Streaming Fraud’s First Federal Sentence Lands at 18 Months

The first federal prosecution built on music streaming fraud produced a sentence in Manhattan on Oct. 6 that will function as a benchmark whether or not it was meant to. Judge John G. Koeltl gave Mike Smith, a musician and business owner from North Carolina, 18 months in prison, followed by two years of supervised release.

Prosecutors had asked for 46 months. Smith’s lawyers had argued for probation, saying their client was profoundly sorry and never set out to commit a federal crime. He pleaded guilty in March to one count of conspiracy to commit wire fraud, a charge carrying a maximum of five years, and agreed to forfeit $8 million in what the government described as unearned royalties.

According to the original complaint, Smith used automated bots to stream his music millions of times between 2017 and 2024, and drew further royalties from AI-generated songs he purchased and uploaded. Addressing the court before sentencing, the father of six said he had turned his love of music into a “perverse business model” and that he had “betrayed the music community.”

His defense maintained that he consulted a well-known music attorney and believed his early efforts were lawful at a time when the rules around artificially inflated streams were unsettled, while acknowledging he later rationalized conduct he knew was wrong. Prosecutors rejected the leniency argument directly in their sentencing submission, warning that a light sentence would tell the public that streaming fraud carries no meaningful punishment. Smith’s 18 months sits between the two positions, which is roughly where first precedents tend to land.