About $8 million from AI songs and bot streams. The convicted man asks to avoid prison, saying there was no perceptible harm (first U.S. criminal case of AI-song streaming fraud)

The sentencing memo is on file. There is no sentence

On Tuesday 22 September 2026, Michael Smith’s lawyers filed a sentencing memorandum in the U.S. District Court for the Southern District of New York. The caption is United States v. Michael Smith, No. 24 Cr. 504 (JGK). Billboard reported it on the 24th; Music Business Worldwide and Digital Music News on the 25th. They ask for probation, not prison. There is no sentence. A 29 July date passed without sentencing, and no new date is on the public docket.

The defense argument and the guideline numbers

The memo describes the harm as “tiny, immeasurable losses” spread across millions of songwriters and artists. Billboard quotes the filing: the effect of one stream on every other artist’s share “is not akin to a drop in a proverbial bucket — it is a drop in an ocean,” and “no individual artist or songwriter suffered any perceptible harm.” Counsel also cites a clean record, good deeds, and family impact, and asks the court to go below even the U.S. Probation Office’s 24-month recommendation. Smith pleaded guilty in March to one count of conspiracy to commit wire fraud, which carries a five-year maximum. Federal guidelines call for 46 to 57 months. The presentence report recommended 24 months. As part of the plea he agreed to forfeit $8,091,843.64. Prosecutors have not yet filed their sentencing submission.

What is established and what is still an allegation

Billboard’s account of the government’s case is that Smith used bots on Spotify, Amazon Music, Apple Music, and YouTube Music from around 2017, first with his own tracks and later with mass-produced AI songs. He was indicted in September 2024 on three counts (each carrying up to 20 years); prosecutors then alleged more than $10 million. MBW reports he once estimated the bots at about 661,440 streams a day, or $1,207,128 a year, and that the Mechanical Licensing Collective held back related mechanicals. U.S. Attorney Jay Clayton said at the plea that “although the songs and listeners were fake, the millions of dollars Smith stole was real.” IFPI and RIAA wrote in a February op-ed that streaming pays from a finite pool. Each outlet says whatever Judge John G. Koeltl imposes will be the first U.S. sentence for AI-assisted streaming fraud. That is not a judgment.

The split for commercial producers

For producers shipping AI tracks to YouTube, games, or DSPs, what moved is not “AI generation is a crime.” It is that siphoning the royalty pool with artificial streams is a criminal case, and the sentencing memo is now public. Not legal advice.

• Distribution: bot-like plays and high-frequency uploads can trip DSP and distributor fraud flags. If your own stats look unnatural, open the distributor’s flag screen first.
• Revenue: rightsholders say pro-rata means fake streams cut everyone else’s share. The defense says no single artist felt it. Both are pre-sentence arguments, not a finding of loss.
• Credit / models: the indictment alleged work with an unnamed AI-music-company CEO. Billboard notes co-write credits naming Boomy founder Alex Mitchell; he has not been charged and said Smith presented himself as legitimate. A tool name is not a clearance.

Sources

The memo wording is Billboard (24 September, the filing in hand). MBW (25 September) and DMN (25 September) corroborate. The forfeiture figure and docket number are MBW. DMN’s “wire fraud” and “restitution” conflict with MBW/Billboard’s conspiracy to commit wire fraud and forfeiture; this note uses the latter. Clickable URLs are at the end.