mandates disclosure of synthetic media.
Smith’s case highlights the legal boundaries of AI in creative industries. As streaming platforms refine detection systems, the focus remains on distinguishing legitimate AI use from fraudulent activity. The DOJ emphasized that AI tools are not inherently illegal, but their misuse to defraud systems carries severe consequences. This case serves as a cautionary example for creators and platforms dealing with the intersection of technology and intellectual property law.