Man arrested for creating fake AI music and making $10M by listening with bots

A 52-year-old North Carolina man, Michael Smith, has been arrested by the Department of Justice (DOJ) for his involvement in a sophisticated seven-year scheme involving AI-generated music, fictitious bands, and fraudulent streaming.

Smith is accused of using AI to create hundreds of thousands of fake songs, manipulating streaming services to generate fake plays, and unlawfully earning over $10 million in royalties. He now faces charges of wire fraud and money laundering, both of which carry a potential sentence of up to 20 years.

According to the DOJ’s press release, Smith collaborated with two unnamed accomplices—a music promoter and the CEO of an AI music company—to produce and distribute AI-generated tracks on platforms such as Spotify, Apple Music, Amazon Music, and YouTube Music.

Smith allegedly used bots to artificially boost the number of streams, converting them into royalty payments. His manipulation of the platforms’ fraud detection systems allowed him to escape notice for years.

Investigators uncovered emails that shed light on the scheme. In one 2018 email, Smith urged his co-conspirators to quickly generate vast numbers of tracks to outpace anti-fraud measures being implemented by the platforms.

The CEO of the AI company routinely provided thousands of songs with randomized file names, like “n_7a2b2d74-1621-4385-895d-b1e4af78d860.mp3.” Smith would then rename the files with more natural-sounding titles, such as “Zygotes” and “Zyme Bedewing.” The associated fake artists were given equally unusual names, including “Calvin Mann,” “Calorie Event,” and “Calypso Xored.”

The scheme involved producing large quantities of low-quality, AI-generated “instant music” purely to exploit the royalty systems of streaming platforms. Bots were programmed to stream the tracks billions of times without any human listeners, leading to enormous payouts for Smith and his collaborators.

Despite the substantial evidence provided by the DOJ, including emails and fraudulent streaming data, Smith has denied the charges. In a statement to the New York Times, he expressed shock and frustration, asserting that there was “no fraud” and questioning how he could challenge the accusations.