AI streaming fraud guilty plea
A North Carolina man pleaded guilty after using AI to generate hundreds of thousands of songs and streaming‑bot networks to grab about $8 million in royalties across Spotify, Apple Music and YouTube Music. The case highlights how AI-driven fraud scales and stresses the need for real‑time detection and rollback in payments and royalties pipelines. (theverge.com) (en.androidguias.com)
Michael Smith, 54, of Cornelius, North Carolina, pleaded guilty on March 19, 2026 to one count of conspiracy to commit wire fraud in the Southern District of New York before U.S. District Judge John G. Koeltl. (justice.gov) Prosecutors say Smith admitted his operation purchased or produced hundreds of thousands of AI‑generated tracks that were played by automated Bot Accounts billions of times, enabling him to obtain more than $8 million in illicit royalties. (justice.gov) Under his plea, Smith agreed to forfeit $8,091,843.64 and faces a statutory maximum sentence of five years in prison, with sentencing scheduled for July 29, 2026. ( ) A Rolling Stone investigation and the court filings estimate Smith operated roughly 1,040 bot accounts that streamed about 636 tracks each per day at peak—around 661,440 fake streams daily and an estimated annual take exceeding $1.2 million. (rollingstone.com) The unsealed indictment and DOJ filings say Smith began in 2018 working with co‑conspirators that included the CEO of an unnamed AI music company and a music promoter who allegedly supplied hundreds of thousands of AI tracks for the scheme. ( ) The case was handled by the U.S. Attorney’s Office for the Southern District of New York’s Complex Frauds and Cybercrime Unit, led by Assistant U.S. Attorneys Nicholas W. Chiuchiolo and Kevin Mead, with investigative assistance from the FBI. (justice.gov) Industry reporting and prior probes show the Mechanical Licensing Collective halted royalty payments tied to the scheme in early 2023 after flagging anomalous activity linked to the account network. (billboard.com)
