AI Music Fraudster Wants Probation After $8M Scheme, Says No Artist Suffered Meaningful Harm

The man who admitted using AI-generated music and billions of fake streams to collect more than $8 million in royalties is asking a federal judge for probation, arguing that the losses were spread so widely that no individual artist or songwriter suffered meaningful financial harm.

Michael Smith pleaded guilty in March to conspiracy to commit wire fraud in what federal prosecutors have described as the first U.S. criminal case involving artificially inflated music streaming. Federal guidelines call for 46 to 57 months in prison, while a Presentence Investigation Report recommends 24 months. His attorneys want U.S. District Judge John G. Koeltl to impose no prison time when Smith is sentenced Oct. 6 in Manhattan federal court.

The defense does not dispute that Smith collected more than $8 million through fraudulent streams or that the money came from royalty pools shared by legitimate rightsholders. Instead, his lawyers argue that the loss was divided among millions of artists and songwriters, leaving each individual victim with only a tiny reduction in royalties.

Smith’s attorneys described the effect as closer to “a drop in an ocean” than a drop in a bucket. Their sentencing memorandum argues that the aggregate dollar figure makes the scheme appear more harmful than the financial impact experienced by any one musician.

Federal prosecutors have framed the same loss differently. When Smith pleaded guilty, U.S. Attorney Jay Clayton said the songs and listeners may have been fake, but the money was real and represented royalties diverted from legitimate artists and rightsholders.

Smith admitted using automated accounts to stream music he controlled billions of times across platforms including Spotify, Apple Music, Amazon Music and YouTube Music. Prosecutors said the scheme began in 2017 and eventually relied on hundreds of thousands of AI-generated tracks, allowing him to spread fraudulent activity across a large catalog and reduce the chances of detection.

At one point, Smith estimated his bot network could generate roughly 661,000 streams a day and more than $1.2 million in annual royalties, according to prosecutors. He repeatedly misrepresented the activity to streaming and distribution companies as they began scrutinizing suspicious traffic.

His lawyers acknowledge that Smith used increasingly deceptive tactics and lied once his conduct came under scrutiny. They argue, however, that fraudulent streaming was already widespread across the music industry and that Smith initially viewed his conduct as exploiting weaknesses in the royalty system rather than committing a federal crime.

The filing alleges that forms of artificial streaming have been used throughout the business, including by major labels and publishers, and contends the criminal boundaries surrounding the practice were less clear when Smith began.

Smith has already agreed to forfeit $8,091,843.64 in proceeds from the scheme. Conspiracy to commit wire fraud carries a maximum sentence of five years under the charge to which he pleaded guilty.

His attorneys are also asking Koeltl to consider Smith’s lack of a prior criminal record, his family circumstances, and character letters describing acts of generosity and support for others. They contend incarceration is unnecessary to protect the public and that the conduct was an aberration in an otherwise law-abiding life.

Koeltl will decide whether the scale of the scheme and the more than $8 million in diverted royalties warrant prison despite the defense’s argument that the financial harm was thinly dispersed across individual artists and songwriters.

Smith is scheduled to be sentenced Oct. 6.