Bot like us. Get this, a North Carolina man has admitted to orchestrating a massive fraud operation that used artificial intelligence and automated bots to generate millions in music royalties from major streaming platforms.
Federal prosecutors say Michael Smith, 54, of Cornelius, North Carolina, created hundreds of thousands of songs with artificial intelligence and then artificially boosted their popularity by running automated programs that repeatedly streamed the tracks. The scheme allowed him to collect more than $8 million in royalty payments.
Smith entered a guilty plea to conspiracy to commit wire fraud before U.S. District Judge John G. Koeltl in New York. The case was announced by Jay Clayton, the United States Attorney for the Southern District of New York.
“Michael Smith generated thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times,” Clayton said. “Although the songs and listeners were fake, the millions of dollars Smith stole was real. Millions of dollars in royalties that Smith diverted from real, deserving artists and rights holders. Smith’s brazen scheme is over, as he stands convicted of a federal crime for his AI-assisted fraud.”
According to prosecutors, music streaming platforms distribute royalty payments from a shared revenue pool based on the number of times songs are played. When legitimate listeners stream a track on services such as Amazon Music, Apple Music, Spotify, or YouTube Music, small payments are allocated to the songwriters, performers, and other rights holders.
Authorities say Smith exploited that system.
Investigators found he created thousands of accounts on multiple platforms, known as bot accounts, and used software to stream his own songs around the clock. Instead of concentrating streams on a few tracks, he spread the automated plays across a massive catalog of AI generated music to avoid triggering fraud detection systems.
The artificial streams eventually reached billions of plays.
Federal officials say the tactic allowed Smith to quietly pull millions of dollars from the royalty pool while legitimate artists competed for small payouts.
Smith’s operation reportedly averaged roughly 660,000 fake streams per day across thousands of tracks. The volume of activity generated more than $1.2 million annually from music that no real listener had actually played.
He agreed to forfeit $8,091,843.64 as part of the case.
The charge carries a maximum possible sentence of five years in prison. Smith is scheduled to be sentenced on July 29, 2026.
Federal officials credited the Federal Bureau of Investigation for investigating the scheme. The case is being prosecuted by the Southern District of New York’s Complex Frauds and Cybercrime Unit.
The case marks one of the first major criminal prosecutions involving large scale streaming fraud driven by artificial intelligence. Prosecutors say the scheme highlights new challenges facing the music industry as technology makes it easier to fabricate both songs and audiences.