Streaming fraudster Michael Smith gets 18 months for $8M bot scheme

Michael Smith, 54, of Cornelius, North Carolina, was sentenced to 18 months in federal prison on Tuesday for running bot accounts that streamed his AI-generated songs billions of times. Judge John G. Koeltl handed down the term in Manhattan and ordered Smith to forfeit $8,091,843.64, the loss figure both sides agreed on. Two years of court supervision follow his release. Smith pleaded guilty in March to one count of conspiracy to commit wire fraud.

Prosecutors and the defense both call it the first criminal prosecution of its kind in the US. The sentence is short by their standards. Prosecutors asked for at least 46 months, the low end of the federal guidelines range. The US Probation Office recommended 24. Smith’s lawyers pushed for probation and no prison at all. Smith had originally been charged with wire fraud, wire fraud conspiracy and money laundering conspiracy, each carrying up to 20 years.

How the scheme worked

According to prosecutors, Smith ran thousands of fake accounts on Spotify, Apple Music, Amazon Music and YouTube Music between 2017 and 2024. They played hundreds of thousands of AI-generated songs. One comparison from the case: in April 2023, Taylor Swift’s entire catalog drew 9.3 million family-plan streams on YouTube Music. Smith’s bots, using family plans, streamed his own tracks 80.9 million times that month.

He knew the risk of looking greedy. In a 2018 email quoted by prosecutors, he wrote that “in order to not raise any issues with the powers that be we need a TON of content with small amounts of Streams.” An early model he emailed himself had 1,040 bot accounts producing about 661,440 streams a day. Spread over a catalog of 300,000 songs, a figure in line with the “hundreds of thousands” prosecutors cite, that is roughly two plays per song per day, which is the kind of footprint nobody notices. At points he ran as many as 10,000 accounts, according to prosecutors.

The government says he took in more than $14 million from royalty-paying entities. The agreed loss is lower because it nets out estimates of royalties from legitimate streams of his music and the money he paid back into the pools by buying the accounts his bots used.

Why the harm reaches everyone else

The defense argues that no artist or songwriter suffered any appreciable loss and that the $8 million “far exceeds any amount Mr. Smith actually ‘pocketed.'” The mechanics of payout make that hard to hold onto. Services like Spotify don’t pay a fixed rate per play. Rights holders are paid from a pool tied to the service’s revenue, split by each track’s share of all streams in that period. Every fake stream shrinks everyone else’s slice. The Music Fights Fraud Alliance told the court that each one “diluted the value of every legitimate stream occurring during the same accounting period.”

If you release your own tracks, edits or bootlegs-turned-official, you are paid from those same pools, and your share is small enough that dilution is the kind of thing you’d never spot on a statement.

The platforms have changed their rules too. Since April 2024, Spotify has paid recording royalties only on tracks with at least 1,000 streams in the previous 12 months, and it also requires a minimum number of unique listeners per track. On Smith’s early model, each track would have averaged about 805 streams a year across all platforms, under that line. At 10,000 accounts, the average would clear it. Spotify told MBW in 2024 that its preventative measures held Smith’s earnings from the platform to about $60,000 of the $10 million alleged at the time. Neither requirement currently applies to publishing royalties. That is the side where The MLC stopped Smith’s payments in 2023.

What the case does and doesn’t say

Smith’s defense has leaned on the idea that he was told, at worst, civil penalties were on the table by a music industry lawyer. Prosecutors doubt this, noting they believe the same lawyer emailed The MLC in March 2023 insisting none of the works were computer-generated. The defense also quotes a September 2025 Spotify statement that for royalty purposes “all music is treated equally, regardless of the tools used to make it,” and argues that using AI to make songs and put them on streaming platforms is not inherently unlawful.

That is the useful line to hold onto. The crime here was the bots and the false accounts, not the AI. US Attorney Jamie McDonald framed it the other way, saying Smith “exploited super intelligence technology to generate a fraud,” but the charge was wire fraud conspiracy.

Denmark got there first on the sentencing side, in a smaller case. A man who used bots to inflate streams on 689 tracks received 18 months in March 2024, with three to be served. An appeals court raised it to 24 months in February 2025, again with three served.

IFPI says enforcement is only part of the answer and points to its Streaming Integrity Initiative for prevention and detection. The MFFA’s Michael Lewan says it needs “continued, meaningful deterrence.” One 18-month term, shorter than anyone in the prosecution wanted, is a start, not a deterrent on its own.