He Had a Billion Streams and No Fans: The Story of the First U.S. AI Streaming Fraud Case
Breaking into the upper echelons of the music industry is so rare, it might as well be a statistical crime. But on a mild late spring evening in Louisville, Kentucky, Mike Smith and Jonathan Hay shared that almost unheard-of golden moment when everything finally fell into place. Smith manned the guitar, Hay tweaked a drum machine and keyboard, and the two were locked into a groove. Holed up in Hay’s living room, surrounded by stringed instruments and production gear, the pair hoped their debut album as a jazz duo would finally earn them the industry attention they’d spent decades chasing.
It was 2017, and both men were in their 40s: longtime collaborators and business partners, even if they made an incredibly odd pair. Smith owned a chain of medical clinics, wore form-fitting shirts that showed off his carefully sculpted muscles, and lived in a sprawling suburban Charlotte, North Carolina, home with his wife and six children. He’d even served as a judge on a reality TV competition and published a self-help book. Hay, by contrast, was a larger, more laid-back guy who favored sweatpants and Crocs, lived in a small apartment, and dated a stripper. He loved cannabis, had spent years grinding as a music publicist, and was most infamous in industry circles for spreading an unconfirmed salacious rumor that Rihanna had had an affair with Jay-Z. He’d recently impulsively gotten full-sleeve tattoos, and snuck off to vape in the bedroom to avoid irritating his health-obsessed friend.
When Smith and Hay finished their album, they named it simply Jazz. That fall, they uploaded it to all the major platforms—Spotify, Apple Music, Tidal—and pressed physical copies. But the release fell flat, failing to gain any traction. The pair weren’t complete unknowns: a handful of tracks they’d co-produced for other artists years earlier had earned some buzz. So they decided to rework Jazz, add new tracks, and drop an updated reissue.
Jazz (Deluxe) launched in January 2018, and almost immediately, it rocketed up the Billboard charts straight to the No. 1 spot. Hay was over the moon—at long last, tangible, mainstream success was his. Just as quickly as it rose, though, the album vanished from the ranking entirely. “Nobody drops off completely to zero in a single week,” Hay says, recalling his confusion. He called other artists to ask if they’d ever seen anything like it, and none had. Questions stacked up fast: if thousands of people had streamed the album enough to hit No. 1, why did streams suddenly stop? He scoured the internet for any fan chatter, even a single stray tweet about the record. There was nothing. Where were all the listeners? “No one was talking about the music,” Hay realized.
When Hay pulled up Spotify’s for-artist analytics dashboard to examine the pair’s streaming data, he found listeners were concentrated in far-flung places like Vietnam, a detail that only deepened the mystery. Things got even stranger from there. As Hay tells it, he started getting alerts from distribution companies—the middlemen that handle licensing for independent artists. Distributors were flagging tracks from Jazz and the pair’s other projects for streaming fraud, and pulling the music off platforms. Smith told Hay the issue was his own fault, that Hay had messed up clearing sample rights. Hay scrambled to fix the problem, but the fraud flags kept coming.
Panicked, Hay badgered Smith to help him get to the bottom of what was going on. Finally, Hay says, Smith gave him a partial answer: he’d told his medical clinic staff to stream the pair’s songs on repeat. But that explanation didn’t add up, and it wasn’t the full story.
Then, last September, Smith landed at the center of a far bigger, more explosive streaming scandal. The FBI arrested him, charging him in the first-ever AI streaming fraud case brought by the U.S. government. Prosecutors allege that between 2017 and 2024, Smith earned more than $10 million in royalties by using bot networks to stream AI-generated tracks nonstop on major streaming platforms. Smith has pleaded not guilty to all charges. (Through his attorney, Smith declined interview requests, so this account draws heavily from Hay’s perspective, corroborated by multiple interviews with former colleagues of the pair.)
When Hay learned the full extent of the allegations, he was stunned by the idea that his former collaborator had gotten richer than almost every working musician without ever becoming a household name. “He had a billion streams,” Hay claims, “and no fans.”
Hay first met Smith in 2013, when Hay was working as a publicist and selling $250 online PR consulting sessions to up-and-coming musicians to make extra cash. Smith stumbled on his services and signed up. “He did something really over the top,” Hay says. “He booked 20 hours straight.” That was an immediate payday for Hay.
Smith flew in for the consulting sessions in person, and even though Hay was the local, Smith picked the meeting spot: a sports bar in a strip mall. (“Control freak,” Hay says now.) As Hay understood it at the time, Smith had already built a massive fortune running his medical clinics, and he wanted his next act to be music fame—no matter what it cost. By the end of that first meeting, the pair were aligned: Smith wanted to be a star, and Hay wanted to be the one who made him a star.
They quickly mapped out a strategy. Though Smith wanted to perform as an artist himself, they launched an independent label called SMH Records and started out working as producers and behind-the-scenes players, essentially buying their way into the industry. “He spared no expense on the budget,” says B. Stille, a member of southern rap group Nappy Roots, who collaborated with Smith and Hay multiple times. One of the pair’s first early wins was co-producing a breakout buzzed-about single for the group. Smith also financed, and took a judging spot on, BET’s rap competition show One Shot, where he scouted new talent alongside A-list stars DJ Khaled, Twista, and T.I.—even as he was just an unknown producer with a big checkbook.
Around the time One Shot started production, Hay began to suspect that his friend’s finances weren’t what he claimed. He and another SMH employee dug into Smith’s business records, and in February 2015, Hay sent a 111-page document accusing Smith of financial mismanagement to all their business partners. Hay thought it would be his “Jerry Maguire moment,” confident he could convince at least one person that something was deeply wrong. But everyone else stayed loyal to Smith. “Everybody stuck with Mike,” he says. “It made me feel like an idiot.”
People in their circle trusted Smith. Rapper Kxng Crooked, who judged alongside Smith on One Shot, saw him as a wholesome, stand-up guy. “I flew out to his house and played with his kids,” the rapper says. SMH label artist Goldy Locks says she had “a completely positive experience” working with Smith. “Out of all the labels that I’ve ever been on, Mike’s the only one that’s ever taken care of us,” she says.
One Shot aired in 2016 for just one season. It was the high point of Smith’s music career—and the start of a downward turn for Hay. In 2017, two men broke into Hay’s apartment and held him and his daughter at gunpoint. Smith came to check on him after the incident, Hay appreciated the gesture, and his anger toward Smith faded. That lasted until their jazz album’s strange chart performance left Hay suspicious of his old friend all over again.
In the late 2010s, Smith connected with Alex Mitchell, CEO of AI music startup Boomy, which lets users generate original songs by selecting prompts for style and sound. AI song generators now have millions of users worldwide, but back then they were a little-known niche product. Smith was ahead of the curve: few people at the time realized how ubiquitous AI would become in the music industry. In the federal indictment, Mitchell matches the description of an unindicted co-conspirator: starting around 2018, the “Chief Executive Officer of an AI music company” provided Smith with “thousands of songs each week,” per court documents. “Keep in mind what we’re doing musically here …” the CEO wrote, according to the indictment. “This is not ‘music,’ it’s ‘instant music’ ;).”
Smith reportedly assigned the AI-generated tracks to dozens of made-up artists, giving the songs bizarre, obscure names pulled straight from a dictionary: “Zygophyceae,” “Zygophyllaceae,” “Zygopteraceae.” The fake artists got equally odd monikers, from “Calm Force” and “Calm Knuckles” to “Calms Scorching” and “Calorie Event.”
Per the indictment, Smith uploaded all these tracks to streaming platforms, then worked with contractors to create thousands of fake user accounts. Using small, custom pieces of code he purchased, Smith was able to keep the tracks playing 24/7 from those fake accounts—essentially running a private bot army to stream his AI music nonstop. Every stream triggers a royalty payment, so if the allegations are true, Smith built an entire business churning out low-effort AI content to game the system. He’s far from alone: the internet is already flooded with grifters pumping out low-quality AI-generated books on Amazon and turning empty websites into AI content mills, all looking to cash in on the broken creator economy. Today’s internet is increasingly a warehouse of algorithmically generated fakes of real cultural products, all made by people looking to game the system and get rich quick.
Hay says he knew nothing about Smith’s AI scheme at the time, but he knew something was off about their streaming numbers. The pair’s fights escalated, and in December 2019, Hay emailed Smith an explicit accusation: “You steal from streaming platforms. These are federal crimes, bro.” Smith responded by just resending their original legal partnership agreement. Hay claims Smith cut him out of deals and withheld payments, and that was the last straw. He sent another blistering letter to all their business contacts, outlined his suspicions to Billboard staff and other industry contacts, and this time, he was ready to walk away for good. He says he went to local police and even the FBI: “I blew the whistle as loud as I could.”
But once again, nothing came of it. A Billboard employee eventually texted Hay that the outlet had decided not to open an investigation. (Billboard declined to comment on this specific incident, though a spokesperson for Penske Media Corporation, which now owns Billboard, notes that the outlet removes inaccurate chart data when notified of issues in a timely manner. Chart records for Smith and Hay’s album remain up.) Embarrassed, Hay told the Billboard team he had been off his medication, and he started to feel like he was going crazy.
Meanwhile, Smith was dealing with his own legal troubles. He was named in a lawsuit by his medical clinic staff, who accused his clinics of defrauding Medicaid and Medicare. The suit alleged Smith was siphoning money from the clinics to fund SMH Records, which matched what Hay had long suspected. Smith and his co-defendants settled the suit in 2020, agreeing to pay out $900,000.
Even so, by 2022 Smith seemed to be back on track. He produced a track featuring Snoop Dogg and Billy Ray Cyrus, and lined up a slate of ambitious projects: a horror film with Wu-Tang Clan’s RZA, and an animated series where a cartoon version of Smith travels to the afterlife, with new music from Snoop Dogg and RZA. (Neither Snoop Dogg nor RZA responded to interview requests.) But success in the music industry is fleeting, and by 2023 something shifted. Smith went silent on Instagram, the horror film was released with little promotion, and per the indictment’s timeline, Smith spent much of that year trying to convince streaming industry groups he was a legitimate artist. Then, in spring 2023, he got a devastating notice: The Mechanical Licensing Collective, the nonprofit that collects and distributes royalties for streaming services, had confronted him about fraud and was cutting off all future payments. His biggest source of income had been turned off.
On September 4, 2024, federal agents pulled up to Smith’s sprawling Colonial Revival brick home. They cuffed him and walked him out to their navy blue sprinter van, in full view of his three-car garage and confused neighbors.
For Hay, the arrest was long-overdue vindication. In the indictment, Hay matches the description of an unindicted “Co-Conspirator 2” and has not been charged with any crime; he is framed as something of a patsy, whose legitimate work was used by Smith to fraudulently generate royalty payments before Smith pivoted to full AI schemes.
Other people in Smith’s orbit have expressed shock at the allegations. Music promoter Bram Bessoff, who is listed as a co-writer on hundreds of Smith’s AI tracks, told WIRED he was in “total shock” and is cooperating with authorities. (Bessoff is not named or charged in the indictment, but “Co-Conspirator 4” is described as a music promoter.) Boomy CEO Alex Mitchell, who was also listed as a co-writer on hundreds of the tracks alongside Bessoff and Smith, declined to answer questions. A Boomy spokesperson told WIRED that neither Mitchell nor the company “had any knowledge or involvement in Smith’s alleged criminal conduct,” nor had they “engaged in bot streaming or knew of any bot streaming by Smith.” The spokesperson added that Mitchell never had any relationship with Smith’s music publishing company.
The indictment includes an excerpt from a giddy email Smith sent to his co-conspirators, who appear to be Mitchell and Bessoff. In it, he wrote about the 10 percent cuts each would get from the generated royalties: “We are at 88 million TOTAL STREAMS so far!!!”
Technically, there’s nothing illegal about creating massive amounts of AI-generated music and uploading it to streaming services. It might be tacky, arguably disrespectful to the craft of music-making, but it’s not against the law. In fact, it’s extremely common: French streaming platform Deezer estimates that 10 percent of all songs uploaded every day are AI-generated. AI music generators can run into legal trouble if they train their models on copyrighted music without permission, as the leading AI music tools Suno and Udio are currently facing lawsuits over. Boomy says it operates above board: it’s certified by Fairly Trained, a nonprofit that verifies generative AI companies got consent to use training data. So the first part of Smith’s alleged scheme, creating thousands of AI tracks, may only be a violation of good taste, not criminal law.
The crime lies in the bots and fake accounts. Major streaming services ban this kind of activity in their terms of service, and last year a man in Denmark was convicted of music streaming fraud for using bots to stream his own tracks on Spotify and Apple Music. Even so, the vast majority of this fraudulent activity goes unpunished. Morgan Hayduk, co-CEO of streaming fraud detection startup Beatdapp, has tracked entire networks of bad actors siphoning money off legitimate royalty pools. “Conservatively, it’s a billion-dollar-a-year type of problem,” Hayduk says. “The Michael Smith case is the tip of the iceberg.”
A 2021 study from France’s National Music Center found that between 1 and 3 percent of all streams are fraudulent; Beatdapp estimates the number is closer to 10 percent. Hayduk says some of the startup’s clients consistently flag 17 to 25 percent of all streams as fraudulent, and occasionally as much as half. AI music generators, he says, act as a “supercharger” for this kind of fraud, and Smith’s alleged scheme isn’t even particularly advanced. “If you’re a sophisticated, organized criminal,” Hayduk says, “you would do this from the comfort of a beach in a non-extradition country.”
It’s still unclear which streaming companies paid Smith the most money, largely because no company wants to admit their fraud detection systems failed. Industry giant Spotify says its fraud detection tools caught Smith’s scheme early. “It appears our preventative measures worked and limited the royalties Smith was able to generate from Spotify to approximately $60,000 of the $10 million,” says company spokesperson Laura Batey. Apple, YouTube Music, and Tidal did not respond to requests for comment, and Amazon declined to answer questions about Smith. While distributors and streaming services are now using AI to fight AI fraud, many industry experts argue the real problem is the broken royalty structure of streaming itself, and only a full overhaul can curb the problem.
In some corners of the independent music world, Smith isn’t seen as a total villain. Artists have long accused streaming platforms and major labels of ripping off independent creators. Goldy Locks, Smith’s former client, says some people see him as a modern-day Robin Hood. Others view him as someone who exploited an already exploitative system, a product of a music industry that has always been rife with grifts. After all, payola has been a part of radio since its early days, and Spotify regularly adds bulk-produced stock tracks to popular playlists. The line between organic and paid audiences has always been blurry: even 19th-century French opera houses hired “claqueurs” to fill seats and applaud for unpopular performers.
Smith is currently out on bail. His attorney, Noell Tin, said in a statement that “Mike Smith is a successful songwriter, musical artist, devoted husband, and father to six children. He looks forward to responding to the charges against him in court.” The case, being heard in the U.S. Southern District Court of New York, will be presided over by Judge John Koeltl, who has overseen major high-stakes tech cases, including a ruling against the Internet Archive and the ongoing case against crypto exchange Binance. If convicted, Smith faces up to 60 years in prison.
Either way, he’s already secured a place in the history of the modern music industry: the government has cast him as the defining face of grift in the AI era. Anyone can click a few buttons and generate a song now. But building a nine-figure fortune off those songs with no actual fans? From one perspective, it’s a crime. From another, it’s just the new normal of the digital music business.
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Animations by Soomin Jung
