North Carolina man jailed for 18 months over $8m AI streaming fraud

Michael Smith, a 54-year-old from Cornelius, North Carolina, has been sentenced to 18 months in prison for a streaming fraud scheme that prosecutors said generated more than $8 million in royalties. U.S. District Judge John G. Koeltl imposed the sentence in Manhattan federal court on 6 October.

Smith pleaded guilty in March to one count of conspiracy to commit wire fraud, an agreement to carry out fraud using electronic messages and transfers. The judge ordered him to forfeit $8,091,843.64, in effect giving up the alleged proceeds. He must also serve two years under court supervision after release. U.S. Department of Justice

Prosecutors said the scheme ran from 2017 to 2024. During that period Smith controlled thousands of fake accounts and used them to stream hundreds of thousands of AI-generated songs billions of times. AI-generated here means tracks assembled with artificial-intelligence tools rather than studio performances by musicians. Those plays were spread across Spotify, Apple Music, Amazon Music and YouTube Music, where each stream triggers a small royalty payment.

The numbers tell the story. In April 2023, Taylor Swift's entire catalogue drew 9.3 million family-plan streams on YouTube Music, a subscription that lets several listeners share one bill. In that same month, Smith's bot accounts streamed his own AI-generated tracks 80.9 million times using family plans. Music Business Worldwide

It could have been longer. Prosecutors asked for at least 46 months in prison, the low end of the 46-to-57-month federal sentencing guidelines range. The U.S. Probation Office recommended 24 months, while Smith's lawyers asked for probation with no prison time.

The case has moved through the Southern District of New York in stages. The office published a charge of AI-assisted music streaming fraud in September 2024, with then U.S. Attorney Damian Williams alleging that Smith had fraudulently streamed AI-created songs billions of times. Smith later pleaded guilty before Judge Koeltl, a plea announced by U.S. Attorney Jay Clayton, before returning to the same court for sentencing.

What makes this stand out for listeners is simple. Fake streams pull money from a shared royalty pool, so inflated plays can reduce what genuine plays earn. The sentence, and the forfeiture order, put a prison term and a dollar figure on that harm.