By Lukas I. Alpert
Two men have been charged with allegedly running a years-long music royalty scam, in which they collected more than $20 million in payments from YouTube /zigman2/quotes/202490156/composite GOOGL +0.25% by falsely claiming to hold the rights to 50,000 Spanish-language songs.
Prosecutors say Jose “Chanel” Teran, 36, of Scottsdale, Ariz. and Webster “Yenddi” Batista, 38, of Doral, Fla. claimed their company, MediaMuv Inc., controlled the rights to a large back catalog of music.
In 2017, they allegedly approached a third-party royalty management firm identified in court papers only by the initials A.R., falsely claiming to control the royalty rights to the songs. In some cases, Teran and Batista used forged notes from artists claiming they had the rights to manage the music, prosecutors said.
A spokeswoman for the U.S. Attorney’s office in Arizona, which is prosecuting the case, declined to elaborate beyond what was detailed in public court filings.
Teran and Batista signed contracts with the management firm to monetize the music online, prosecutors said. The management firm then established MediaMuv’s credentials with YouTube, giving them copyright claims to the songs on the video platform.
Representatives for YouTube didn’t immediately respond to a message seeking comment. Lawyers for Teran and Batista also didn’t immediately respond to messages seeking comment.
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Big money in music royalties
Over the next several years, prosecutors say Teran and Batista fraudulently collected more than $20 million in royalty payments from the arrangement, none of which they ever shared with the artists who had written the songs.
Prosecutors say that when the legitimate right’s holder for one song — identified in court papers only by the initials D.H. — filed a complaint to the third-party management company claiming copyright infringement, Teran boldly insisted the person had no legal grounds to stand on.
“Any issue that [D.H.] have with our content, he can email me directly, we will not issue any revenue share to him or anyone just because he says he had a right to, we have contracts and if he has any doubts we can keep discussing this in front of a federal judge, thanks,” court documents quoted Teran as writing in an email.
The men allegedly collected over $100,000 in royalty payments for the hit ballad “Me Llamas” by the Colombian pop group, Piso 21, according to court documents. A song from the 1980s by the long-running Mexican group, Los Caminantes, allegedly netted the pair $30,000 in payments. Representatives for the groups couldn’t be immediately reached.
Prosecutors allege the men collected more than $50,000 in royalty payments from music by 21 different groups.
According to court documents, Teran used more than $500,000 of the money as a down payment to purchase a mansion in the Sonoran Foothills in the outskirts of Phoenix. The men also allegedly used $129,000 to purchase cars from Tesla, $93,000 to buy a BMW hybrid car from a dealer in Beverly Hills, and $62,000 to buy jewelry from a store in Manhattan.
Both men have been charged with 30 counts of conspiracy, wire fraud, money laundering and aggravated identity theft. They could face decades behind bars and large fines if convicted.