North Carolina Man to Pay $8 Million After Pleading Guilty In First-Ever Streaming Fraud Case

A North Carolina man has agreed to pay over $8 million after pleading guilty in the first-ever criminal music streaming fraud case brought by law enforcement.

The feds had first indicted Mike Smith in 2024, alleging that he had used artificial intelligence music generators to help him create mass amounts of songs to be streamed millions of times by bots tied to thousands of accounts Smith had set up. Smith earned millions of dollars from his fraudulent streams, siphoning off royalties from the legitimate artists in the royalty pool.

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Smith pled guilty to one count of conspiracy to commit wire fraud, the U.S. Attorney’s Office for the Southern District of New York said, which carries a maximum sentence of five years in prison. Smith will also return the nearly $8.1 million he’d made.

“Smith’s brazen scheme is over, as he stands convicted of a federal crime for his AI-assisted fraud,” U.S. Attorney Jay Clayton said in a statement Thursday.

Streaming fraud has been a rampant issue in the music industry for years, a problem only exacerbated by AI now that fraudsters can quickly generate thousands of songs to flood the zone on streaming services like Spotify and Apple Music. The French music streaming service Deezer previously reported that it’s seeing 60,000 AI songs uploaded to its platform every day, further noting that as much as 85 percent of streams on those tracks are fraudulent.

As The Hollywood Reporter exclusively reported in February, Apple Music doubled its penalties for those caught engaging in streaming fraud, with the company saying AI’s impact on fraud was a factor in the decision.

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