Efraim Diveroli (born December 20, 1985)
AEY had supplied Chinese ammunition to Afghanistan, attempting to conceal its origin by repackaging it as Albanian. Although this did not violate the American arms embargo against China, because the ammo was manufactured pre 1989, it was a violation of their contract with the government which said no Chinese ammo at all. Concealing its origin then became an act of fraud.
Diveroli's story became the focal point of the 2016 Todd Phillips film, War Dogs,
Early life
Diveroli was born on December 20, 1985, in
Miami Beach,
Florida, the son of Ateret and Michael Diveroli. His family was
Orthodox Jewish, strictly observing all traditional Jewish laws. He studied at Hebrew Academy in Miami Beach. His Iranian-born grandfather, Yoav Botach, was one of the wealthiest property owners in
Los Angeles, and his uncle is celebrity
rabbi Shmuley Boteach.
AEY Inc
Formation of AEY Inc
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 for years.
Diveroli's success in arms dealing quickly attracted attention within the industry,
he was labeled as an "arms wunderkind" by the Miami Herald and as a "stoner arms dealer" by Rolling Stone as a result of Diveroli's drug use.
Arms trading dynamics
During the
Cold War, the USA & USSR engaged in a protracted and massive arms race.
Millions of weapons were stockpiled throughout
Eastern Europe. When the Cold War ended, and the immediate threat of violence subsided, arms dealers started moving some of these weapons.
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.
The Pentagon wanted access to this gray market to arm the militias it was creating in Iraq and Afghanistan. The US government therefore required intermediaries, or proxies, to undertake the more covert and intricate facets of arms-related activities. Companies such as AEY emerged as entities facilitating these operations, playing a role in executing tasks that were considered sensitive or clandestine in nature.
Contracts and controversies
Diveroli began working during a 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 comfort of his couch.
He began surfing solicitations on fbo.gov (now sam.gov), or FedBizOpps, 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 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."
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.
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.
The United States House Committee on Oversight and Government Reform ruled the ammunition "unserviceable".
Convictions and lawsuits
Ammoworks, a company owned by Diveroli, continued selling arms while he awaited trial for conspiracy.
In late August 2008, he pleaded guilty on one count of conspiracy, and was sentenced to four years in prison on January 4, 2011.
He was further sentenced for possessing a weapon while out on bond
and had his overall sentence reduced for assisting in the investigation of the prosecution.
Diveroli's former partner
David Packouz was sentenced to seven months house arrest.
Packouz, along with 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.
Debarment termination
In 2022, Diveroli opted into an exhaustive government review of his qualifications, following which the U.S. Army formally terminated his debarment and confirmed that he was fully qualified and fit to contract with the federal government once again.
War Dogs
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,
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.
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
Matthew Cox claims to have written while in prison with Diveroli, himself having been convicted of real estate fraud.
Further reading
