Prosecutors seek 46+ month sentence for man who defrauded artists with AI music scheme

Prosecutors want man who pocketed $8m using AI songs and bot streams imprisoned for at least 46 months, saying he stole from ‘hard-working’ songwriters

September 30, 2026 By Mandy Dalugdug

US federal prosecutors are asking a judge to send Michael Smith to prison for at least 46 months .

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Smith is the North Carolina man who pleaded guilty in March over a scheme in which bots streamed AI-generated songs billions of times, generating more than USD $8 million in royalties he was not entitled to.

The request was made in a sentencing letter to Judge John G. Koeltl , dated Monday ( September 28 ) and filed in Manhattan federal court on Tuesday ( September 29 ) by the US Attorney’s Office for the Southern District of New York .

The 11-page filing can be read in full here .

Smith is due to be sentenced by Judge Koeltl on Tuesday ( October 6 ).

Prosecutors are also asking the court to order Smith to forfeit USD $8,091,843.64 – the loss figure both sides agreed on, and the sum his plea agreement provides for.

“ Smith was the architect of, and led, a sophisticated and multi-faceted fraud scheme over the course of many years to divert musical royalties from legitimate and hard-working songwriters and other rightsholders to himself,” the letter states. “Smith pocketed more than $8 million of these royalties.

> “ Smith was the architect of, and led, a sophisticated and multi-faceted fraud scheme over the course of many years to divert musical royalties from legitimate and hard-working song writers and other rightsholders to himself.” US Attorney’s Office

“For more than six years, Smith labored almost daily to perpetrate massive fraud.”

The letter also sets Smith ‘s streaming numbers alongside those of Taylor Swift .

According to streaming data cited by prosecutors, Swift ‘s entire catalog received 9.3 million family-plan streams on YouTube Music in April 2023 .

Smith ‘s catalog, by comparison, received 80.9 million family-plan streams, the letter states. That is almost nine times as many.

The comparison turns on family plans because, according to the filing, Smith bought them deliberately: they were the cheapest way to run large numbers of accounts at once.

At certain points, he had as many as 10,000 active bot accounts on the streaming platforms, according to the filing.

Prosecutors say Smith registered those accounts using email accounts mostly bought in bulk, often under fictitious names.

To make each account appear to have its own source of payment, he turned to a Manhattan -based financial services firm that issued corporate debit cards, telling it that dozens of made-up names belonged to employees of his company, the letter states.

To avoid detection, Smith spread his artificial streams thinly across hundreds of thousands of songs and turned to AI to supply them.

“in order to not raise any issues with the powers that be we need a TON of content with small amounts of Streams,” Smith wrote in an October 2018 email quoted in the filing.

In a May 2019 email, he wrote: “I can’t run the bots without content. And I need enough content so I don’t overrun each song. That’s the problem. If we get too many streams on one song it comes down.”

According to the letter, Smith received more than USD $14 million in total from musical royalty-paying entities.

The agreed loss of USD $8.09 million was reached by deducting estimated royalties from genuine streams of his music, as well as money he effectively paid back into royalty pools by buying large numbers of streaming subscriptions.

Smith ‘s lawyers are asking for probation, as MBW reported last week .

According to the prosecutors’ letter, the defense argues that while Smith caused a large loss overall, no single victim lost a significant amount.

Prosecutors argue that Smith ‘s case differs from securities fraud cases, in which losses are spread across many shareholders and the defendant may gain relatively little.

“Every penny of loss was diverted to the defendant,” the letter from the US Attorney’s Office states. “Put differently, the actual loss is the same as the defendant’s gain, and while the loss may have been diffuse, the fraudulent proceeds were not – they all went into the defendant’s pocket.

“Moreover, the defendant had full visibility into, and intended, every penny of loss. He even created profit and loss statements showing how much profit he could obtain from each bot he operated.”

The letter also takes aim at Smith ‘s claim that he began the scheme to compete with major labels and publishers that, he says, used artificial streaming themselves.

The 2019 article he cited to support that claim, published by The Economic Times , described the practice as “stream fraud” and noted it was widely condemned at the time, according to prosecutors.

They add that Spotify already prohibited artificially increasing play counts using scripts or automated processes back in 2017 , when the scheme began.

Smith has also argued that a music industry lawyer advised him that, at worst, his conduct would lead to civil penalties.

Prosecutors say they believe that same attorney emailed The Mechanical Licensing Collective (The MLC) on March 23, 2023 , after it halted royalty payments to Smith , stating that none of his works were computer-generated: “Mike is the ‘human’ author!”

“Either Smith concealed from the lawyer pertinent facts, including that Smith’s songs were generated by AI and Smith used computer programs to stream songs, or the attorney affirmatively lied to the MLC,” the letter states. “Either scenario undercuts the defendant’s argument that he relied in good faith on the attorney’s advice.”

The filing details several occasions on which Smith denied wrongdoing when confronted by distributors and platforms.

In October 2018 , when a distributor told him it planned to pull his releases over reports of streaming abuse, Smith replied: “This is absolutely wrong and crazy! … There is absolutely no fraud going on whatsoever! How can I appeal this?”

Prosecutors also point to industry letters submitted to the court by The MLC and the Music Fights Fraud Alliance .

The MLC ‘s letter says streaming fraud “redirects a portion of the existing royalty pool from every single legitimate rightsholder to fraudsters,” according to the filing.

Prosecutors cite the Music Fights Fraud Alliance , which argues that, given this is the first criminal prosecution for streaming fraud in the US, “the sentence the Court imposes will serve as the first real signal to the public regarding the actual legal consequences of streaming fraud.”

The letter also points to an earlier brush with federal investigators. Smith was one of three defendants who settled civil allegations, brought by federal and North Carolina authorities following a 2015 whistleblower lawsuit, that he knowingly billed Medicare and Medicaid for medically unnecessary procedures at a North Carolina health care practice he helped manage.

That settlement, for USD $900,000 , was announced in September 2020 . The Justice Department said at the time that the claims were allegations only and that there had been no determination of liability.

Prosecutors argue that the earlier case should have served as a warning to Smith about the need to be scrupulous when obtaining money from others. The letter describes him as having begun the streaming scheme “shortly after resolving” those allegations, though the settlement was announced around three years after the scheme began, which the filing elsewhere dates to 2017 .

Smith pleaded guilty on March 19 to one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 371 , which carries a maximum sentence of five years , as MBW reported at the time .

Both sides agree that federal sentencing guidelines, the framework judges use as a starting point, put his range at 46 to 57 months .

The US Probation Office has recommended 24 months , according to the filing.

Smith was first indicted in September 2024 on charges of wire fraud, wire fraud conspiracy, and money laundering conspiracy, with prosecutors alleging at the time that he had taken more than USD $10 million .

Following the indictment, Spotify told MBW that its preventative measures had limited the royalties Smith generated from its platform to approximately USD $60,000 .

The case has been described as the first criminal prosecution for streaming fraud in the US, meaning Judge Koeltl ‘s sentence will be the first of its kind.

Outside the US, a Danish man convicted of using bots to inflate streams on 689 tracks had his prison sentence increased from 18 months to 24 months by the Western High Court of Denmark in February 2025 . Music Business Worldwide

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_Originally reported by [Music Business Worldwide](https://www.musicbusinessworldwide.com/prosecutors-want-man-who-pocketed-8m-using-ai-songs-and-bot-streams-imprisoned-for-at-least-46-months-saying-he-stole-from-hard-working-songwriters/)._