Micfo00.jpg (copy) (copy) (copy)

Micfo LLC's offices are on East Bay Street in downtown Charleston. File/Andrew J. Whitaker/Staff

As the trial for a Charleston technology company CEO approaches, his attorney is arguing the case should be tossed out, saying it is impossible to own what the executive is accused of fraudulently obtaining.

Amir Golestan, chief executive of the data center owner Micfo LLC, pleaded not guilty to federal wire-fraud charges after he was charged in mid-May. The accusations stem from the company's acquisitions and subsequent sales of unique number sets known as internet protocol addresses that are required to run every device that connects to the internet. 

According to the indictment, Golestan fraudulently procured about 758,000 of the combinations with an estimate resale value of $9 million to $14.4 million by creating shell companies run by fictional executives.

About 4.3 billion of the numbers are in existence, but they have been depleted amid the fast-rising use of smartphones and other electronic gadgets. The shortage has increased their value to about $15 to $25 each, based on recent sales. 

Golestan alleged completed two transfers of about 130,000 addresses in 2017 and 2018 for $1.85 million.

The Micfo CEO is arguing that he couldn't have committed wire fraud, which defense attorney Bart Daniel defined as "obtaining money or property by means of false and fraudulent pretenses," because he never owned the addresses, according to a court document filed last week.

"IP addresses themselves are services, not property," according to the filing.

The addresses are managed by a handful of regional networks across the globe, which control the rights to distribute them. 

Golestan had to request his from the American Registry for Internet Numbers, which manages the number sets in North America. And though the registry retains ultimate control over them, customers buy the rights to use them. The nonprofit brought in $14.3 million in revenue in registration services in 2017, according to tax records. 

Last year, the group halted one of Golestan's attempts to resell numbers for $6.2 million after it became suspicious, according to court docuements.

The organization does not comment on pending litigation, a registry spokesman said. Daniel also declined to comment,

In a response filed with the court on Thursday, the U.S. Attorney's Office said Golestan and Micfo profited from millions of dollars in sales of addresses, and the idea that he did not intend to deprive the registry of something of value "strains reason."

We're starting a weekly newsletter about the business stories that are shaping Charleston and South Carolina. Get ahead with us - it's free.

"The right to use a particular IP address does have value," U.S. Attorney Sherri Lydon wrote. "Otherwise, a market would not exist for such sales, and Golestan would not have made millions of dollars from fraudulently transferring IP addresses to third parties."

U.S. District Court Judge David Norton is scheduled to hear arguments on the request to dismiss the indictment Nov. 4. Golestan's trial is set to begin Nov. 18.

According its website, Micfo owns data centers and provides cloud-based technology services worldwide. The company's offices are in a building just south of the City Market on East Bay Street.

In online postings, Golestan has said he started Micfo in 1999 as 16-year-old from his bedroom in Dubai. The company was incorporated in Nevada in 2015 and registered with the state of South Carolina in late 2015.

Editor's note: This article has been updated to reflect the rescheduling of Micfo's next hearing. It was originally scheduled for Oct. 25 and will now take place Nov. 4. 

Reach Mary Katherine Wildeman at 843-937-5594. Follow her on Twitter @mkwildeman.