Efraim Diveroli

Efraim Diveroli (born December 20, 1985)[3] is an American former arms dealer and author.[4] His company, AEY Inc., was a major weapons contractor for the U.S. Department of Defense. The U.S. government suspended AEY for violating its contract after AEY provided 42-year-old substandard and unserviceable Chinese ammunition and attempted to re-brand and re-package it, thus violating the American arms embargo against China.[5][6][7] As a result of the publicity surrounding the contract and the age of the arms dealers – Diveroli was 21 and partner David Packouz was 25 when AEY landed the ammunition deal – the United States Army began a review of its contracting procedures.[6]

Efraim Diveroli
Born (1985-12-20) December 20, 1985
Miami Beach, Florida, U.S.[1]
OccupationAuthor and former arms dealer
Criminal statusReleased August 2014[2]
Conviction(s)Conspiracy, felon in possession of a firearm
Criminal penalty4 years in federal prison

Diveroli was sentenced to four years in federal prison.[8] He is a central subject of the Todd Phillips dramedy film War Dogs, released in 2016,[9] as well as a memoir written in conjunction with convicted fraudster Matthew Cox and published in 2016.

Early life

Diveroli was born on December 20, 1985, in Miami Beach, Florida, the son of Ateret and Michael Diveroli. The family was Orthodox Jewish, strictly observing all traditional Jewish laws. His grandfather, Yoav Botach, is one of the wealthiest property owners in Los Angeles, and his uncle is celebrity rabbi Shmuley Boteach.[10][11]

AEY Inc.

Formation of AEY

Diveroli returned home to Miami Beach, Florida in March 2001 at the age of fifteen. After an argument with his uncle, he told his father he wanted to open a business specializing in arms, ammunition trading, and defense contracts with the U.S. Government. He convinced his father to sell him a shell company, AEY, Inc., named after the first initials of him and his siblings, which his father had incorporated as a small printing business, but had not done anything with in years.[4] Diveroli showed a penchant for arms dealing and quickly made a name for himself within the industry.[8] His young age and apparent talent led local media outlets to label him as an "arms wunderkind."[12] Diveroli struggled with drug addiction and was also labeled as a "stoner arms dealer" by the media.[8]

During the Cold War, the world was locked in an arms race.[13] Millions of weapons were stashed throughout Eastern Europe, ready for a war with the west. When the Cold War ended, and the immediate threat of violence subsided, arms dealers started moving these vast amounts of weapons.[8] The sales that followed formed the "gray market" where non-state actors (such as militia or terrorist groups) and legitimate government sanctioned buyers could procure arms through illegal foreign government sales.[14] "The Pentagon needed access to this new aftermarket in order to arm the militias it was creating in Iraq and Afghanistan. The trouble was, it couldn't go into such a murky underworld on its own. It needed proxies to do its dirty work — companies like AEY."[8]

Contracts

Diveroli started working during this period of heavy arms trading as a teenager in a one-room apartment in Miami. Equipped with nothing more than a laptop, he sought to enter the industry from the seat of his couch.[4][8] He began surfing solicitations on fbo.gov, or FedBizOpps, which is a government website where contracts are posted. He began by bidding on small contracts with the financial help of Ralph Merrill, with whom he did business during his time working for his uncle. By the age of eighteen, Diveroli had become a self-made millionaire by continuing to beat out big corporations like Northrop Grumman, Lockheed and BAE Systems. In the words of Rolling Stone, Diveroli had "an appetite for risk and all-devouring ambition."[8]

After steadily increasing the size of his contracts and developing a track record of success, Diveroli’s company AEY, Inc. was awarded a $298 million contract by the Pentagon to provide arms and munitions to the allied forces in Afghanistan.[4] In order to fulfill the US government contracts, Diveroli soon found himself dealing with dubious weapons traders, crooked diplomats, and soldiers of fortune; negotiating deals with foreign defense ministers, holding meetings at embassies, and taking calls from high-ranking Army officials.[8]

On March 27, 2008, the U.S. government suspended AEY Inc. for infringing upon the terms of its contract; in violation of a pre-existing arms embargo, the company was accused of supplying ammunition manufactured in China to the Afghan National Army and police. United States Army documents showed that the company totaled more than $200 million in contracts to supply ammunition, rifles, and other weapons in 2007. As a result of publicity surrounding the contract, the United States Army began a review of its contracting procedures.[15]

The United States House Committee on Oversight and Government Reform ruled the ammunition "unserviceable".[16] AEY had also failed to perform on numerous previous contracts, including sending potentially unsafe helmets and failure to deliver 10,000 Beretta pistols to Iraq.[17][18][19]

Diveroli's former partner, David Packouz, and Ralph Merrill, the group's former chief financier, later filed separate lawsuits against Diveroli seeking payment of millions of dollars they say they were owed in connection to the weapons contract with the U.S. government.[20]

Trial and conviction

A company Diveroli owns, Ammoworks, continued selling arms while he awaited trial for conspiracy.[21] In late August 2008, he pleaded guilty on one count of conspiracy, and was sentenced to four years in prison on January 4, 2011.[22][23] He was further sentenced for possessing a weapon while out on bond[24] and had his overall sentence reduced for assisting in the investigation of the offense. Diveroli's former partner David Packouz was sentenced to seven months' house arrest.[8]

War Dogs
Main article: War Dogs (2016 film)

The story of Diveroli's arms deals is the subject of the Todd Phillips comedy/drama film War Dogs, starring Jonah Hill as Diveroli and Miles Teller as his partner, David Packouz.,[9] which was based on the reporting done by Canadian journalist Guy Lawson for Rolling Stone. In 2016, Diveroli filed a lawsuit against Warner Bros. Entertainment Inc., director Todd Phillips, producer Bradley Cooper, and others, seeking to block release of the film.[25] Diveroli's suit against Warner Bros. claimed that the basis for the film was taken from his self-published memoir Once A Gun Runner, which convicted real estate fraudster Matthew Cox claims to have written while in prison with Diveroli.[26][20][25]

References
  1. "About". Efraim Diveroli. Archived from the original on May 15, 2016. Retrieved April 5, 2016.
  2. "Miami Beach's stoner gun-runner drama — now a Hollywood movie — shows up in Panama Papers". Miami Herald.
  3. "About". Archived from the original on April 15, 2016.
  4. "About Efraim Diveroli". Once A Gun Runner. Archived from the original on May 15, 2016. Retrieved May 4, 2016.
  5. Chivers, C.J. (March 27, 2008). "Supplier Under Scrutiny on Arms for Afghans". The New York Times. Retrieved August 13, 2016.
  6. Chivers, C.J. (April 27, 2008). "Allegations Lead Army to Review Arms Policy". The New York Times. Retrieved August 13, 2016.
  7. Bullock, Penn (September 25, 2008). "Accused Arms Dealer Trades Guns for a Guitar". comingsoon.net. Retrieved February 16, 2016.
  8. Lawson, Guy (March 16, 2011). "The Stoner Arms Dealers: How Two American Kids Became Big-Time Weapons Traders". Rolling Stone. Retrieved May 14, 2015.
  9. "Arms & the Dudes: First Photos of Jonah Hill and Miles Teller on the Set - ComingSoon.net". ComingSoon.net. April 30, 2015. Retrieved April 13, 2017.
  10. Elizabeth Newell Jochum and Robert Brodsky (April 3, 2008). "No record of arms dealer's certification as disadvantaged business". Retrieved April 20, 2016.
  11. Bullock, Penn (August 5, 2010). "Arms Merchants of South Central". L.A. Weekly. Retrieved April 13, 2017.
  12. Miami Herald (September 2, 2010). "South Florida becomes gateway for arms smuggling". Cayman Compass Via Miami Herald. Retrieved April 20, 2016.
  13. "Arms Race - Cold War - HISTORY.com". HISTORY.com. Retrieved May 4, 2016.
  14. Peterson, Barry. The Black and Gray Market Arms Trade. p. 4.
  15. Chivers, C.J. (April 27, 2008). "Allegations Lead Army to Review Arms Policy". The New York Times. Retrieved April 29, 2008.
  16. Rep. Henry A. Waxman. Opening Statement of Rep. Henry A Waxman Chairman, Committee on Oversight and Government Reform Examination of AEY Contracts with the U.S. Government (PDF) (Report). Archived from the original (PDF) on September 8, 2016. We know that ammunition provided by AEY was "unserviceable." We know that much of the ammunition was illegal Chinese-made ammunition
  17. Schmitt, Eric (June 25, 2008). "Army Awarded Contract, Unaware of Dealer's Past". The New York Times. Retrieved September 11, 2016.
  18. Clark, Lesley (June 25, 2008). "Army missed red flags on 21-year-old international arms dealer". The Seattle Times. Retrieved September 11, 2016.
  19. Eisenberg, David (June 27, 2008). "Firing blanks in Afghanistan". Asia Times. Retrieved September 11, 2016.
  20. Elfrink, Tim (August 11, 2016). "The Real Story Behind the Movie War Dogs". Miami New Times. Retrieved August 29, 2016.
  21. Bullock, Penn (February 3, 2009). "Armed Again". The Miami New Times. Retrieved February 4, 2009.
  22. "Efraim Diveroli Guilty Plea: End of an Arms Era | Miami New Times". Blogs.miaminewtimes.com. September 7, 2009. Retrieved May 14, 2015.
  23. "Miami Gun Runner Gets 4 Years, Says 'Good Times' Weren't Worth It". Tpmmuckraker.talkingpointsmemo.com. January 4, 2011. Retrieved May 14, 2015.
  24. "Eleventh Circuit Affirming Diveroli's conviction" (PDF). Cases.justia.com. Retrieved May 14, 2015.
  25. Gardner, Eriq (June 22, 2016). "Former Arms Dealer Suing Warner Bros. Over 'War Dogs' Takes Return Fire". Hollywood Reporter. Retrieved August 29, 2016.
  26. The Truth Behind the Movie "War Dogs", retrieved December 9, 2019

Further reading
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