Man Gets 18 Months in First U.S. AI Music Streaming Fraud Case After $8M Royalty Scheme

A federal judge has sentenced a North Carolina musician to 18 months in prison for using AI-generated songs and thousands of automated accounts to produce billions of fake streams and collect more than $8 million in royalties, bringing the first U.S. criminal case over AI-assisted music streaming fraud to sentencing.

U.S. District Judge John G. Koeltl sentenced Michael Smith, 54, on October 6, 2026, in Manhattan federal court. Smith also received two years of supervised release and was ordered to forfeit $8,091,843.64. He pleaded guilty in March to one count of conspiracy to commit wire fraud.

The scheme ran from 2017 through 2024 and eventually involved as many as 10,000 bot accounts at once, according to federal prosecutors. Smith used fake email addresses and fraudulently obtained debit cards to create accounts on services including Spotify, Apple Music, Amazon Music and YouTube Music, then used software to make them continuously stream music he controlled.

As the operation grew, Smith turned to artificial intelligence to generate hundreds of thousands of songs, allowing him to spread the fraudulent plays across a huge catalog and reduce the chances that unusually high activity on any one track would trigger anti-fraud systems.

The scale was striking. In April 2023, prosecutors said Smith’s bots generated 80.9 million YouTube Music streams through family plans. Taylor Swift’s entire catalog received 9.3 million family-plan streams on the platform during the same month.

Those fake plays ultimately generated more than $8 million in royalty payments for Smith.

The case did not treat the creation or distribution of AI-generated music itself as criminal. Prosecutors focused on Smith’s use of fraudulent accounts and automated streams to create the appearance of genuine listeners and obtain royalty payments based on activity that had not actually occurred.

Streaming services generally distribute royalties from pools of revenue according to the share of legitimate plays attributed to different music. Artificially increasing one catalog’s share can therefore direct more money toward the person generating the fake streams and reduce the amount available to other rights holders.

Prosecutors said Smith understood that problem and deliberately designed the operation to avoid detection. In one email cited by the government, he wrote that he needed “a TON of songs fast” to work around streaming platforms’ anti-fraud policies.

The 18-month sentence was substantially below what prosecutors requested.

Federal sentencing guidelines called for 46 to 57 months in prison, and prosecutors asked Koeltl to impose at least 46 months. The U.S. Probation Office recommended two years, while Smith’s attorneys sought probation with no prison time.

His lawyers argued before sentencing that the financial effect on any individual artist or songwriter was extremely small because the losses were spread among millions of rights holders. They compared the impact of each fraudulent stream to a drop in an ocean.

Prosecutors rejected that argument, saying the distributed nature of the losses did not change the fact that the money generated by the fraudulent activity flowed to Smith. The government calculated the agreed loss from the scheme at $8,091,843.64, the same amount Koeltl ordered him to forfeit.

The sentencing follows years of efforts by music platforms and industry groups to combat artificial streaming, a practice in which bots or other automated systems are used to inflate play counts.

AI has added another dimension to the problem because large quantities of music can now be generated quickly and paired with automated streaming networks. Smith’s operation showed how the two technologies could be combined at scale, with vast numbers of tracks allowing fraudulent plays to be dispersed rather than concentrated on a small number of songs.

The Recording Industry Association of America said after the sentencing that streaming fraud harms creators by diverting money generated by legitimate listeners. The Music Fights Fraud Alliance similarly called the prosecution an important deterrent while saying broader efforts will be needed to combat artificial streaming.

Smith was originally indicted in September 2024 on charges of wire fraud, wire fraud conspiracy, and money laundering conspiracy. His March 2026 guilty plea to the single conspiracy count carried a maximum sentence of five years.

His 18-month prison term, two years of supervised release and more than $8 million forfeiture now conclude the criminal sentencing phase of a case federal prosecutors have described as the first of its kind involving artificially inflated music streaming.