The man at the center of what’s been described as the first-ever criminal prosecution for AI-assisted streaming fraud in the United States has pleaded guilty.
Michael Smith, of Cornelius, North Carolina, pleaded guilty today (March 19) to one count of conspiracy to commit wire fraud before U.S. District Judge John G. Koeltl in the Southern District of New York.
The charge carries a maximum sentence of five years in prison. Smith has also agreed to pay over $8 million in forfeiture.
Smith is scheduled to be sentenced by Judge Koeltl on July 29.
US Attorney Jay Clayton said: “Michael Smith generated thousands of fake songs using artificial intelligence and then streamed those fake songs billions of times.
“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…
This type of fraud targets the supply chain and accounts payable departments of businesses.
- Invoice Manipulation: Criminals intercept a legitimate invoice between a supplier and a client and change the banking details to their own. The client pays the bill thinking they are paying their trusted vendor.
- Kickbacks and Bribery: A vendor secretly pays an employee of the purchasing company to ensure their bid is successful or to overlook inflated pricing.