AI Streaming Fraudster Sentenced to 18 Months in Prison

Michael Smith has been sentenced to 18 months in federal prison for a music-streaming fraud scheme that used automated accounts and large volumes of AI-generated tracks to divert royalty payments. The sentence was handed down Tuesday in Manhattan and will be followed by two years of supervised release.

The sentence followed a wire-fraud plea

Smith, a 54-year-old musician and business owner from North Carolina, pleaded guilty in March to one count of conspiracy to commit wire fraud. As part of his plea agreement, he had already agreed to forfeit more than $8 million connected to the scheme.

The prison term landed below the 46 months sought by federal prosecutors and the five-year statutory maximum. Smith’s lawyers had asked for probation, arguing that the financial effect on any individual artist was difficult to measure. Prosecutors countered that the operation pulled money from a shared royalty pool that should have gone to legitimate musicians and songwriters.

Bots turned fake plays into real royalties

According to court reporting, the scheme ran from 2017 to 2024. Smith used thousands of bot accounts to repeatedly stream music on platforms including Spotify and Apple Music. He initially promoted music from his own catalog, then expanded the operation with large numbers of AI-generated songs.

The volume was central to the business model: tiny payments from individual plays could become millions of dollars when automated streams were repeated at enormous scale. Smith admitted in court that he had betrayed the music community and transformed his interest in music into what he called a perverse business model.

A warning for the streaming economy

The case gives the music business a concrete criminal sentence at a time when labels, services and artists are trying to distinguish genuine listening from automated activity. AI made it easier to manufacture an enormous catalog, while bots supplied the appearance of an audience.

For working artists, the concern is not only chart manipulation. Streaming royalties are distributed from finite pools, so fraudulent plays can reduce the money available to legitimate recordings. The 18-month sentence signals that large-scale manipulation can carry consequences beyond account removals and withheld payouts.