According to a report in Variety, a North Carolina-based music producer has been arrested and faces multiple felony charges for allegedly defrauding streaming platforms out of more than $10 million in royalties using AI-generated music.

Michael Smith, 52, from Cornelius, is accused of creating an extensive network of fake accounts on major streaming platforms, including Spotify, Amazon Music, and Apple Music, to artificially boost streams of music he uploaded. According to the indictment, Smith allegedly manipulated these platforms by generating as many as 661,440 streams daily through automated bots, bypassing anti-fraud measures.

Initially, Smith is said to have engaged in fraudulent activity using his own music. However, after fraud detection systems started flagging pieces that had been excessively streamed, he reportedly escalated his operation by generating large volumes of AI-created music.

Court documents reveal Smith’s strategic planning to avoid detection. In one exchange with co-conspirators, he allegedly urged quick action to circumvent the platforms’ evolving fraud detection systems. “We need a TON of songs fast to work around the anti-fraud policies these guys are using now,” he reportedly said in a communication.

Beginning in 2018, Smith allegedly partnered with an AI music company and a promoter to mass-produce hundreds of thousands of songs. He then used fake email addresses and VPN services to create and manage fraudulent accounts, according to the indictment.

Despite denials when confronted by the Mechanical Licensing Collective (MLC) in 2023, which questioned how he could produce such high volumes of music without AI, Smith maintained that his work was human-created. He had previously been accused of streaming fraud by one platform in 2019, but again denied any wrongdoing.

Smith now faces charges of wire fraud, conspiracy to commit wire fraud, and money laundering in the Southern District of New York. Prosecutors allege his denials were false and part of the scheme to conceal his fraudulent activity.

In response to the indictment, the MLC issued a statement highlighting the broader issue of streaming fraud in the music industry. CEO Kris Ahrend emphasized the organization’s role in identifying the scheme and withholding payments linked to the suspicious activity, further underscoring the importance of ongoing efforts to protect artists from fraudulent practices.