AI MUSIC SCHEME: North Carolina Man Arrested for $10 Million Fraud

Michael Smith, a 52-year-old resident of North Carolina, has been taken into custody by the Department of Justice (DOJ) for his alleged involvement in a sophisticated scheme leveraging AI-generated music and fraudulent streaming practices. Smith is accused of creating hundreds of thousands of fake songs using artificial intelligence, manipulating streaming services to generate fake plays, and unlawfully earning over $10 million in royalties.

The DOJ’s press release reveals that Smith collaborated with two unnamed accomplices to produce and distribute AI-generated tracks on prominent platforms, including Spotify, Apple Music, and YouTube Music. He allegedly employed bots to artificially boost stream numbers, converting them into royalty payments. Smith’s manipulation of fraud detection systems allowed him to evade detection for years.

Investigators uncovered emails detailing the scheme, including a 2018 message in which Smith urged his co-conspirators to rapidly generate tracks to outpace anti-fraud measures. The CEO of the AI company provided thousands of songs with randomized file names, which Smith would later rename with more natural-sounding titles.

The scheme involved producing large quantities of low-quality, AI-generated music solely to exploit streaming platforms’ royalty systems. Bots were programmed to stream tracks billions of times without human listeners, resulting in substantial payouts for Smith and his collaborators.

Despite the substantial evidence presented by the DOJ, Smith has denied the charges, expressing shock and frustration in a statement to the New York Times. He asserted that there was “no fraud” and questioned how he could challenge the accusations.