Claiming to be legitimate music rights holders, two men managed to rake in more than $23 million in revenue from YouTube's content identification system. Both were arrested, pleaded guilty and now face prison terms of several years. This week, the US requested a 70-month sentence against the 'number two' of the operation, in part to deter future fraud.
In 2021, the United States Department of Justice launched a criminal process against two men suspected of running a massive YouTube content identification scam.
By falsely claiming to own the rights to more than 50,000 songs, the couple generated more than $23 million in revenue.
Last year, one of the defendants confessed his part in the copyright scam by pleading guilty. Webster Batista admitted it was a simple scheme: find Latin American music that hasn't yet been monetized on YouTube and claim the content as your own.
guilty pleas
In February of this year, the second defendant pleaded guilty. Josรฉ Terรกn signed a plea agreement admitting that he was part of the conspiracy, participating in wire fraud and money laundering.
As part of the deal, the defendant turned over a Phoenix home, several cars, and bank accounts totaling more than $1 million.
The Content ID scam was straightforward, Teran's plea deal revealed. The defendants simply identified non-monetized music and uploaded those songs to YouTube.
[W]We discovered that there were recorded songs by musicians and bands on the internet that were not being monetized. We started searching and downloading these songs. Once the songs were downloaded, Batista would upload them to YT as mp3 files."
โWe falsely claimed legal ownership of these songs in order to receive royalty payments,โ Teran adds, noting that the scheme generated millions.
To collect these payments, Batista launched the company MediaMuv, which became a trusted member of YouTube Content ID through a third-party company referred to by the initials AR. As the scheme grew, more employees were hired and tasked with finding more non-monetized leads.
Judgment
Despite pleading guilty, both defendants face several years in prison. Terรกn will be the first to be sentenced and this week, the defendant and the prosecution made their respective positions known.
According to the defense, Terรกn was not the leader of the operation. As an aspiring musician, he admired his co-defendant, who is portrayed as the mastermind behind the operation.
โWhile Mr. Terรกn admits to his involvement in the relevant criminal activity, Mr. Batista was the mastermind behind the fraud scheme,โ Terรกn's attorney writes.
"Mr. Terรกn believed that Mr. Batista was a successful businessman in the music field with whom he could realize his dream of producing music, films and music videos. Believing that the co-conspirator was a close friend, Mr. Terรกn was excited to receive the advice and collaboration of the co-conspiratorโ.
This advice did not help Terรกn succeed in the music industry. Instead, he led him into a criminal conspiracy. This was clearly wrong, but Teran believes that he will be a productive citizen in the future, so he is asking the court for a lenient sentence.
70 months in prison
The US government also shared its sentencing position this week. The prosecution acknowledges that Teran was not the initiator of the plan, but emphasizes that his role was significant.
Terรกn and Batista at one point had between five and eight people working for them. These employees used special software to find non-monetized music that they would then add to their catalog to exploit YouTube's content identification system.
โThe defendant, Josรฉ Terรกn, participated in a concerted effort, spanning nearly five years, to steal royalty proceeds from approximately 50,000 song titles, causing a loss of more than $23,000,000.00,โ the prosecution writes.
โTerรกn personally earned more than $6 million in personal earnings, which he used to maintain a lavish lifestyle. In addition to the damage that Mr. Terรกn caused and the exorbitant profits that he reaped; a significant sentence is warranted to deter future conduct.โ
Pursuant to the sentencing recommendation, Terรกn continued to obtain fraudulent royalty payments after he was indicted. To send a clear message to others considering similar schemes, a serious prison sentence is warranted.
โA 70-month sentence is undoubtedly substantial, but given Mr. Terรกn's conduct and the need to prevent future fraud, it is fully justified,โ the government sentencing memorandum concludes.
Josรฉ Terรกn is scheduled to be sentenced at the end of this month and Webster Batista will follow him in August.
โ
A copy of the US government sentencing memorandum is available. here (pdf) and the defendant's memorandum can be found here (pdf)
