In 2021, the US Department of Justice launched a criminal proceeding against two men suspected of running a massive YouTube Content ID scam.
By falsely claiming to own the rights to more than 50,000 songs, the pair generated more than $23 million in revenue.
Last year, one of the defendants confessed to his part in the copyright swindle by pleading guilty. Webster Batista admitted it was a simple scheme: find Latin American music that wasn’t yet monetized on YouTube and claim the content as their own.
In February of this year, the second defendant pleaded guilty. Jose Teran signed a plea agreement admitting that he was part of the conspiracy, engaging in wire fraud and money laundering.
As part of the deal, the defendant forfeited a house in Phoenix, several cars, and bank accounts totaling over a million dollars.
The Content ID scam was straightforward, Teran’s plea agreement revealed. The defendants simply identified unmonetized music and uploaded those songs to YouTube.
[W]e discovered there were recorded songs of musicians and bands on the internet that were not being monetized. We began searching and downloading these songs. Once songs were downloaded, Batista would then upload them to Y.T. as mp3 files.”
“We falsely claimed legal ownership over these songs to receive royalty payments,” Teran adds, noting that the scheme brought in millions.
To collect these payments Batista launched the company MediaMuv, which became a trusted YouTube Content ID member through a third-party company referred to by the initials A.R. As the scheme grew, more employees were hired and tasked with finding more unmonetized tracks.
Despite pleading guilty, both defendants face a multi-year stint in prison. Teran will be the first to be sentenced and this week, the defendant and the prosecution announced their respective positions.
According to the defense, Teran wasn’t the lead of the operation. As an aspiring musician he looked up to his co-defendant, who is portrayed as the brains behind the operation.
“While Mr. Teran admits to his involvement in the relevant criminal activity, Mr. Batista was the mastermind of the fraud scheme,” Teran’s attorney writes.
“Mr. Teran believed Mr. Batista to be a successful businessman in the music field with whom he could realize his dream of producing music, movies and music videos. Believing the co-conspirator to be a close friend, Mr. Teran was excited to be the recipient of the co-conspirator’s advice and partnership.”
This advice didn’t help Teran succeed in the music industry. Instead, it led him into a criminal conspiracy. This was clearly wrong but Teran believes that he will be a productive citizen going forward, so is asking the court for a lenient sentence.
70-Months in Prison
The U.S. Government also shared its sentencing position this week. The prosecution recognizes that Teran wasn’t the initiator of the scheme, but stresses that his role was significant.
Teran and Batista at one point had between five and eight people working for them. These employees used special software to find unmonetized music which they would then add to their catalog, to exploit YouTube’s Content ID system.
“Defendant, Jose Teran, engaged in a concerted effort—over nearly five years—to steal royalty proceeds from approximately 50,000 song titles, causing a loss of more than $23,000,000.00,” the prosecution writes.
“Teran personally obtained more than $6 million in personal profit, which he used to sustain a lavish lifestyle. In addition to the harm Mr. Teran caused and the exorbitant profits that he reaped; a significant sentence is warranted to deter future conduct.”
According to the sentencing recommendation, Teran continued to obtain fraudulent royalty payments after he was indicted. To send a clear message to others considering similar schemes, a serious prison term is warranted.
“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 Government’s sentencing memorandum concludes.
Jose Teran is scheduled to be sentenced later this month and Webster Batista will follow in August.