Efraim Diveroli Guilty Plea: End of an Arms Era
In 2005, at age 19, Diveroli inherited AEY from his father. Its new teenaged president quickly turned the company, based out of a single office suite, into a major geopolitical player. In early 2007, it got a $300 million contract through the Pentagon to supply the Afghan government with ammo for tanks, bazookas, and other weapons. AEY plumbed Albania's decrepit arms stockpiles, which had been bequeathed to the country decades earlier by Chairman Mao (and had been marked for destruction by NATO).
The Pentagon has an embargo against Chinese-made arms; so AEY removed the ammo from canisters marked 'Made in China' and shipped the stuff anyway -- at an extreme mark-up price. But in March, 2008, an arms depot where repackaging was going on exploded with the force of a small nuke. A few weeks later, The New York Times exposed AEY's rip-off scheme and released a peculiar tape on which Diveroli alleged corruption in Albania "went up to the prime minister and his son."
Things only got stranger from there. The businessman who recorded the tape was found dead in Albania. Diveroli and three associates were indicted. One man, then-26-year-old David Packouz, had been a massage therapist while at the same time serving as AEY's vice-president. After his arrest, he went into the record business and cut an acid-rock album about peace and love. (Like Diveroli, he pled guilty on one count.)
After his own indictment, Diveroli essentially changed the name of AEY to Ammoworks and continued selling massive quantities of heavy caliber ammo in Miami Beach. Ammoworks even bragged about supplying the government. Many months after he was arrested and banned from defense work, the U.S. government paid Diveroli $10 million on two contracts.
Now Diveroli can look forward to prison time, his freshly obtained millions notwithstanding.
-- Penn Bullock