A musician from North Carolina has been sentenced to 18 months in prison for running a massive music streaming fraud scheme. Michael Smith, 52, used artificial intelligence software and thousands of automated bots to stream fake tracks billions of times.
The scam fraudulently netted him more than $8 million (Ksh 1,037,760,000) in royalty payments. Smith appeared at Manhattan federal court, where US District Judge John G. Koeltl delivered the sentence.
Along with his prison term, Smith received two years of supervised release and was ordered to forfeit $8,091,843.64. Prosecutors had originally requested a prison term of at least 46 months, while defence lawyers sought probation.
How the Fraud Scheme Operated
Between 2017 and 2024, Smith constructed a digital operation to manipulate major music streaming platforms. In 2018, he partnered with the chief executive of an unnamed AI music company to receive thousands of automated tracks every month. In return, Smith provided song metadata and shared a portion of the streaming revenue.
To stream the music continuously without triggering anti-fraud systems, Smith operated up to 10,000 active bot accounts simultaneously. These automated accounts played hundreds of thousands of AI-generated tracks across multiple streaming platforms.
In a February email, Smith claimed his catalogue had generated “over 4 billion streams and $12 million in royalties since 2019.”
Courtroom Statements and Industry Impact
Smith pleaded guilty in March to one count of conspiracy to commit wire fraud. Before sentencing, the former BET reality show judge choked up as he addressed the court.
He acknowledged that he had turned his love for music into an illegitimate enterprise. He told the judge: “I have made a mess of what was an honorable life.”
Federal prosecutors argued that a firm sentence was necessary to deter similar technological scams. US Attorney Damian Williams stated: "Through his brazen fraud scheme, Smith stole millions in royalties that should have been paid to musicians, songwriters, and other rights holders whose songs were legitimately streamed."
