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Interesting. According to the definition in that Wikipedia link, "copyfraud" is claiming copyright on public domain content.

Does this mean a company can take code from an open source project that used AI, put it into their closed source code, potentially modify it, all without attribution?

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Yes, that's exactly what it means. AI works are public domain by default. Copyright law requires the work is created with human creativity. The essential piece is to clearly define what parts are AI generated vs human written. This is an obligation placed on you by the courts, and if you don't do it, it becomes very very hard to argue that you wrote that code.

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