Rising AI-Related Sophisticated Crimes May Invite More DOJ Focus

Former Department of Justice Deputy Attorney General Lisa Monaco warned last year that the agency would take a “robust” approach toward artificial intelligence-related crimes, even promising to seek harsher sentences for such crimes. While current DOJ leadership has neither affirmed nor disavowed Monaco’s position, multiple trends suggest AI enforcement will rise.

AI is fueling the commission of increasingly sophisticated crimes, and prosecution of AI-related offenses may increase in four key areas—financial fraud, cyberattacks, child sexual abuse, and AI washing.

Financial Frauds

AI makes it easier to engage in confidence scams or “pig butchering” schemes, in which scammers use fake digital personas to lure vulnerable victims into romantic or financial relationships. The culprits dupe their victims into making significant investments, often in cryptocurrency. According to the FBI, these scams cause severe losses compared to other internet-facilitated crimes, with over 4,300 pig butchering scams in 2024 alone.

AI tools can create hyper-realistic deepfakes, making it harder for victims to detect fraud until it’s too late. For example, an employee at a foreign bank was tricked last year into paying $25 million after fraudsters created deepfakes of the employees’ coworkers and lured the employee into attending a video call with these deepfake recreations.

Earlier this month, Spanish authorities also arrested six people in connection with a crypto investment scam that used AI to create fake celebrity ads to convince people to invest. US law enforcement will need to address any harm caused by a potential increase in these kinds of fraud.

Cyberattacks

Cyberattacks fueled by AI are also poised to be a top enforcement concern. Agentic AI—which can autonomously make decisions and execute tasks on a human’s behalf—enables hackers to steal large swaths of sensitive information. Agentic AI can adapt and learn from victims’ responses to craft more personalized and effective attacks in subsequent rounds.

Since January, the DOJ has revealed two cyber-hacking prosecutions involving foreign nationals: one against Russian nationals who allegedly deployed Phobos ransomware, and another against a Canadian national who allegedly engaged in a $65 million cryptocurrency hacking scheme. As foreign threat actors continue to target sensitive personal information in the US, expect to see an increase in criminal national security and computer hacking prosecutions.

Child Sexual Abuse

AI’s ability to generate images based on user prompts have led to a rapid increase in AI-generated child sexual abuse material in the US and abroad. Federal prosecutors have already used federal child pornography and obscenity laws to combat the distribution, production, transportation, and possession of AI-generated child pornography, and will continue to do so.

In May 2024, the DOJ returned a four-count indictment charging a man in the Western District of Wisconsin for violating federal obscenity laws when he allegedly used a text-to-image generative AI model to create thousands of explicit hyper-realistic images of minors. In August 2024, the DOJ indicted a man in the District of Alaska for allegedly using an AI chatbot to photo manipulate images of real children.

AI Washing

AI washing occurs when companies or individuals exaggerate or misrepresent their use of AI or AI capabilities. These misstatements will likely lead to more civil and criminal enforcement actions targeting individuals and companies for AI washing.

Civil regulators ramped up efforts to combat AI washing in 2024. For example, the Securities and Exchange Commission settled charges in March 2024 against two investment advisers, Delphia (USA) Inc. and Global Predictions, Inc., for making false and misleading statements to their clients about their purported use of AI. Similarly, the Federal Trade Commission last year also launched “Operation AI Comply,” an enforcement initiative that targeted five separate companies for engaging in deceptive AI-related claims and schemes.

The FTC also pursued an action in November 2024 against Evolv Technologies Holdings Inc., the maker of a security screening system commonly used in schools, alleging that the company made false claims about its AI-powered screening system.

The DOJ has now taken the baton. In January, the DOJ prosecuted its first AI washing case when former CEO of MoviePass’ parent company pleaded guilty to one count of securities fraud and one count of conspiracy to commit securities fraud. According to the DOJ, the defendant knowingly lied to investors that the company had and used “artificial intelligence” capabilities to generate revenue, when the company didn’t.

Earlier this month, the DOJ also returned an indictment against the former CEO of Nate Inc. for securities and wire fraud. Specifically, the DOJ alleged that the defendant lied to investors and consumers when he stated that his company used proprietary AI technology to autonomously complete online purchases for consumers, when he and the company relied heavily on humans to manually process transactions in secret. The SEC has also filed parallel civil charges against the former CEO of Nate, and we should expect to see an increase in parallel civil and criminal prosecutions on this front.

While the new DOJ hasn’t explicitly set an agenda with respect to AI-related crimes, that doesn’t mean anything goes when it comes to AI. The above misuses and misrepresentations of AI have already caught the eye of prosecutors and civil regulators alike, and they will continue to monitor for new ways in which people can misuse AI to cause harm.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Genny Ngai is partner with Morrison Cohen’s White Collar and Digital Assets practices and a former Assistant US Attorney with New York’s Eastern District.

William Roth is counsel with both practices at the firm. They both advise and defend emerging technology clients in complex litigation, criminal matters and government enforcement actions.   

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