AI Music Creator Accused of $10 Million Fraud

A suspected fraudster allegedly earned over $10 million in royalties since 2017 by creating AI-generated songs, uploading them to streaming platforms, and artificially inflating play counts. This is according to a statement from the U.S. Attorney’s Office for the Southern District of New York.

Michael Smith, a 52-year-old resident of North Carolina, is accused of uploading hundreds of thousands of songs to streaming platforms like Spotify, Apple Music, and Amazon Music, using automated programs to play them billions of times to steal royalties.

On September 4, he was arrested on charges of:

• conspiracy to commit wire fraud;
• wire fraud;
• conspiracy to commit money laundering.

Each charge carries a maximum penalty of 20 years in prison. 

“Smith created thousands of accounts on streaming services (bot accounts) that he could use to stream songs. He then used software to have the bot accounts continuously stream his songs,” the statement from the prosecutor’s office reads. 

The accused collaborated with two unnamed accomplices—a CEO of a music AI company and a promoter—to create hundreds of thousands of songs using artificial intelligence. The former allegedly provided Smith with tracks in exchange for a share of the revenue. 

“We need to quickly generate a ton of songs to make this work within the anti-fraud policies that all these guys are using now,” the alleged fraudster wrote to his two accomplices on December 26, 2018. 

Fake emails and VPNs were used to cover their tracks. 

In May 2023, the fraudster earned nearly $10,000 from selling AI-generated tracks featuring a deepfake voice of Frank Ocean.

In April, Universal Music Group urged streaming platforms to block AI services that extract melodies and lyrics from songs.