Michael Smith, a 52-year-old resident of Cornelius, North Carolina, has been indicted on charges of orchestrating an elaborate scheme to defraud music streaming platforms by using artificial intelligence to create hundreds of thousands of songs.
U.S. Attorney for the Southern District of New York, Damian Williams, announced the charges, which include conspiracy to commit wire fraud and money laundering.
According to the indictment, Smith fraudulently generated over $10 million in royalty payments through an extensive operation involving automated streaming programs, or “bots,” which streamed AI-generated music billions of times.
This deceitful tactic allowed him to divert funds from legitimate musicians and songwriters.
“Through his brazen fraud scheme, Smith stole millions in royalties that should have been paid to musicians and rights holders,” said U.S. Attorney Williams. “Today, it’s time for Smith to face the music.”
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The Federal Bureau of Investigation (FBI) played a crucial role in this investigation, with Acting Assistant Director Christie M. Curtis indicating that Smith manipulated technology to exploit the streaming industry.
“The FBI remains dedicated to plucking out those who manipulate advanced technology to receive illicit profits,” Curtis added.
Smith allegedly created thousands of accounts across popular streaming platforms such as Spotify and Apple Music, using these “bot accounts” to continuously play the songs he controlled.
To avoid detection, he spread automated streams across numerous tracks, cunningly preventing any single song from raising suspicion.
To facilitate this operation, Smith teamed up with an artificial intelligence music company, producing hundreds of thousands of songs.
Collaborators supplied him with a steady stream of AI-generated music, which he would subsequently upload and manipulate, ensuring the songs appeared to come from legitimate artists.
The indictment details Smith’s deceptive practices, which included creating fictitious accounts and misrepresenting himself to the streaming platforms.
Facing multiple serious charges, Smith could face up to 20 years in prison for each count of wire fraud and money laundering conspiracy.
His arrest underscores the consequences of exploiting technology for personal gain and highlights law enforcement's commitment to safeguarding the rights of legitimate artists in the music industry.
