North Carolina musician Michael Smith Pleads Guilty to AI-Driven Streaming Royalty Fraud.

North Carolina musician Michael Smith has become the first person in the United States to plead guilty to a federal charge of AI-assisted music streaming fraud.

“North Carolina musician Michael Smith has pleaded guilty to collecting over $10 million in royalty payments through a massive streaming royalty fraud scheme on Spotify, Apple Music, Amazon Music, and YouTube Music”

Bleeping Computer

The 54-year-old Smith, who operated from Charlotte, admitted to orchestrating a sophisticated scheme that generated over $10 million in fraudulent royalty payments.

Bleeping Computer

Smith used AI to create hundreds of thousands of songs and deployed automated bots to stream them billions of times across major platforms including Spotify, Apple Music, Amazon Music, and YouTube Music.

The operation ran from 2017 to 2024, according to court documents unsealed when he was charged in September 2024.

Prosecutors noted that although the songs and listeners were fake, the millions of dollars he stole was real money that should have gone to legitimate artists and rights holders.

The mechanics of Smith's elaborate fraud scheme reveal a sophisticated operation that combined cutting-edge AI technology with systematic automation.

Smith purchased hundreds of thousands of AI-generated songs from an accomplice, the CEO of an AI music company identified as Alex Mitchell from Boomy.

Music Business Worldwide

He uploaded these songs to streaming platforms under fake artist names like 'Calm Force' and 'Calorie Event'.

To avoid detection, he deployed over 1,000 bot accounts that accessed streaming platforms using virtual private networks (VPNs).

Emails showed he maintained 52 cloud service accounts, each containing 20 bot accounts.

At its peak, the operation generated approximately 661,440 streams per day, with each bot streaming around 636 songs daily.

Smith maintained a dual life that contrasted his legitimate music industry connections with his secret criminal enterprise.

“Tonight, in “Damn, those folks at the Crime Factory sure do love to whip up something new, huh”

The A.V. Club

Before becoming a federal convict, Smith lived the quintessential suburban life in a sprawling house in Charlotte with his wife and six children.

He had established credibility in the music industry through legitimate channels, owning a string of medical clinics, judging the reality show 'One Shot,' and even writing a self-help book.

His musical connections included working with prominent artists like RZA and Snoop Dogg.

He had taken '20 hours' of musical training sessions with Jonathan Hay, a publicist offering consulting to aspiring musicians.

Beneath this surface of respectability lay his massive digital architecture designed to siphon money from the industry's royalty pools.

Smith's guilty plea carries significant legal consequences while highlighting broader industry concerns about AI-generated content.

He has agreed to forfeit $8,091,843.64 in illicit gains and faces a maximum sentence of 5 years in prison after pleading guilty to one count of conspiracy to commit wire fraud.

The Times of India

U.S. Attorney Jay Clayton emphasized the seriousness of the crime, stating that 'Michael Smith generated thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times.'

The plea comes amid heightened industry anxiety about AI-generated tracks, with Sony reporting having to remove 135,000 deepfakes of songs by its artists from various streamers.

Industry groups are continuing to call for more protections against both the creation and fraudulent streaming of AI content.

The case exposes critical vulnerabilities in streaming platform royalty systems and raises fundamental questions about the future of music distribution in the AI era.

“North Carolina musician Michael Smith has pleaded guilty to collecting over $10 million in royalty payments through a massive streaming royalty fraud scheme on Spotify, Apple Music, Amazon Music, and YouTube Music”

Bleeping Computer

Smith's scheme demonstrated how easily automated systems could be manipulated to exploit the per-stream royalty model.

Bleeping Computer

His internal emails showed deliberate strategy to 'get a TON of songs fast to make this work around the anti fraud policies these guys are all using now.'

Unlike deepfake imitations of specific artists, Smith focused on creating generic electronica tracks with nonsensical names to avoid immediate detection.

The scale of his operation—generating over 4 billion streams and $12 million in royalties since 2019—suggests streaming platforms' anti-fraud measures were insufficient.

This landmark case serves as both a warning and a catalyst for the industry to develop more robust systems to distinguish between legitimate and artificially inflated streaming activity.