Jon Blistein
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NEW YORK, NY - AUGUST 22: Mike Smith, judge on ONe Shot attends BET's ONE SHOT exclusive screening at Sky Lounge on August 22, 2016 in New York City. (Photo by Bennett Raglin/Getty Images for BET Networks) Bennett Raglin Mike Smith, the first person to face federal charges tied to music streaming fraud, was sentenced to 18 months in prison after pleading guilty earlier this year.
Smith, a musician and business owner from North Carolina, appeared at federal court in Manhattan Tuesday afternoon, Oct. 6. He nodded heavily as John G. Koeltl handed down the year-and-a-half prison sentence, which will be followed by two years of supervised release. Smith also previously agreed to forfeit $8 million as part of his plea deal.
When asked if he would like to say anything following his sentence, Smith told the judge, “Thank you for your consideration on everything, Your Honor.”
The sentence was notably less than the 46 months in prison prosecutors had sought, though Smith’s lawyers had hoped to secure their client just probation. In their sentencing submission, the prosecution highlighted the novelty of the streaming fraud case, as well as the $8 million in unearned royalties Smith earned. They argued a significant stint in prison was necessary “to provide justice punishment” and deter other potential fraudsters.
“If the public is watching this case, as the defendant claims, a lenient sentence will send precisely the wrong message: streaming fraud will not result in meaningful punishment,” Assistant U.S. Attorneys Nicholas W. Chiuchiolo and Kevin B. Mead wrote.
Smith pleaded guilty to one count of conspiracy to commit wire fraud back in March, a charge that carries a maximum sentence of five years in prison. In their original complaint, the feds claimed that, between 2017 and 2024, Smith used an army of bots to improperly stream his music millions of times. While Smith, an aspiring musician, had a catalogue of his own music, he also allegedly generated additional royalties through bot-streams of AI-generated songs he purchased and uploaded.
In their sentencing submission, Smith’s lawyers said their client was “profoundly sorry” for his conduct, but claimed he “did not set out to commit a federal crime” and “believed his initial efforts to be lawful.”
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They said he spoke with a “well-known music attorney” and came to believe “his conduct began at a time when the legal parameters [around artificially inflated streams] were unsettled.” Nevertheless, they acknowledged, Smith “ended up rationalizing conduct that he knew was wrong,” like when he gave “false statements to distributors” who contacted him about possible streaming manipulation.
Smith’s sentencing submission further featured a plethora of statements from friends and family, many of whom argued that Smith should be spared a prison sentence so that he would not be separated from his children, especially an adolescent son. Some of Smith’s music industry peers even submitted letters on his behalf, including the Wu-Tang Clan’s RZA.
