Tech Company, CEO Plead Guilty to Wire Fraud Mid-Trial

Tech Company and CEO Plead Guilty to Twenty Counts of Wire Fraud Mid-Trial

Charleston, S.C (STL.News) Acting United States Attorney M. Rhett DeHart announced today that Micfo, LLC, a tech company located in Charleston, and its chief executive officer (CEO), Amir Golestan, 38, of Charleston, have both pleaded guilty to twenty counts of wire fraud.  Specifically, both defendants pled mid-way through a 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,” said Acting U.S. Attorney DeHart.

“This office greatly appreciates the hard work of the Federal Bureau of Investigation (FBI) and the American Registry for Internet Numbers (ARIN) on this case.  I want to especially recognize the efforts of ARIN’s Chief Customer Officer John Sweeting, General Counsel Michael Abejuela, and their outside counsel Steve Ryan and Sam Neel from McDermott Will & Emery LLP.”

“Corporate wrongdoers often avoid accountability by obscuring their criminal conduct through complicated business procedures or by operating in areas unfamiliar to most people,” said Criminal Chief Nathan Williams, who prosecuted the case alongside Assistant United States Attorney Amy Bower.  “The world of Internet resources is one of those areas.  However, this case shows that the FBI and U.S. Attorney’s Office, along with other agency partners, are capable of detecting complex crimes and prosecuting corporate and executive criminals.”

“Like many corporate fraud criminals often do, Golestan made the mistake of assuming his scheme would not be discovered,” said Susan Ferensic, Special Agent in Charge of the FBI Columbia Field Office.  “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.”

“ARIN is grateful for the hard work by the U.S. Attorney’s Office in South Carolina and the FBI to hold Mr. Golestan and Micfo accountable for the complex fraud perpetrated against ARIN,” said John Curran, ARIN’s President and CEO.  “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”

Evidence presented during the trial showed that Golestan started Micfo in Charleston in 1999.  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.” The purpose of these Channel Partners was to obtain address rights to Internet Protocol (IP) version 4 addresses (IPv4) from ARIN.

IPv4 addresses 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.

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.  Once Golestan had fraudulently obtained the IPv4 address rights, he began to sell those rights for millions of dollars.

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.  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, 3 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.

The case was investigated by the FBI.  Assistant United States Attorneys Nathan Williams and Amy Bower are prosecuting the case.

SOURCE: USDOJ.Today