How scammers stole $20 million USD from YouTube via faking background music ownership rights

Arizona state authorities have begun legal proceedings against two individuals accused of defrauding various musicians and companies, demanding an alleged royalty payment for songs that can be heard in thousands of videos on YouTube. Jose Teran, 36, and Webster Batista, 38, face a total of 30 charges, including conspiracy to commit fraud, wire fraud, money laundering and identity theft.

According to the U.S. Department of Justice (DOJ) report, the defendants used their company MediaMuv and claimed to have the legal rights to monetize a music library of more than 50,000 songs, posing as representatives of YouTube and purposely misleading AdRev, an intermediary company specialized in digital rights management.

Sometime in 2017 the scammers sent the corresponding song files to AdRev, which in turn uploaded them to YouTube, recognizing the scammers as beneficiaries of the royalties obtained for these songs, the lawsuit states. As an example the DOJ points to the song “Viernes Sin Tu Amor”, which generated about $24,000 USD over the past 4 years.

The hackers would have done the same with many other songs, using AdRev employees to file disputes with YouTube, which eventually gave the royalties to MediaMuv. Although it seems that the problem has already been completely corrected, YouTube has not commented on it.

The defendants allegedly used the proceeds to purchase real estate, luxury cars, jewelry and other property, which will be confiscated.

If convicted, the defendants face up to 20 years in prison on the wire fraud charges, 10 years for money laundering and 2 more years for aggravated identity theft, plus a fine of up to $250,000 USD.

To learn more about information security risks, malware variants, vulnerabilities and information technologies, feel free to access the International Institute of Cyber Security (IICS) websites.