Chinese bullets for Afghanistan forces, Czech missiles for Iraq paid for by the US taxpayer - the Miami connection

In January 2007 the US Department of Defense awarded a contract to AEY Ltd. to supply up to US$300 Mn. worth of ammunition to the Afghan Defense Forces. Public records show that AEY’s contracts since 2004 have potentially been worth more than a third of a billion dollars.

A curious company to obtain such a contract, the President was 21 year old Efraim E. Diveroli, the Vice President , David Packouz, a licensed massage therapist and they operated out of an unmarked Miami storefront. They also had a representative in Albania , Alexander Podrizki, and apparently a Ralph Merrill, a business associate of Mr. Diveroli was based in Utah who gave the company financial and managerial assistance.

Unsurprisingly it has led to a federal grand jury in Miami handing down charges to the three who ran the outfit , of fraud and conspiracy to misrepresent the types of ammunition they sold to the Defense Department.

It appears that the ammunition supplied was more than 40 years old and came from stockpiles of the old Communist bloc, including stockpiles that the State Department and NATO have determined to be unreliable and obsolete, and have (apparently) spent millions of dollars to have destroyed. Records are said to show shipments by AEY from stocks in the old Eastern bloc, including Albania, Bulgaria, the Czech Republic, Hungary, Kazakhstan, Montenegro, Romania and Slovakia.

Conversation of young Efraim secretly recorded suggest corruption in AEY's acquisition of more than 100 million aging rounds in Albania

Efraim was secretly recorded in a conversation that suggested corruption in his company's purchase of more than 100 million aging rounds in Albania, according to audio files of the conversation. These involve Kosta Trebicka, an Albanian businessman, and Ylli Pinari, director of an Albanian agency in charge of arms exports - Efraim (whose MySpace page says he's a "nice guy") says he "can't play monkey business with the mafia ... and all those fucking guys in Albania" .

Diveroli stresses to Trebicka the need to push a Pinari to go through with a a sale of material, according to the recording.

"Call him up, beg him, kiss him, whatever..." Diveroli tells his Albanian contact. "Send one of your girls to fuck him... Let's get him happy. Maybe he gives you one more chance to do the job. No?"


Mr. Diveroli arranged re-packing in new cardboard boxes, many of which split or decomposed after shipment to the war zones. Lots and types of ammunaition mixed, it was dirty, corroded or covered with a film. A middleman company registered in Cyprus, Evdin Ltd., bought the ammunition and sold it to his company, the principal function of which was to divert money to Albanian Government officials.

The Czech Connection

AEY Ltd., founded by Efraim's dad in 1966 had other interests. In May 2007, according to two American officials, the Czech government contacted the American Embassy in Prague . AEY was buying nine million cartridges through Petr Bernatik, a Czech citizen who had been accused by Czech officials of illegal arms trafficking.

The accusations included shipments of rocket-propelled grenades in violation of an international embargo to Congo, and illegal shipments of firearms to Slovakia.

Mr. Bernatik was listed on the Defense Trade Controls watch list, maintained by the State Department, is used to prevent American dealers from engaging suspicious traders in their business, in part to prevent legal arms companies from enriching or legitimizing black-market networks.

Any person who engages in the U.S. in the business of either manufacturing or exporting defense articles or furnishing defense services is required to register with the Directorate of Defense Trade Controls through the Office of Defense Trade Controls Compliance..There are about 7,000 entities listed and some 500 are added/changed/delisted every month.....They review approximately 55,000 requests for export licenses annually. (See ACLU review)

The State department didn't block the trade - equipping Iraq was, after all, in the United States’ interest, and also because Mr. Bernatik had been accused, not convicted.

On May 7, 2007, the Czech government issued an export license. Mr. Bernatik, in a telephone interview, said he arranged seven flights to Iraq for AEY last year. “We have a normal business collaboration,” he said.

Inquisitive Henry A. Waxman, Chairman of the House Oversight and Government Reform Committee, said in a statement on Friday. “The more we learn about AEY, the more questions we have.” They will be holding hearings starting on Tuesday.

Supplier Under Scrutiny on Arms for Afghans : March 27th, 2008 New York Times
This article was reported by C. J. Chivers, Eric Schmitt and Nicholas Wood and written by Mr. Chivers.