In a shocking case of music industry fraud, Michael Smith, a 52-year-old musician from Cornelius, North Carolina, was arrested by the FBI for manipulating music streaming platforms to rake in over $10 million in fraudulent royalties.
Michael Smith, a musician from North Carolina, was arrested on September 5, 2024, by the FBI for orchestrating a massive fraud scheme involving artificial intelligence and bot-generated music streams. Smith reportedly amassed over $10 million in fraudulent royalties by streaming AI-created songs across platforms like Spotify, Apple Music, and YouTube Music.
The scheme, which ran from 2017 to 2024, involved creating thousands of bot accounts that streamed hundreds of thousands of songs Smith had artificially produced using AI technology. These automated streams raked in royalties intended for legitimate artists and songwriters, redirecting the funds into Smith’s pockets. Authorities revealed that at the height of the operation, Smith generated over 661,000 streams per day, resulting in more than $1 million in annual royalties.
To avoid detection, Smith spread the streams across tens of thousands of songs, masking the fraudulent activity as legitimate. He collaborated with an AI music company and a promoter, generating a vast number of fake songs under randomly generated artist names to conceal his activities.
Smith’s operation was exposed when he boasted about accumulating 4 billion streams and over $12 million in royalties. The FBI eventually caught wind of the operation, and Smith now faces serious charges, including wire fraud and money laundering conspiracy, with each charge carrying up to 20 years in prison.
Smith faces multiple charges, including wire fraud and conspiracy to commit wire fraud, which could lead to up to 60 years in prison. His case marks the first criminal prosecution involving AI and streaming fraud in the music industry.
This unprecedented case has drawn attention to the vulnerabilities in streaming platforms and the potential misuse of AI in the creative industry. This case marks a significant moment in the fight against AI-assisted fraud, illustrating how modern technology can be exploited for financial gain in the entertainment industry.
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