In a mind-blowing case of music fraud, Michael Smith, a U.S.-based musician, has been charged with wire fraud, money laundering, and wire fraud conspiracy.
Over the course of eight years, Smith used artificial intelligence (AI) services to generate thousands of songs while exploiting bots to create fake streams of these tracks across popular platforms. This elaborate scheme allowed him to amass a staggering $10 million in royalties and streaming income, misappropriating payments from the shared pool of revenue meant for artists with genuine listeners.
The depth of Smith’s operation is alarming. He created a network of 52 cloud service accounts, each containing 20 bot-driven streaming accounts, totaling over 1,000 fake users. These bots streamed 636 songs per day, generating more than 661,000 streams daily. At the height of his fraudulent activity, Smith was raking in $100,000 monthly, directly manipulating streaming algorithms.
The implications for real musicians are significant, as these fake streams distorted the revenue distribution model.
Independent and major artists whose music was streamed by authentic users were effectively deprived of fair compensation due to Smith’s actions. The manipulation created a false picture of success, driving inflated royalty payments to his business, SMH Entertainment, rather than to legitimate musicians.
Smith collaborated with an AI music company under a Master Services Agreement, where they churned out music for him at scale. His operation came to light through email evidence, including a 2017 financial breakdown of his dealings with partners and a 2020 transfer of $1.3 million at the height of the pandemic.
Facing charges from the U.S. Attorney for the Southern District of New York, Smith now stands accused of defrauding streaming services and laundering money. The charges carry a potential maximum sentence of 60 years in prison, marking a historic moment in the fight against digital music fraud.