Feds Want 46 Months Prison for AI Music Fraudster Who ‘Stole Millions’

The North Carolina man who used artificial intelligence to create thousands of fake songs by invented artists, then unleashed an army of bot accounts to stream the tracks billions of times and siphon millions from royalty pools meant for legitimate artists, should face “significant punishment,” prosecutors say.

In a new letter filed Tuesday and obtained by Rolling Stone, Manhattan federal prosecutors urged a judge to sentence Michael Smith to at least 46 months behind bars for his admitted scheme. Smith’s defense is asking for no jail time, only probation. Federal probation officials are recommending 24 months in prison. Smith’s sentencing is set for Oct. 6 in Manhattan federal court.

In their letter, prosecutors said Smith became so adept at artificially inflating streams of his music on platforms including Apple Music, Spotify, Amazon Music, and YouTube Music that his share of subscription-funded royalty pools sometimes exceeded shares allotted to the industry’s biggest stars. In April 2023, for example, Taylor Swift’s entire catalog drew 9.3 million streams from YouTube Music family-plan subscribers, prosecutors said, while Smith’s catalog generated 80.9 million.

Prosecutors said Smith pocketed more than $8 million in unearned royalties overall, perpetrating his “massive fraud” for more than six years. They argued that a stiff sentence is necessary “to provide just punishment” and deter other white-collar criminals in the future.

“Imposing a substantial term of incarceration will send a clear message that defrauding social services programs, no matter who you are, will result in significant punishment,” Assistant U.S. Attorneys Nicholas W. Chiuchiolo and Kevin B. Mead wrote in their letter to the court. “If the public is watching this case, as the defendant claims, a lenient sentence will send precisely the wrong message: streaming fraud will not result in meaningful punishment.”

Smith accepted a deal from prosecutors in March, pleading guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of five years in prison. He also agreed to pay $8,091,843.64 in forfeiture.

In defense filings last week, Smith and his lawyers said he was “profoundly sorry” for his conduct but that he “did not set out to commit a federal crime.”

“He believed his initial efforts to be lawful,” his lawyers Noell P. Tin and Justine Harris wrote to the judge. “Indeed, Mr. Smith consulted with a well-known music attorney with extensive experience in legal operations at music publishing companies. Although he ultimately ended up rationalizing conduct that he knew was wrong — false statements to distributors and increasingly deceptive conduct to avoid scrutiny — his conduct began at a time when the legal parameters were unsettled.”

Prosecutors disputed that in their Tuesday filing, arguing that Smith’s “own words and conduct reveal that he knew from the very beginning that his scheme was a form of fraud.” They said he knowingly carried out the fraud on a daily basis during the six years.

“Michael Smith generated thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times,” U.S. Attorney Jay Clayton said in March. “Although the songs and listeners were fake, the millions of dollars Smith stole was real. Millions of dollars in royalties that Smith diverted from real, deserving artists and rights holders. Smith’s brazen scheme is over, as he stands convicted of a federal crime for his AI-assisted fraud.”