North Carolina man charged in $10 million AI music streaming fraud

A North Carolina man has been charged with orchestrating a complex fraud scheme using artificial intelligence and bots to manipulate music streaming platforms, allegedly stealing over $10 million in royalties. This case marks the first criminal investigation involving AI in music streaming fraud.

Michael Smith is accused of creating hundreds of thousands of AI-generated songs under fake band names such as “Callous Post,” “Calorie Screams” and “Calvinistic Dust.”

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These songs, with titles like “Zygotic Washstands” and “Zymotechnical,” were streamed billions of times on platforms like Spotify, Apple Music and Amazon Music using bots Smith programmed, according to federal prosecutors.

Smith’s scheme, which ran from 2017 through 2024, began with him uploading his own music, but he quickly expanded by partnering with an AI music company and a promoter in 2018.

In exchange for a share of the profits, the AI company generated thousands of tracks that Smith streamed using 10,000 fake accounts he created. Prosecutors said Smith spread these streams across a vast catalog of songs to avoid detection.

To further mask the fraud, Smith allegedly targeted multi-account family plans and collaborated with co-conspirators to create additional bot accounts. At its peak, the operation generated over 661,000 streams per day, earning Smith more than $1.2 million annually.

Smith’s fraudulent royalties were funneled through U.S.-based bank accounts and corporate debit cards registered under fake names, prosecutors said. Between 2020 and 2023, Smith allegedly transferred $1.3 million in royalties to these accounts.

The Mechanical Licensing Collective (MLC) eventually flagged the fraud and halted royalty payments in early 2023.

“Through his brazen fraud scheme, Smith stole millions in royalties that should have been paid to musicians, songwriters, and other rights holders,” U.S. Attorney Damian Williams said.

Smith, who was arrested in Cornelius, North Carolina, faces multiple charges, including wire fraud and money laundering conspiracy. Each charge carries a maximum sentence of 20 years in prison.