US Man Pleads Guilty in $8 Million Streaming Fraud Scheme Using AI-Generated Music

A federal case in New York has resulted in a guilty plea from a man who orchestrated a scheme to defraud streaming services of approximately $8 million using artificially generated music. Michael Smith, also known as “Mike Smiff,” from Brooklyn, pleaded guilty to conspiracy to commit wire fraud, admitting he used fraudulent means to collect royalties from platforms including Spotify, Apple Music, and Amazon.

The scheme, which operated between 2017 and 2023, involved creating hundreds of fake artist profiles and uploading tens of thousands of AI-generated songs. Smith and his associates then used a network of streaming bots and manipulated play counts to simulate hundreds of millions of fraudulent streams. This activity generated royalty payments that were then funneled through a digital payment company he controlled.

As part of his plea agreement, Smith has agreed to forfeit the proceeds of the fraud, amounting to $8,075,849. He also faces a maximum sentence of 20 years in prison, with sentencing scheduled for later this year. The case was investigated by the FBI and prosecuted by the US Attorney’s Office for the Eastern District of New York.

This conviction represents one of the largest and most formal legal actions to date targeting systematic streaming manipulation for financial gain. While platforms have long battled bot-driven “streaming farms,” the explicit use of AI to mass-produce content for the sole purpose of fraud adds a new dimension to the challenge. It highlights how generative AI tools can be weaponized to exploit the automated, volume-driven economics of streaming royalty distribution.

The case underscores a growing tension within the music industry. As services encourage the use of AI in legitimate creative tools and some artists experiment with the technology, bad actors are simultaneously deploying it for purely extractive fraud. This legal action serves as a stark warning that such schemes constitute federal wire fraud, moving beyond mere violations of platform terms of service.

For streaming services, the fraud exposes persistent vulnerabilities in their detection systems. The scale of this operation, lasting several years and involving millions of dollars, indicates the sophistication and profitability of such manipulation. It will likely intensify internal and industry-wide efforts to develop more robust fraud detection algorithms that can distinguish between genuine listener engagement and artificially inflated activity, even when the content itself is AI-synthesized.