Despite its seemingly boundless borders, the Internet can be hemmed in by one of the oldest laws on the books: supply and demand.
And one of its scarcest and most sought-after online commodities are the numerical routing addresses that enable smart devices of all types, from iPhones to new-age appliances, to connect to the web.
Plentiful before the "Internet of Things" craze, they aren't so readily available anymore. The pool of roughly 4 billion unique 32-digit combinations ran dry nearly four years ago, according to the group in charge of doling them out in the U.S. and other parts of North America.
The ensuing shortage has fueled a wholesale market for blocks of unused numbers that are either returned or revoked, with a few unscrupulous middlemen willing to game the system to get their hands on them.
Some of this illicit brokerage activity has been traced to South Carolina. Last week, the CEO of a Charleston-based technology company was charged with orchestrating a digital-era version of a land grab.
Amir Golestan, 36, and his Micfo LLC were indicted in federal court on 20 criminal charges Tuesday. The U.S. Justice Department is accusing them of fraudulently obtaining about 758,000 of the prized numbers, which could fetch anywhere from $10 million to $14 million based on recent sales.
The case is being called a first-of-its-kind prosecution for the wide-open Internet law frontier.
It's an abrupt turn of events for a business that Golestan has said he bootstrapped 20 years ago, at age 16, from his bedroom in Dubai. According its website, Micfo now owns 55 data centers and provides cloud-based technology services worldwide.
How the company made the leap from the Mideast to the U.S. is unclear, but it incorporated in Nevada in 2005. Micfo filed registration papers with the S.C. Secretary of State in late 2015, when it moved to Charleston from Atlanta. A few weeks later, it bought an office condominium on East Bay Street, just south of the bustling City Market.
Last year, the low-key founder and CEO of Micfo raised his profile after snapping up a historic South of Broad home for nearly $4 million.
Golestan's legal woes stem from an entity called Channel Partners that sought out web-routing codes from the American Registry for Internet Numbers Ltd. It did so through a string of at least 11 businesses set up around the country under such names as Roya Hosting and Fiber Galaxy. The paperwork they submitted included notarized documents, links to sophisticated websites and the names of executive officers.
The nonprofit numbers registry said it believed the legitimate-looking requests were from independently owned companies — and truthful. They weren't.
"As a former federal prosecutor, I was impressed with the skillful design and tradecraft used in the fraud," Steven Ryan, the registry's general counsel, said in a recent blog post.
The numbers resale racket worked at first. A couple of smallish deals with buyers in places that included China and Saudi Arabia raked in $1.85 million in 2017 and 2018, according to court documents.
The digital gold mine began to cave in last fall, after some of the Channel Partners affiliates submitted new "transfer requests" to sell more allocated numbers for more than $6 million.
The now-suspicious registry, which has been stepping up its efforts to identify and root out fraudsters, asked for more information. Then, it started playing hard ball, threatening to revoke all of the remaining combinations it had previously assigned.
The companies lawyered up and requested a restraining order, saying they would suffer "insurmountable damage ... including ... the depletion of virtually all of their business operations" if the registry clawed back the numbers. The gamble backfired "spectacularly," the Internet industry news site Krebs On Security said last week.
At a Dec. 21 hearing, Ryan trotted out a South Carolina lawsuit from last June. It involved a onetime Micfo employee who, according to a court filing, was ordered to notarize bogus documents needed to obtain fresh blocks of numbers. The ex-staffer also called the Channel Partners portfolio as "sham companies" and "pure alter egos" of Golestan.
The Micfo CEO acknowledged in a sworn statement dated Dec. 20 that he was the "sole manager" of at least nine of the businesses.
The judge refused to issue the restraining order. At Golestan's request, the lawsuit was dismissed, and the dispute went to arbitration. That, too, backfired. The arbitrator awarded the numbers registry $350,000 and revoked all of the remaining Internet codes from the Micfo-controlled fronts.
The dispute was settled and closed on May 1, with no admission of wrongdoing. The criminal charges came down less than two weeks later.