In a shocking case of music fraud, American musician Michael Smith has been indicted on charges of wire fraud, money laundering, and wire fraud conspiracy.
Smith reportedly used artificial intelligence (AI) technology over an eight-year period to produce thousands of songs.
He then utilized bots to generate fake streams of these songs on various popular platforms.
This sophisticated scheme enabled him to accumulate a whopping $10 million in royalties and streaming revenue by diverting payments from the communal pool intended for authentic artists with real listeners.
The extent of Smith’s operation is staggering. He set up a network of 52 cloud service accounts, each containing 20 bot-driven streaming accounts, totaling more than 1,000 fake users.
These bots streamed 636 songs per day, resulting in over 661,000 streams daily. At the peak of his deceptive activities, Smith was making $100,000 per month, directly manipulating streaming algorithms for financial gain.
This fraudulent activity has significant consequences for legitimate musicians, as the fake streams distorted the distribution of revenue.
Independent and major artists who had their music legitimately streamed were unfairly deprived of rightful compensation due to Smith’s actions. The artificial inflation of streams led to inflated royalty payments to Smith’s company, SMH Entertainment, instead of reaching deserving creators.
Smith’s collaboration with an AI music company under a Master Services Agreement facilitated the mass production of music for his illicit scheme.
Evidence from emails, such as a 2017 financial breakdown of his partnerships and a $1.3 million transfer in 2020 during the pandemic, exposed his fraudulent activities.
Now facing charges from the U.S. Attorney for the Southern District of New York, Smith stands accused of defrauding streaming services and laundering money.
The charges carry a potential maximum sentence of 60 years in prison, marking a significant milestone in the fight against digital music fraud.
