A shy and socially isolated man “desperately wanted validation” when he created indecent images of children using artificial intelligence (AI) to sell to other paedophiles, a court heard.

Hugh Nelson, 27, of Bolton, Greater Manchester, accepted requests in online chatrooms for “bespoke” explicit computer-generated images depicting children being harmed.

The ex-student with a Masters in graphics, who admitted 11 offences, also used images of real children for some AI “artwork”, Bolton Crown Court heard.

Judge Martin Walsh said the case, which police have called “a landmark” prosecution, was “difficult and troubling” and he would sentence Nelson on Monday as he needed to reflect carefully on it.

Nelson frequently discussed child sexual abuse with other chatroom users and on three separate occasions encouraged the rape of children aged under 13, the court heard.

David Toal, prosecuting, said the case resulted from Operation Influence, an investigation into the “creation and developing trends of AI in relation to child sexual exploitation”.

He added: “The use of AI is rapidly improving and the imagery is becoming more realistic.”

The defendant was unmasked as the administrator of a paedophile chatroom when he engaged in a conversation with an undercover officer in May last year, said Mr Toal.

Nelson told the officer he took commissions from customers for images created by 3D modelling software and went on to send computer-generated images which depicted child sexual abuse.

Mr Toal said: “The defendant said he had over 60 characters in total, ranging from six months to middle-aged, and he charged £80 to create a new character.

Nelson, who had no previous convictions, was arrested at his family home in Egerton in June last year and told police he had a sexual interest mainly in girls aged about 12.

He said he had met like-minded people on the internet and eventually began to create images for sale as he considered his offending “had got out of control”, the court heard.

Various devices were seized and were found to contain a large quantity of indecent images as well as chats online with adults in France, Italy and the United States regarding the sexual exploitation and rape of children, although there was no evidence before the court to say any child had been sexually or physically assaulted.

Bob Elias, defending, said Nelson was a “shy, gauche man” who led a “lonely, socially isolated existence” in his bedroom at his family home.

He said: “What he was seeking primarily was validation, congratulations and a sense of belonging in a community.

“He was earning relatively small amounts of money and desperately wanted validation.

“He has brought his life crashing down around him to the shock and horror of his immediate family.”

Nelson had recognised the depravity of his actions and had apologised for them in a letter to the judge, the court heard.

The defendant pleaded guilty in August to various sexual offences including intentionally encouraging or assisting the commission of the rape of a child under the age of 13, making and distributing indecent images of children, and attempting to incite a child aged under 16 to engage in sexual activity.

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