Co-Conspirator Details Emerge in Massive $10 Million Streaming Fraud Indictment — Including the CEO of a Major AI Music Company

New details have come to light about the co-conspirators in an alleged music streaming fraud scheme. Photo Credit: Sora Shimazaki

Yesterday, a North Carolina-based musician was indicted for allegedly facilitating a massive streaming fraud scheme for the better part of a decade. Now, new details – among them the name of the prominent AI music company CEO with whom the defendant allegedly conspired – are coming to light. Also emerging: the MLC’s Credits Database attributes an astounding 202,000 AI-generated works to the defendant.On Wednesday, DMN broke the news that North Carolina musician Michael Smith had been slapped with wire fraud and money laundering conspiracy charges by the U.S. Attorney’s Office for the Southern District of New York. According to the indictment, Smith had raked in more than $10 million since 2017 by spinning up thousands of AI-generated tracks and using bots to generate fake streams and royalty payments.

Now, it turns out that Smith wasn’t acting alone. According to prosecutors, Smith could serve up to 60 years behind bars if found guilty on all counts, depending on how this shakes out.  But the affidavit also mentions details on co-conspirators without naming names — though only Smith has been formally charged with a crime so far.

So who else was in on the $10 million heist?Importantly, while the sole defendant is alleged to have organized the scheme, the indictment doesn’t claim that he acted alone. Rather, the Cornelius, North Carolina-based producer allegedly coordinated with “the Chief Executive Officer of an AI music company” and “a music promoter” to create the hundreds of thousands of songs that made the scheme possible.

We contacted both the MLC and the US Attorney’s Office to determine those identities but couldn’t get any answers. The Mechanical Licensing Collective (MLC), which is said to have halted royalty payments to the defendant in March of 2023 due to fraud suspicions, told us it was “unable to comment beyond” the official statement put out by CEO Kris Ahrend.

The MLC isn’t talking, though the fingerprints of at least two co-conspirators can be found in multiple song databases — including the MLC’s own Credits Database.Hardly opting for a subtle approach, the defendant, having evidently raked in recording and compositional royalties alike, is registered in the MLC database as a writer on a staggering number of works.

Specifically, an astonishing 201,944 “creations” in the MLC database are attributed to Michael Anthony Smith. Digging into the attributions alongside DMN, Billboard unearthed this afternoon the names of Indiehitmaker founder Bram Bessoff and Alexander Mitchell (the founder and CEO of Warner Music-partnered AI music generator Boomy) as co-writers with Smith on thousands of works.

Admittedly, the scope of these joint credits seems relatively small; bearing in mind the almost 202,000 works tied to Smith, Bessoff’s associated with 5,118 works in the MLC database, against 5,119 for Mitchell, search results show.

It’s unclear whether the north of 200,000 AI-generated tracks are included in the 20.16 million songs that Boomy’s created (according to its website, that is) thus far. But in any event, just at the top level, the facts raise interesting questions about the unprecedented impact of the AI music explosion as well as the revenue sources behind it.

Bessoff has opted against publicly addressing the information, reportedly due to “his cooperation in the ongoing investigation.” However, Mitchell in a statement said he was “shocked” with the indictment and insisted that Smith had “consistently represented himself as legitimate.”That doesn’t quite sound right given some smoking-gun emails and communications details by federal investigators, though this investigation is just getting started.

Moving forward, it’ll be worth keeping an eye out for additional charges, possible effects on the AI music space, and, perhaps most notably, the defense of Smith.

There are, of course, serious ethical issues with using bots to rack up streams on artificial intelligence tracks. Nevertheless, time will tell if the defendant (possibly taking a page from the book of the individual charged in Denmark for alleged streaming fraud) and his counsel attempt to paint the relevant laws as less clear-cut than those covering more traditional crimes.

Furthermore, the case may also be made that this isn’t entirely a criminal matter given that Smith violated a number of contractual terms with platforms like Spotify.

Also worth asking: how did Smith and the gang rack up $10 million in fake plays without anyone — including the MLC and Spotify, among others — even noticing?More questions than answers, indeed — stay tuned as more foul-smelling solids hit the rotating fan blades.