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A North Carolina musician has pled guilty to stealing $8 million in royalties with fake streams on AI-generated music in the first-ever criminal streaming fraud case brought by U.S. prosecutors.
Michael Smith, 54, copped to one count of wire fraud conspiracy on Thursday (March 19) in New York federal court. He agreed to forfeit his $8 million in streaming fraud proceeds and faces up to five years in prison.
“Michael Smith generated thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times,” said Manhattan’s top federal prosecutor, U.S. Attorney Jay Clayton, in a statement Thursday. “Although the songs and listeners were fake, the millions of dollars Smith stole was real. Millions of dollars in royalties that Smith diverted from real, deserving artists and rights holders. Smith’s…
Identity theft is the “foundational” fraud upon which many other crimes are built. It involves the unauthorized acquisition and use of a person’s personal identifying information (PII), such as an ID number, Social Security number, or passport details.
- How it works: Fraudsters obtain PII through data breaches, mail theft, or “social engineering” (tricking people into revealing details). Once they have this data, they can open new bank accounts, apply for credit cards or loans, and even receive medical treatment under your name.
- Synthetic Identity Fraud: A sophisticated variation where criminals combine real and fabricated information to create a completely new, “synthetic” person. This is particularly difficult to detect because there is no single victim to report the suspicious activity initially.