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Charleston tech company, CEO enter guilty pleas in wire fraud case

Published: Nov. 18, 2021 at 3:20 PM EST|Updated: Nov. 18, 2021 at 5:32 PM EST
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CHARLESTON, S.C. (WCSC) - A Charleston-based tech company and its CEO charged with multiple counts of wire fraud decided to enter guilty pleas to the charges mid-trial, the U.S. Attorney’s Office said.

Micfo, LLC, and its chief executive officer, Amir Golestan, 38, of Charleston, pleaded guilty to 20 counts of wire fraud, Acting United States Attorney Rhett DeHart said.

The pleas came during their federal trial after evidence presented in the case showed Golestan, acting through Micfo, created fictitious persons and companies to sell fraudulently-obtained internet address rights for millions of dollars.

“Corporate and executive malfeasance can be difficult to detect and even harder to prosecute, and this case is an excellent example of the success we can achieve in spite of this difficulty when we work with our federal and agency partners,” DeHart said.

DeHart’s office worked with the FBI and the American Registry for Internet Numbers in this case.

“Like many corporate fraud criminals often do, Golestan made the mistake of assuming his scheme would not be discovered,” FBI Columbia Field Office Special Agent in Charge Susan Ferensic, said. “Make no mistake, the FBI along with our local, state, and federal partners, will work nonstop to uncover and pursue charges for criminals who adversely affect our Internet infrastructure.”

Evidence presented during the trial showed that Golestan started Micfo in Charleston in 1999 and that the company represented itself as providing web hosting and other Internet-based services. From February 2014 until the federal indictment in this case in May 2019, Golestan, as CEO of Micfo, created ten separate and fictitious companies which he referred to as “Channel Partners,” Assistant U.S. Attorney Derek Shoemake said.

Investigators said the purpose of these Channel Partners was to obtain from ARIN address rights to Internet Protocol version 4 addresses, which are numerical labels assigned to each device connected to a computer network that uses the Internet for communication.

ARIN is a nonprofit organization that administers IP address rights, allocations, and transfers in the United States, Canada, and parts of the Caribbean. To obtain an IP address allocation from ARIN, per its policies, an entity must provide a need-based justification. \

ARIN’s pool of IPv4 addresses has been depleted so there has been an increasing demand, which has resulted in a secondary market where prices for a single IPv4 address have increased dramatically, Shoemake said.

“Mr. Golestan’s scheme harmed ARIN and our community of Internet registry customers, and we hope that this outcome will send a clear message to any other parties contemplating fraudulent schemes to obtain or transfer Internet resources,” ARIN President and CEO John Curran said.

Prosecutors said Golestan created the fictitious Channel Partners, which would sometimes include creating web pages and fictional employees, to make the companies look legitimate and meet ARIN’s need-based justification policies for allocation of IPv4 addresses. Golestan, using the fake companies, was granted the rights to hundreds of thousands of IPv4 addresses from ARIN worth tens of millions of dollars, Shoemake said. Once Golestan had fraudulently obtained the IPv4 address rights, he began to sell those rights for millions of dollars, he said.

“As a result of his fraudulent scheme, Golestan pocketed approximately $3.5 million dollars, with another $6.2 million dollars waiting in escrow that would have went to Golestan had he not been caught,” Shoemake said. “Although Golestan and his company initially went to trial, after two days and testimony from eight Government witnesses, both Micfo and Golestan pleaded guilty to all twenty counts of wire fraud without a plea agreement.”

Golestan faces of maximum penalty under each count of 20 years in federal prison, a fine of $250,000, three years of supervision to follow the term of imprisonment, and restitution. Micfo, the company, faces a maximum fine under each count of $500,000.

United States District Judge Richard M. Gergel accepted the guilty pleas and will sentence Golestan after receiving and reviewing a sentencing report prepared by the United States Probation Office.

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