A man from North Carolina was charged with fraud for allegedly using artificial intelligence tools to cheat music-streaming services.
Prosecutors from the U.S. district court charged Michael Smith with three criminal counts for what they said was a multi-million dollar royalties scheme.
The prosecutors said Smith used a combination of an AI composition service and thousands of bot accounts to defraud services, including Spotify and Apple Music.
The case would mark one of the first in which an AI service was used in connection with a fraud scheme.
“As alleged, Michael Smith fraudulently streamed songs created with artificial intelligence billions of times in order to steal royalties,” said U.S. Attorney Damian Williams.
“Through his brazen fraud scheme, Smith stole millions in royalties that should have been paid to musicians, songwriters, and other rights holders whose songs were legitimately streamed.”
Authorities said the fraud worked by using AI to generate music that was never intended to be listened to by human ears. Rather, Smith would use his bot army to play the songs thousands of times. From there, Smith would use the sites’ royalties systems to claim profits from the streams.
The scam was allegedly generating more than 600,000 streams per day at its peak and Smith was collecting $1.2 million a year. Over the full course of the scam, prosecutors said they believe Smith collected in excess of $10 million in fraudulent royalties.
Smith did not act alone, as prosecutors said he had at least three co-conspirators, including the CEO of the AI company that helped him generate the thousands of songs used in the scheme.
If convicted, Smith could face a maximum of 20 years on each of the three fraud counts. It is more likely, however, that he will take a plea deal that would yield him a much more lenient prison term.
“Today, thanks to the work of the FBI and the career prosecutors of this Office, it’s time for Smith to face the music,” said Williams.
