Ten men and one woman including a former IT teacher have been given jail terms, suspended prison sentences and community service for their part in a £1m "fake royalties" fraud of iTunes and Amazon.
Thousands of stolen or compromised credit cards were used to buy songs to generate fake royalty payments. Southwark Crown Court in London heard that the scam worked by exploiting the fact that if a musician pays a flat fee to a music distributor and then uploads their music to iTunes and Amazon, any royalties go straight into their own pocket.
The ring leaders bought 24 laptops, obtaining thousands of compromised credit card details and email addresses and recruiting helpers to buy songs to generate royalties, the court heard. The purchases – for less than £10 each time – initially went unnoticed. "The fraud came to light because iTunes realised they were paying royalties to what appeared to be unknown musicians in the Wolverhampton area at a rate they expect to pay to someone like Madonna," prosecutor Helen Malcolm QC told the court.
The scam made £500,000 but caused losses to iTunes and Amazon of between £750,000 and £1m.
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