Army flayed over 21-year-old's $298 million arms deal

[RedEarth]

Source: McClatchy

WASHINGTON — Military officials came under withering attack Tuesday in Congress from both Democrats and Republicans, who expressed anger and astonishment that a 21-year-old Miami Beach man with a spot on a State Department "watch list" and a history of failing to deliver on military contracts was awarded a $298 million deal to provides arms to allied forces in Afghanistan.

A congressional investigation found that Efraim Diveroli — who's now 22 — was granted the contract even though he, his company, AEY, and a supplier he worked with were on a State Department watch list for suspicious international arms dealers, said Rep. Henry Waxman, the chairman of the House Oversight and Government Reform Committee.

The California Democrat said that the awarding of the contract revealed a "fundamentally flawed system," noting that Defense Department officials had overlooked AEY's "long record of failed and dubious performance." That record, as compiled by the committee, included delivering damaged helmets to Iraq, falsely blaming a hurricane in Miami for failing to deliver 10,000 pistols to Iraq's security forces and delivering the wrong model of laser pointer and rifle attachments to the U.S Embassy in Colombia.

"It appears that anyone — no matter how inexperienced or unqualified — can win a lucrative federal contract worth hundreds of millions of dollars," Waxman said, adding that it was "hard to imagine a less-qualified company than AEY."


Read more: http://www.mcclatchydc.com/homepage/story/42081.html

[bullimiami]

1. the question they are failing to ask is WHY he was awarded these contracts?

What connections does he have?

[eShirl]

2. probably Republican and/or fundy

[gratuitous]

3. Whaddya mean unqualified?

I'm sure that young Efraim has a dandy record as a Republican suck-up, perhaps even a multi-generational record. If that doesn't qualify a 21-year-old for his own lucrative no-bid contract, you might as well start requiring Republicans to work for a living, rather than sucking up corporate welfare out of the U.S. Treasury. And that could lead to them voting Democratic, and we all know what a disaster that would be for the country!

[indepat]

4. Our taxes hard at work to keep us safe

:D

[indepat]

5. Multiply this by a few thousand and what do you get: an inkling, the tip of the iceberg, of fraud,

waste, abuse, mendacity, venality, and corruption associated with this neocon wet dream called Iraq, but not to worry for four big oil companies stand to gain trillions of dollars. :D

[barbtries]

6. could it be

that he bribed his way into those contracts? if he didn't have some special connections i'm a monkey's uncle. 21 years old and a known bad apple and gets this contract. it stinks even worse than Waxman is saying.

[Overseas]

7. The young fella is just following the golden example of Halliburton and KBR. /nt

[bluedeminredstate]

8. K&R

[LuckyLib]

9. K and R -- McClatchy is at it again. Digging into the Bush Crime Family.

A criminal enterprise, through and through. No tracking in the US government?

[applegrove]

10. Only under Bush and Free Marketeering could something so awful happen.

[heliarc]

11. "suspicious international arms dealers"

Who among these international arms dealers ISN'T suspicious? That's what I want to know.

[Shipwack]

12. The suspicious ones are easy to spot...

They're the ones that don't give a big enough kick back...

[burythehatchet]

13. get to know Efraim on his myspace

http://profile.myspace.com/index.cfm?fuseaction=user.viewprofile&friendid=31397346

[skoalyman]

14. good god

:rofl: :rofl: :rofl: :rofl:
I LIKE TO EAT GOOD FOOD AND I DON'T KNOW HOW TO COOK SO I EAT OUT ALOT
reading from his my-space page well he best get to learning
sure is a shame our government gives away tons of money to crooks but when it comes to the least fortunate and poor who go with out the basics no way

[Greyskye]

15. Awww, he only has one friend. :(

Poor guy!

And among his favorite movies are "GOFATHER" and "AMERICAN BEUTY". :rofl:

[Divernan]

16. "Ephraim" is an Israeli name. Google his full name to see what a thug he is.

[seemslikeadream]

17. Pentagon Contractor Was Suspect Company Accused of Fraud Had Been Flagged by State Dept

Source: Washington Post

By Walter Pincus
Washington Post Staff Writer
Wednesday, June 25, 2008; Page A06

AEY Inc., the company run by a 22-year-old Miami Beach arms dealer who was indicted last week for conspiring to defraud the government on a $298 million Pentagon contract in 2007, was on a State Department watch list for suspicious international dealings the year before that contract was awarded, according to testimony before Congress yesterday.


Pentagon Contractor Was Suspect
Washington Post Investigations: Army Defends Contract With Indicted Arms Dealer
Both AEY and its president, Efraim E. Diveroli, were listed because they had been under investigation since July 2005 because of suspicion of "numerous violations of the Arms Export Control Act and contract fraud," according to a report released by the House Committee on Oversight and Government Reform at yesterday's hearing.

But Defense Department contracting officials were not aware of the listing because the two agencies did not regularly share such data, according to defense and State Department officials who appeared at the hearing.


Diveroli and four associates were indicted for conspiring to conceal that ammunition they were supplying to Afghanistan under a Pentagon contract had originated in China and not Albania as they were certifying. U.S. law prohibited providing Chinese-made arms and ammunition under the contract.


Read more: http://www.washingtonpost.com/wp-dyn/content/article/2008/06/24/AR2008062401281.html?hpid=topnews

[seemslikeadream]

18. Efraim was "a boy genius" who is "hard to control."

At first, Pentagon defended its contractor AEY proposal represented best value to the goverment

http://www.guardian.co.uk/world/2008/mar/28/afghanistan.usa

At first, the Pentagon defended its contractor. "AEY's proposal represented the best value to the government," the Army Sustainment Command wrote to the New York Times. Henry Waxman, the member of congress from California who heads the committee on government oversight, said yesterday he would conduct hearings into the contract next month.



........



In 2006, AEY was among 10 firms bidding on a contract to supply 52 kinds of ammunition for the Afghan security forces. But while his business was taking off, Diversoli was accused of violent behaviour involving two girlfriends and the parking attendant at his apartment building. In December 2006, Diversoli was charged with battery after beating up the parking attendant, according to the newspaper. Police recovered a forged driving licence from Diversoli's flat which led to a separate charge. He entered a programme for first time offenders to avoid trial.

AEY's contract was approved weeks later in January 2007, and Diversoli began scouring the globe for suppliers. Diversoli turned to Albania, which had large weapons dumps. However, the New York Times reported that the firm ended up paying for Kalashnikov rounds that were so obsolete that the US and Nato funded programmes to see them safely destroyed.

AEY also purchased 9 million cartridges from a Czech citizen who had been linked to illegal arms trafficking to Congo.



......



AEY also supplied weapons to US agencies, and rifles to Iraqi forces






AEY & Efraim Diveroli: Subject to the Foreign Corrupt Practices Act?


http://pogoblog.typepad.com/pogo/2008/03/aey-efraim-dive.html

AEY & Efraim Diveroli: Subject to the Foreign Corrupt Practices Act?
Based on my quick Google search of the web for AEY, Efraim Diveroli and "Foreign Corrupt Practices Act," I haven't seen anyone ask the question (though someone may have): Is Efraim Diveroli's alleged bribery of Albanian government officials, if true, a violation of the Foreign Corrupt Practices Act? It seems that it would be the case. According to the New York Times:

As Mr. Diveroli began to fill the Army’s huge orders, he was entering a shadowy world, and in his brief interview he suggested that he was aware that corruption could intrude on his dealings in Albania. “What goes on in the Albanian Ministry of Defense?” he said. “Who’s clean? Who’s dirty? Don’t want to know about it.”

The way AEY’s business was structured, Mr. Diveroli, at least officially, did not deal directly with Albanian officials. Instead, a middleman company registered in Cyprus, Evdin Ltd., bought the ammunition and sold it to his company.

The local packager involved in the deal, Mr. Trebicka, said that he suspected that Evdin’s purpose was to divert money to Albanian officials.

The purchases, Mr. Trebicka said, were a flip: Albania sold ammunition to Evdin for $22 per 1,000 rounds, he said, and Evdin sold it to AEY for much more. The difference, he said he suspected, was shared with Albanian officials, including Mr. Pinari, then the head of the arms export agency, and the defense minister at the time, Fatmir Mediu.

...

The conversation, he said, showed that the American company was aware of corruption in its dealings in Albania and that Heinrich Thomet, a Swiss arms dealer, was behind Evdin.




http://www.miamiherald.com/news/columnists/fred_grimm/story/475617.html
But Sonnett was taken aback by Diveroli. ``Well, I think it is passing strange that a 22-year-old can sign a $300 million worth of weapons contract with the Pentagon. I suppose the American dream is always possible.''

Even by the mythical standards of South Florida, a 20-something Miami Beach party boy seems an unlikely entry in our gallery of rogue arms peddlers with the likes of Soghanalian. Or Nazi turned arms smuggler Klaus Altmann-Barbie. Or Fort Lauderdale's flamboyant Ken Burnstine, the drug smuggler and arms dealer who may -- or not -- have perished in a 1976 plane crash. Or Gerard Latchinian, whose arms dealings were interrupted when he was caught plotting a coup in Honduras. Or David Duncan, tripped up in a deal sending guns to Peru. Or the bevy of Miami arms dealers exposed in the Iran-Contra scandal.

http://www.exportlawblog.com/archives/313

Of course, you didn’t expect that this blog would let a story about an arms company run by a 22-year-old kid and a 25-year-old “professional masseur” escape without comment, did you? The story, which the New York Times broke on Thursday, revealed how AEY, Inc., the company run by 22-year-old Efraim Diveroli and his massage therapist friend, was paid hundreds of millions of dollars by the United States Government to supply sub-standard ammunition to Afghan forces. Some of the ammo supplied by AEY is alleged to have been up to 40-years-old, i.e., manufactured before the AEY executives were even born.

There is at least one export law angle to the story. It arises from the discovery that some of the ammunition delivered by AEY had been procured from China. The Times story noted:

Tens of millions of the rifle and machine-gun cartridges were manufactured in China, making their procurement a possible violation of American law.

I’d say that’s more than a “possible” violation. When AEY arranged the export of ammunition from China to Afghanistan it would have been acting as a broker under Part 129 of the International Traffic in Arms Regulations (the “ITAR”). Section 129.5 of the ITAR notes that “no brokering proposals involving any country referred to in § 126.1,” e.g. China, “may be carried out by any person without first obtaining the written approval of” the Department of State’s Directorate of Defense Trade Controls. And we know that AEY would not have had such written approval because section 126.1 says that it is the policy of DDTC to deny licenses involving China.


http://edition.cnn.com/2008/US/03/28/arms.dealer/?iref=mpstoryview

Diveroli is president of AEY Inc., a South Florida company which, according to U.S. government documents, has done more than $10 million of business with the U.S. government since 2004

He's a genius about anything to do with weapons," the 72-year-old says. "Ever since he was a little boy, I would take him to gun shows and he could identify every model of guns. People would ask: How can he do that so young? He has a gift, I would tell them.''

Michael Diveroli, Efraim's father, told CNN affiliate WFOR-TV that he wished his son had turned his intellect elsewhere.

He said Efraim was "a boy genius" who is "hard to control." Read the WFOR story

"I would prefer he became a nice Jewish doctor or lawyer rather than an arms dealer," WFOR quoted Michael Diveroli as saying. Watch how father says son runs his own show »

For now, relatives say Efraim Diveroli is out of the country. CNN attempts to contact him have not been successful.



http://www.lindsayfincher.com/2008/03/aey_inc_wtf.html


And that's not their only federal contract!

As Efraim Diveroli arrived in Miami Beach, AEY was transforming itself by aggressively seeking security-related contracts.
It won a $126,000 award for ammunition for the Special Forces; AEY also provided ammunition or equipment in 2004 to the Department of Energy, the Environmental Protection Agency, the Transportation Security Administration and the State Department.

By 2005, when Mr. Diveroli became AEY’s president at age 19, the company was bidding across a spectrum of government agencies and providing paramilitary equipment — weapons, helmets, ballistic vests, bomb suits, batteries and chargers for X-ray machines — for American aid to Pakistan, Bolivia and elsewhere.

It was also providing supplies to the American military in Iraq, where its business included a $5.7 million contract for rifles for Iraqi forces.

Two federal officials involved in contracting in Baghdad said AEY quickly developed a bad reputation. “They weren’t reliable, or if they did come through, they did after many excuses,” said one of them, who asked that his name be withheld because he was not authorized to speak with reporters.



Arms Dealing Company Was Listed As ‘Minority-Owned’


http://www.thejewishweek.com/viewArticle/c37_a7197/News/National.html


As the government investigation was started, the House Oversight and Government Reform Committee launched its own inquiry into the arms shipments. A spokeswoman for Rep. Henry Waxman (D-Calif.), the committee chair, said invitations to appear before the committee April 17 had been sent to Diveroli, Packouz, the company’s vice president, and Levi Meyer, its general manager.


Dudes, is everyone who works on these government contracts completely high? Is it too much to ask that you actually investigate who you will be handing out $300 million contracts to?!




March 27.2008
Mr. Efraim E. Diveroli
President
AEY Incorporated
975 Arthtx Godfrey Road, Suite 2l I
Miami Beach, FL 33140-3341
Dear Mr. Diveroli:
Today's New York Times raises questions about your company's contracts with the U.S.
government to provide weapons, ammunition, and munitions to military forces in Iraq and
Afghanistan.' I am writing to request your testimony at a hearing on these matters before the
Oversight Committee at 10:00 a.m. on April17,2008, in Room 2157 of the Rayburn House
Office Building.
At the hearing, please be prepared to discuss your company's financial history, past
performance, and compliance with U.S. law and government contracting regulations. The
Committee will be sending you under separate cover a request for documents relating to this
issue. In addition, I request that you make yourself available for a transcribed interview with
Committee staff on or before April 11, 2008.
The Committee on Oversight and Govemment Reform is the principal oversight
committee in the House of Representatives and has broad oversight jurisdiction as set forth in
House Rule X. Information for witnesses appearing before the Committee is contained in the
enclosed'Witness Information Sheet. Also enclosed with this letter are the Committee's
procedures for transcribed interviews.
' Supplier Under Scrutiny on Aging Arms for Afghans, New York Times (Mar. 27,2008)
(online at www.nytimes.com/2008103l27lworldlasia/27ammo.html?_r:1&hp&ore Èslogin).
Mr. Efraim E. Diveroli
March 27,2008
Page2
Ifyou have any questions regarding this request, please contact Theodore Chuang or
Suzanne Renaud with the Committee staff at [phone].
Sincerelv.

Henry A. Waxman
Chairman
Enclosures
cc: Tom Davis
Ranking Minority Member



Is he competition for Erik Prince, Brent Wilkes?


http://tpmmuckraker.talkingpointsmemo.com/2008/03/todays_must_read_304.php


Botach Tactical and AEY Inc., family arms dealerships


http://majikthise.typepad.com/majikthise_/2008/03/botach-tactic-1.html


http://www.botachtactical.com /


Botach Tactical doesn't advertise guns or explosives on its Yahoo-hosted website, but they will sell you plastic training guns and real magazines. Body bags, too. (Before you whip out your credit cards, be advised that Botach seems to have a lot of bitterly dissatisfied customers.)


In 2005 Rep. Maxine Waters (D-Ca) and some of her constituents confronted Botach at his at unmarked establishment at 3423 W. 43rd Place in Los Angeles. Local residents and city officials became concerned when they found out that Botach had quietly converted a former pawn shop into a gun dealership 12 years earlier. Botach has many other business interests in California, including Botach Management, also at 3423 W. 43rd Place, and a cold storage warehouse around the corner from his tactical store/gun dealership/property management company.

[Robb]

19. Misleading headline

...Although it would be an interesting turn of events to attempt to skin the people responsible.

Bring back a little Old Testament law and order. :D