A musician indicted by the US Government earlier this month over an alleged $10 million streaming fraud scam has pled not guilty.
As reported by Law360, Michael Smith, a 52-year-old resident of North Carolina, entered his plea in front of U.S. District Judge John Koeltl in Manhattan on Thursday “during a brief proceeding”.
According to court documents viewed by MBW, Judge John Koeltl issued an order on Thursday (September 18) setting Smith’s bail at $500,000.
As MBW reported earlier this month, the US Government charged Smith with three felony counts in connection with a “scheme to create hundreds of thousands of songs with artificial intelligence and use automated programs called ‘bots’ to stream the AI-generated songs billions of times”.
Smith is alleged to have fraudulently generated over $10 million in royalties through the scheme between 2017 and 2024.
He faces charges of wire fraud, wire fraud conspiracy and money laundering conspiracy, each of which carries a maximum of 20 years in prison.
The indictment, which was unsealed earlier this month, alleged that Smith used a number of measures to artificially boost streams, including fake email accounts and cloud services, and paying for Family plans on various streaming platforms.
At one point, according to the DOJ’s announcement, Smith estimated that he could use bots to generate about 661,440 streams per day, generating annual royalties of $1,207,128.
Last week, Spotify went on the record to say that its platform accounted for less than 1% of the $10 million generated in the landmark streaming fraud case.
“Spotify invests heavily in automated and manual reviews to prevent, detect, and mitigate the impact of artificial streaming on our platform,” a Spotify spokesperson told MBW in an email.
“In this case, it appears that our preventative measures worked and limited the royalties [Michael] Smith was able to generate from Spotify to approximately $60,000 of the $10,000,000 noted in the indictment.
“As Spotify typically accounts for around 50% of streamshare, this shows how effective we are at limiting the impact of artificial streaming on our platform.”
The indictment against Smith described one unnamed streaming service that was able to detect Smith’s alleged fraudulent streaming activities and cut him off from payments as early as 2019.
That streaming service – referred to as “Streaming Platform-1” in the indictment – has been identified by news outlets as…
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