Musician Faces Fraud Charges Over $10M AI-Generated Music Streaming Scam
A North Carolina musician faces criminal charges for allegedly orchestrating a $10 million streaming fraud scheme using AI-generated music tracks across major platforms including Spotify, Apple Music, Amazon Music, and YouTube Music.
The scheme, running from 2017 to 2024, involved collaboration with an AI music company that produced thousands of tracks. The defendant, Michael Smith, allegedly created numerous bot accounts through Family plans to artificially inflate streaming numbers.
AI fraud indictment legal document
Key details of the alleged fraud:
- Created 1,040 bot accounts through 52 cloud services
- Generated approximately 661,440 streams per day
- Transferred $1.3 million in fraudulent royalties to personal accounts (2020-2023)
- Used corporate debit cards with fake employee names to pay for streaming subscriptions
- Collected both recording and compositional royalties until discovered
The Mechanical Licensing Collective (MLC) halted royalty payments in early 2023 after identifying suspicious activity. MLC CEO Kris Ahrend emphasized this case highlights the serious issue of streaming fraud in the music industry.
Smith faces charges of wire fraud and money laundering conspiracy. While creating and distributing AI music is legal when not infringing on protected content, the alleged bot-powered fake streaming scheme violates platform policies and federal law.
Blurred businessman in dark suit
The case represents the first criminal prosecution involving artificially inflated music streaming numbers, marking a significant precedent in combating streaming fraud.
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