YouTube Fraudster Accepts Plea Deal for $23M Royalty Scam

Just before the start of his previously scheduled trial, Jose Teran, who was accused of running a YouTube scam with a partner, has accepted a plea deal in which he has admitted to counts of conspiracy, wire fraud and transactional money laundering for his role in one of the largest royalty scams in history. In his plea, Teran admits to stealing over $23 million in royalties from Latin artists that he admits now he had “no lawful rights to monetize or otherwise control.” 

Teran and his business partner, Webster Batista Fernandez, operated their scam under the business name “MediaMuv” and were originally indicted by a federal grand jury in Arizona on Nov. 16, 2021, on 30 counts of conspiracy, wire fraud, money laundering and aggravated identity theft. The scam was the subject of a Billboard investigation. Batista took a plea deal on April 21, 2022, in which he admitted to one count of conspiracy and one count of wire fraud. Batista now awaits sentencing, which is currently scheduled for March. 

Teran’s plea agreement echoes much of Batista’s. Both pleas say that the MediaMuv founders “discovered there were songs of musicians and bands on the internet that were not being monetized.” So they began uploading the recordings to YouTube as MP3 files, claiming to own or control the rights. Between 2016 and 2021, Teran and Batista falsely claimed royalties from songwriters and artists ranging from independent creators to songs recorded by global stars like Daddy Yankee, Don Omar, Prince Royce, Julio Iglesias and Anuel AA.

Under the name MediaMuv, Teran and Batista signed a contract with YouTube to use its content management system (CMS), which rights holders use to claim copyright ownership and the ensuing royalties. “We falsely claimed that MediaMuv owned over 50,000 songs and further sought access to YouTube’s CMS in order to obtain royalty payments for these songs,” Teran said in his plea. In addition, the duo entered a contract with AdRev, a rights management company owned by Downtown Music Holdings, “to assist in administering the music [they] fraudulently claimed to own.”

Billboard’s investigation uncovered that YouTube royalty-claiming scams like MediaMuv’s are more common than is generally believed, but Teran and Batista’s scheme was particularly brazen in terms of both scale and style.

Sources who work closely with the platform say YouTube scammers typically just claim small fractions of songs they suspect have not been claimed properly and might go unnoticed. This is especially common on the publishing side, where some compositions have so many songwriters that ownership and royalties are far more complicated than they are for recordings. But MediaMuv often claimed 100% of royalties for master recordings or compositions.

Both Batista and Teran admitted in their pleas that they sent three falsified contracts with companies that “purportedly” managed artists to AdRev and YouTube “for the purpose of deceiving [them] into allowing [MediaMuv] to continue [its] fraudulent operation” in July 2017. According to Teran’s plea deal, these three forged management contracts were provided to support MediaMuv’s assertion that it controlled a vast Latin music catalog. 

The plea deals also say the duo did not act alone. Both mention that they hired “over five co-conspirators” to help them find new music to fraudulently claim and, in return, those co-conspirators were paid “a portion of [MediaMuv’s] royalties.” Names are not revealed in these documents, but other court documents tied MediaMuv to a network of people who seem to have benefited financially from Teran and Batista’s scheme, including Batista’s then-wife, who purchased a house in Phoenix in cash with money from a MediaMuv-associated bank account, according to a court document filed by prosecutors. 

The house she purchased, along with six bank accounts, a Tesla, a BMW and a plot of land, are all listed in Teran and Batistas’ plea deals as items they agree to forfeit. 

Though the duo is ordered to “make restitution to any victim” of their crimes, one of the businessmen who represented multiple MediaMuv victims told Billboard in August he doesn’t “expect to get it all back. I’m sure they spent a lot of it on cars and travel and stuff.”

In a statement to Billboard, a spokesman for Downtown Music Holdings says the company is “pleased by the latest developments in the MediaMuv criminal case, as both defendants have now pleaded guilty and admitted their role in this complex fraud scheme. This case sends a strong message to other potential bad actors that this kind of fraudulent activity in our industry will be investigated and prosecuted to the full extent of the law.”

Representatives for Teran and YouTube did not respond to Billboard’s request for comment.

Teran’s sentencing is set for April 17, 2023.