N.C. Man Charged with $10M AI Music Streaming Fraud Scheme

A man from Cornelius, North Carolina, has been arrested and charged in connection with a scheme to fraudulently collect over $10 million in music royalties by using artificial intelligence to generate songs and automated bots to stream them.

AI-Generated Songs and Streaming Bots

Michael Smith, 52, reportedly used artificial intelligence to create hundreds of thousands of songs, which were then streamed billions of times using bot accounts. According to the U.S. Attorney’s Office for the Southern District of New York, this scheme allowed Smith to collect more than $10 million in royalty payments that should have gone to legitimate musicians, songwriters, and other rights holders.

Arrest and Charges

Smith was arrested on Wednesday morning and will face a U.S. Magistrate Judge in North Carolina. He is charged with wire fraud conspiracy, wire fraud, and money laundering conspiracy—each charge carrying a maximum sentence of 20 years in prison.

Prosecutors’ Statement

“As alleged, Michael Smith fraudulently streamed songs created with artificial intelligence billions of times in order to steal royalties,” said U.S. Attorney Damian Williams. “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. Today, thanks to the work of the FBI and the career prosecutors of this Office, it’s time for Smith to face the music.”

Details of the Scheme

The indictment against Smith alleges that from 2017 to 2024, he estimated that his bot accounts could generate around 661,440 streams per day, which would result in annual royalties of over $1 million. To execute his plan, Smith allegedly used false names and other information to create the bot accounts and repeatedly lied to streaming platforms about his activities. His actions violated the terms and conditions of these platforms, which prohibit manipulation of streaming numbers.

Implications for AI and the Future of Regulation

Smith’s case highlights the darker side of AI’s rapid advancement, showcasing how artificial intelligence can be misused on a massive scale. By exploiting AI to generate songs and manipulate streaming platforms, Smith’s actions raise critical questions about the role of AI in creative industries and the need for stronger regulations to prevent fraud. As AI continues to evolve, this case serves as a stark reminder that, while AI holds transformative potential, it also presents new challenges that must be addressed to protect industries and ensure ethical use.