Michael Smith, 54, was found guilty on March 19, 2026, in the first-ever federal criminal case of streaming fraud in the U.S. He agreed to forfeit more than $8 million in assets, the amount he managed to scam from streaming platforms. A sentencing is scheduled for July 29.
Smith pleaded guilty to one count of conspiracy to commit wire fraud, per a statement from the U.S. Attorney’s Office of the Southern District of New York. The maximum sentence is five years in prison, which will be determined during the hearing in July.
According to the official statement, Smith created hundreds of thousands of AI-generated songs, then used bots to generate billions of fraudulent streams. He scammed more than $8 million from the various streaming platforms where he uploaded his fake music.
“Although the songs and listeners were fake, the millions of dollars Smith stole was real,” said U.S. Attorney Jay Clayton. “Millions of dollars in royalties that Smith diverted from real, deserving artists and rights holders. Smith’s brazen scheme is over, as he stands convicted of a federal crime for his AI-assisted fraud.”
Scammer Involved in First-Ever Streaming Fraud Case Will Receive Sentence in July
Smith was first indicted in 2024 when federal law enforcement discovered his scheme. With his AI-generated music, he scammed millions of dollars from the royalty pools of streaming platforms like Spotify and Apple Music.
According to a 2025 WIRED magazine profile, it was initially estimated that Smith scammed more than $10 million between 2017 and 2024. The report featured Jonathan Hay, a close friend and collaborator of Smith’s. The two made an album together in 2017 called Jazz, putting it up on all the streaming platforms. For a moment, it seemed the album was doing well. But after a week, it completely disappeared from notice.
Turns out, it was getting flagged for fraud on streaming platforms. When Hay confronted Smith, he said he had their coworkers stream the album a bunch to get the numbers up. But that was seemingly the catalyst for Smith’s elaborate AI scam.
Fraud and royalty scams have become much more prevalent as more AI programs become available. The influx of AI slop dominated conversations everywhere in recent years. Especially around music streaming platforms. Lately, it seems like every other song on Spotify turns out to be AI. Fake artists were even climbing the Billboard charts.
In February 2026, Apple Music made moves to implement harsher punishments for scammers. Per a report from The Hollywood Reporter, the new measures increased fines depending on the amount of money siphoned from the royalty pool, up to 50%. So, if someone scammed $1 million, they could be fined up to $500,000.
“Increasing the penalties takes the money from people who are cheating and puts it back into the system for those who aren’t,” said Apple Music VP Oliver Schusser.
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