Feds Want AI Streaming Fraudster Who Stole $8M From Artists Sent To Prison For A Long Time

Federal prosecutors want Michael Smith, the North Carolina man behind an AI-powered streaming operation that generated billions of fake plays, sentenced to nearly four years in prison.

In a new filing ahead of his October 6 sentencing in Manhattan federal court, the government says Smith spent more than six years using fake accounts, automated software and a flood of computer-generated songs to pull more than $8 million from royalty pools meant for real artists, writers and rights holders.

Smith pleaded guilty in March to conspiracy to commit wire fraud. His lawyers have asked for probation, while the Probation Office has recommended two years behind bars. Prosecutors are seeking a sentence within the federal guidelines range of roughly four to nearly five years, plus forfeiture of $8,091,843.64.

The government’s position is simple: Smith’s scheme was not a harmless trick in a music business full of inflated numbers. In the filing, prosecutors say his false streams diluted the value of legitimate plays and diverted money from creators across the business.

“Smith was the architect of, and led, a sophisticated and multi-faceted fraud scheme over the course of many years to divert musical royalties from legitimate and hard-working songwriters and other rightsholders to himself,” prosecutors wrote. “Smith pocketed more than $8 million of these royalties.”

Smith’s operation relied on a massive catalog of AI-created tracks, uploaded under made-up artist names. He then used bot accounts to keep the songs playing on Spotify, Apple Music, Amazon Music and YouTube Music. The more streams the songs generated, the larger his share of the royalty pools became.

At one point, prosecutors say Smith controlled as many as 10,000 active bot accounts. He bought bulk email addresses, registered accounts using fake names and used virtual computers to run the streams. He also used family-plan subscriptions, which let him operate several accounts at a lower cost.

The scheme was designed to avoid detection. Smith spread streams across a huge number of songs instead of sending an obvious wave of plays to a single track. In one email cited by prosecutors, he wrote that he needed “a TON of content with small amounts of Streams” so he would not raise alarms.

That strategy became even clearer in April 2023, when prosecutors say Smith’s catalog received 80.9 million YouTube Music family-plan streams. Taylor Swift’s entire catalog drew 9.3 million family-plan streams that same month.

AllHipHop previously reported that Smith had been charged in 2024 after investigators alleged he used AI music and bots to build a fraudulent royalty machine. The case later narrowed when he accepted a plea deal, which the Justice Department announced in March.

Smith’s defense says he did not initially set out to commit a federal crime and argues that the losses were spread so widely that no one artist suffered a large, measurable hit. Prosecutors sharply rejected that framing.

“Every penny of loss was diverted to the defendant,” the government wrote. “Put differently, the actual loss is the same as the defendant’s gain, and while the loss may have been diffuse, the fraudulent proceeds were not—they all went into the defendant’s pocket.”

The filing also says Smith repeatedly denied streaming manipulation after distributors and music-industry groups questioned his activity. Prosecutors say he claimed there was “absolutely no fraud going on whatsoever,” even as he worked to stay ahead of anti-fraud safeguards.

WBTV reported that federal agents arrested Smith at his Cornelius home in 2024. The public court record describes a years-long operation that prosecutors say was built to make fake listening look real.

The government says a probationary sentence would send the wrong message in a business still battling fake streams. “If the public is watching this case,” prosecutors wrote, “a lenient sentence will send precisely the wrong message: streaming fraud will not result in meaningful punishment.”