A Brazen Fraud Scheme Unveiled

A musician from Cornelius, North Carolina, Michael Smith, has been accused of a years-long scheme involving wire fraud conspiracy, wire fraud, and money laundering conspiracy.

The 52-year-old allegedly used artificial intelligence (AI) to generate songs and bots to inflate listener numbers on music streaming platforms. From 2017 to 2024, Smith's activities reportedly netted him over $10 million in royalties.

The U.S. Attorney's Office for the Southern District of New York announced the charges against Smith. "Michael Smith fraudulently streamed songs created with artificial intelligence billions of times to steal royalties," U.S. Attorney Damian Williams said in an official press release.

Williams emphasized that Smith's actions diverted millions from musicians, songwriters, and other rights holders whose songs were legitimately streamed.

The Mechanics of the Scheme

Smith's method was elaborate. He published hundreds of thousands of AI-generated tracks and used thousands of fake accounts and bots to generate around 661,440 streams per day.

This impressive number of streams translated to approximately $1.2 million in annual royalties. Smith allegedly told his accomplices they needed many songs to bypass anti-fraud policies on streaming platforms.

In 2018, Smith began collaborating with the CEO of an AI music company and a music promoter. Together, they created hundreds of thousands of songs using AI, which Smith then fraudulently streamed. The DOJ cited emails in which Smith and his co-conspirators referred to their AI-generated tracks as "instant music."

AI Music: The Controversy

While Smith is not being sued for using AI, the case raises questions about AI-generated music. AI music is allowed on streaming platforms if it violates the same policies as human-made songs. Nonetheless, some artists argue that the training datasets for AI models unfairly use their work without compensation or permission.

The Absurdity of AI-Generated Tracks

The indictment details some of the bizarre AI-generated tracks Smith published. Titles included "Zygophyllaceae" and "Zymotechnical," attributed to fictitious artists like "Calypso Xored" and "Camel Edible."

Despite their nonsensical nature, these tracks logged massive streams thanks to Smith's bot network. When streaming platforms flagged the suspicious activity, Smith denied any wrongdoing.

In a February 2024 email cited in the indictment, Smith allegedly boasted that his music "has generated over 4 billion streams and $12 million in royalties since 2019."

Each charge against Smith carries a maximum sentence of 20 years in prison. "Thanks to the work of the FBI and the career prosecutors of this office, it's time for Smith to face the music," Williams concluded.