Musician due to be sentenced in US AI streaming fraud case

A 52-year-old musician from Cornelius, North Carolina, is due to be sentenced in Manhattan federal court on October 6 after admitting to a large-scale streaming fraud built on bots and AI-made music.

Michael Smith pleaded guilty on March 19, 2026, to a single count of conspiracy to commit wire fraud under 18 U.S.C. § 371, according to the U.S. Department of Justice. That offence carries a maximum sentence of five years in prison. Prosecutors are asking for at least 46 months.

The request came in an 11-page sentencing letter filed on September 29. Prosecutors described the case as the first criminal case involving artificially inflated music streaming, a practice where plays are generated by machines rather than real listeners to trigger royalty payments Music Business Worldwide.

Smith was first charged in September 2024 with three counts carrying a combined 60 years. He then reached a plea deal on the single conspiracy count. The prosecution was brought by the U.S. Attorney's Office for the Southern District of New York, whose head, Jay Clayton, announced the guilty plea.

Prosecutors say the scheme ran from 2017 to 2024. Smith worked with hundreds of thousands of AI-generated songs, which are tracks created by software rather than human songwriters, and used automated bot accounts to play them billions of times. Early charging documents put the alleged royalties at more than $10 million.

Court papers trace how the plan grew. In an early model, Smith used 52 cloud accounts running 20 bot accounts each, or 1,040 bots in total. He calculated that each bot could stream about 636 songs a day. That gave a ceiling of roughly 661,440 streams per day.

At an assumed half a cent per stream, the standard micro-payment paid for each play, that model projected $3,307.20 a day. That is $99,216 a month and $1,207,128 a year.

By June 2019, Smith reported 88 million streams so far and earnings of about $110,000 per month. Prosecutors point to an October 4, 2018 message in which he wrote that he needed a large volume of content with small stream counts per track to avoid raising issues.

The logic was simple. A few tracks with millions of plays would draw attention. Thousands of tracks with two plays a day would blend in.

For listeners, the money matters because streaming royalties come from a shared pool. Fraudulent plays can divert payments away from working songwriters and artists. Prosecutors have argued Smith stole from that group.