Man Pleads Guilty to $23m YouTube Content ID Scam

A man at the center of a copyright scam that abused YouTube’s Content ID system to fraudulently obtain more than $23m to the detriment of artists has entered a plea agreement with the US government. Webster Batista Fernandez wrongfully claimed to own the rights to more than 50,000 tracks and illegally monetized user uploads for years.

YouTube’s Content ID is an advanced piracy recognition system that aims to flag videos or music on users’ channels uploaded without permission.

Once detected, such content can be removed or monetized at the discretion of the relevant rightsholders.

While Content ID is generally considered effective and financially useful for rightsholders, the system relies on the honesty of those allowed to use it. Rumors of abuse have circulated for years, with many reports of user videos being monetized by people that shouldn’t have the right to do so. A grand jury indictment unsealed late 2021 uncovered one such scheme.

Grand Jury Indictment

The case – United States of America vs. Webster Batista Fernandez and Jose Teran – detailed a massive Content ID scam that generated more than $20 million for the defendants. Between 2017 and April 30, 2021, Fernandez and Teran began monetizing music on YouTube for a vast library of more than 50,000 songs, none of which they owned the rights to.

Using forged documents and other means, the men (via their companies) represented to YouTube and an intermediary company that they were the owners of the music and therefore entitled to collect “royalty payments” from the platform. Over the course of almost four years via fraudulent transactions, the defendants generated millions of dollars, with some of the proceeds spent on property, sports cars, and jewelry. The artists who created the tracks got absolutely nothing.

Batista and Teran were charged with thirty counts of conspiracy to commit wire fraud, money laundering, and aggravated identity theft. The indictment also sought forfeiture of any and all property traceable to the pair’s offending.

Webster Batista Fernandez Confesses

On Thursday, the Department of Justice revealed that Fernandez has entered a plea agreement to dispose of the matter subject to specific terms and conditions. It carries the following confession:

I, Webster Batista Fernandez (BATISTA), Jose Teran (TERAN), and other co conspirators, worked together to monetize music on [YouTube] we had no lawful rights to monetize or otherwise control. Sometime in 2016, I discovered there were recorded songs of musicians and bands on the internet that were not being monetized. I began searching for these songs and uploading them to [YouTube], as mp3 files. I falsely claimed legal ownership over them and began receiving royalty payments.

In early 2017, Teran and I created an entity called MediaMuv L.L.C., for the purpose of falsely claiming large swaths of music recordings we had no legal rights to whatsoever. Teran and I were partners, and we co-owned and managed this illegal operation. Using MediaMuv, we entered a contract with Y.T. to utilize their content management system (CMS) to monetize music we purportedly owned and controlled. We also entered contract with a third-party company, A.R., to assist us in administering the music we fraudulently claimed.

According to the confession, Batista and Teran hired over five people to use a tool called ‘Heartbeat’ to scour YouTube for Latin music. When they found content that had not yet been monetized, they downloaded the songs in mp3 format and then reuploaded them to YouTube’s CMS to claim ownership and collect the royalties.

The fraudulent scheme netted more than $23.4 million.

Batista Will Plead Guilty

Batista will plead guilty to Count 1 and 2 of the indictment and the remainder of the charges (Counts 3 to 30) will be dismissed.

Count 1 charges Fernandez with Conspiracy (a Class D felony), in violation of Title 18, United States 23 Code (U.S.C.) § 371, punishable by a maximum fine of $250,000, up to five years in prison (or both), a maximum of three years supervised released and up to five years probation.

Charge 2 charges Fernandez with Wire Fraud (a Class C felony) in violation of Title 18, U.S.C. § 1343, punishable by a maximum fine of $250,000, up to 20 years in prison (or both), a maximum of three years supervised released and up to five years probation.

Fernandez will also be required to pay restitution (not to exceed $25 million) to all victims “directly or proximately harmed” by his “relevant conduct.” He is also required to make a “full accounting” of all assets in which he has an interest and must not sell, hide, waste, spend or transfer any asset before sentencing.

Real estate and land in Arizona, more than a million dollars in several bank accounts, a 2017 Tesla, and a 2014 i8 BMW, will be forfeited and not treated as satisfaction for fines, restitution, or any other penalties.

The plea agreement can be found here (pdf)

Source:   TorrentFreak.com