Crook who stole $23m+ in YouTube song royalties gets five years behind bars

One of the two men who admitted stealing more than $23 million in royalty payments for songs played on YouTube has been sentenced to nearly six years behind bars for his role in what prosecutors called “one of the largest music-royalty frauds ever.”

Jose Teran, 38, of Scottsdale, Arizona, was sent down for 70 months by a US federal judge this week. That stretch in the cooler would be nearly the same amount of time the Feds said Teran spent engaging “in a concerted effort” to steal royalty payments for about 50,000 songs, by falsely claiming that he and co-conspirator Webster Batista owned the legal rights to the tunes.

Teran pleaded guilty to conspiracy, wire fraud, and money laundering in January, following a November 2021 indictment in which a federal grand jury charged him and Batista with 30 felony counts. Batista pleaded guilty to conspiracy and wire fraud in April 2022, and will be sentenced in August.

Even after his indictment, Teran fraudulently obtained another $190,000 in ill-gotten royalty payments and still has plans to remain in the music business, hence the need for a non-trivial punishment, according to prosecutors in their recommendation on sentencing[[PDF].

“A 70-month sentence is undoubtedly substantial but given Mr Teran’s conduct and the need to deter future fraud, it is entirely warranted,” the Feds sniffed.

YouTube did not immediately respond to The Register‘s request for comment on the affair.

The two scammers ran their crooked operation by searching the Google-owned website, identified in the court documents as “Y.T.”, for songs that were not actively monetized. Those titles were ripe for someone to step in and claim they owned them. Batista and Teran thus set up a company called MediaMuv to fraudulently claim the necessary rights to those tracks to collect royalty payments from Google. Every time one of those tracks was played on YouTube, MediaMuv would pocket a royalty from the web giant.

At one point, the duo had between five and eight “employees” helping them to build up a catalog of about 50,000 songs the pair could claim they legally owned.

When the artists who did actually own the rights to the songs accused MediaMuv of stealing their royalties, “Teran aggressively defended MediaMuv’s fraudulent library,” the Arizona court was told, quoting a message that Teran sent to someone identified as D.H.:

Teran personally pocketed more than $6.2 million for his part in the scam, and used his ill-gotten gains “to promote a lavish lifestyle,” the court heard. This included buying luxury vehicles, jewelry, and a 6,000-square-foot estate in Scottsdale for which he paid $11,000 a month in rent.

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Even after the crooks were indicted, YouTube continued paying royalty fees to the shell company, which Teran continued to pocket. Twelve days after receiving a summons, Teran opened a bank account in the name of MuveMusic, and then transferred $191,449.63 of the YouTube royalties to himself.

“Teran is also a high-risk to reoffend, both because he plans to remain in the music industry and because the amount of money that he obtained through the scheme,” the sentencing recommendation stated.

“Outside of this scheme, Teran’s legitimate work in the music industry yielded only modest gains and the temptation to find similar schemes, with exponentially greater income potential, would appear to be strong.” ®