A North Carolina man built a fake music empire with robot listeners and computer-made songs, then walked away with $8 million before a federal judge sent him to prison.
Quick Take
- Michael Smith, 54, of Cornelius, North Carolina, pleaded guilty to conspiracy to commit wire fraud.
- Prosecutors say he used hundreds of thousands of AI-generated songs and thousands of bot accounts to fake billions of streams.
- The scheme pulled in roughly $8.09 million in royalty payments over several years.
- A judge sentenced him to 18 months in prison in what officials call the first case of its kind.
A Fake Fan Base Built by Machines
Federal prosecutors say Smith created hundreds of thousands of songs using artificial intelligence, then hired thousands of bot accounts to stream them around the clock. The Justice Department says he used automated programs to make the plays look like real human listening. Streaming platforms pay royalties based on how many plays a song gets, so fake plays meant fake money flowing straight into his pocket.
The scheme did not run for a few weeks or months. Prosecutors say Smith kept it going for roughly six years, constantly tweaking his tactics to dodge detection by streaming services. Investigators eventually tied the operation to an agreed loss figure of about $8.09 million, calculated after subtracting legitimate royalties and money he paid back into the royalty pools himself.
Guilty Plea Leads to Prison Time
Smith pleaded guilty in March before U.S. District Judge John G. Koeltl in Manhattan to one count of conspiracy to commit wire fraud. The U.S. Attorney’s Office for the Southern District of New York announced the plea, calling it a scheme to defraud music streaming platforms and musicians out of royalty payments they should have earned honestly.
In October, Judge Koeltl sentenced Smith to 18 months in prison plus two years of supervised release. Prosecutors had pushed for nearly four years behind bars, arguing Smith stole from hardworking songwriters who depend on real streams for income. Federal probation officials had recommended two years, landing well short of what prosecutors wanted but still a prison term.
What Smith’s Lawyers Said in His Defense
Smith’s lawyers did not deny using bots or AI-generated songs. Instead, they argued he believed his early actions were legal and said he even consulted a music attorney before starting. They claimed the rules around streaming manipulation were unclear at the time and that he later rationalized deceptive conduct he knew was wrong, including lying to distributors who questioned his streaming numbers.
His defense also argued the $8 million figure overstated what Smith actually kept, since it included money he had already paid back into royalty pools by buying streaming subscriptions. They said no individual artist or songwriter suffered any real, measurable loss because streaming royalties come from a shared pool rather than a fixed per-play payment. Prosecutors disagreed, saying the fraud diverted money that should have gone to real musicians.
A Problem Bigger Than One Man
Smith’s case may be the first criminal prosecution of its kind, but fake streaming itself is not new. A French music industry study defines stream manipulation as artificially generating plays to earn income, climb charts, or trick recommendation algorithms. When fake streams flood a platform without real paying listeners behind them, the value of every legitimate stream drops, spreading the damage across the whole system.
In the first federally prosecuted case of AI-assisted music streaming fraud, a North Carolina man was sentenced to 18 months in prison after using AI-generated songs and thousands of bot accounts to steal more than $8 million in music royalties.
Michael Smith used as many as… pic.twitter.com/rLPlQMQ0bW
— Complex (@Complex) October 12, 2026
That broader pattern has already landed in civil court. A proposed class action accuses Spotify of letting automated bots generate billions of fake streams benefiting certain major artists, while independent musicians lose out. Whether or not that case succeeds, it shows Smith’s scheme fits into a wider industry fight over who really gets paid when a song gets played.
Why This Case Matters Going Forward
Smith apologized to the court, saying he betrayed the music community he claimed to care about. Prosecutors framed his 18-month sentence as a warning shot to anyone tempted to game streaming payouts with artificial intelligence and automation. As AI tools make it easier to flood platforms with machine-made content, this case sets an early marker for how federal courts plan to treat fraud dressed up as technology.
Sources:
foxbusiness.com, justice.gov, ca.rollingstone.com, musically.com, billboard.com, newsweek.com, arxiv.org
