Federal prosecutors have secured a landmark conviction in what’s being described as the first criminal streaming fraud case in U.S. history, after a North Carolina musician admitted to orchestrating an $8 million scheme powered in part by artificial intelligence.
Michael Smith, 54, pleaded guilty to conspiracy to commit wire fraud in New York federal court, bringing an end to a years-long operation that authorities say siphoned money away from legitimate artists and rights holders. Prosecutors said that Smith generated massive volumes of AI-created songs and used automated systems to rack up billions of fake streams across major platforms.
“Michael Smith generated thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times,” said U.S. Attorney 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.”
According to the plea agreement, Smith has agreed to forfeit more than $8 million tied to the scheme. His prison sentence is expected to be in the range of 46 to 57 months, but the exact length will be decided later by the judge. For more about how federal sentencing works, read here.
Court documents outline how the operation ran for several years, with Smith initially using his own catalog before scaling up with AI-generated music and bot-driven streaming activity. The goal was simple: exploit the royalty system, where payouts are distributed from a shared pool, by inflating plays and diverting revenue.
Prosecutors emphasized that while the music and listeners may have been artificial, the financial impact was very real. The scheme ultimately unraveled after irregular streaming patterns were flagged by platforms and industry watchdogs, including the Mechanical Licensing Collective, which works to ensure songwriters are properly paid.
Smith remains free on bond ahead of his sentencing, which is expected later this year.
