Arms and the Dudes: How Three Stoners From Miami Beach Became the Most Unlikely Gunrunners in History

by Guy Lawson

  Alex Podrizki watched the parade in wonder. He’d never witnessed such fevered pro-American sentiment—not even in the United States on Super Bowl Sunday. Through the crowd he caught a glimpse of Bush’s waving hand. Standing in a sea of Albanians, Podrizki felt that he had truly embarked on a great adventure—one of many to come, he hoped.

  In early June, Podrizki was enjoying a rare break from the frantic pace of acting as AEY’s agent in Albania. The repacking effort had been stopped days before Bush’s arrival. The Secret Service and representatives of the US military had come to the airport and demanded that the ammo be moved to a hangar farther from the area where the president would be arriving. The Albanian military had complied, shifting the AK-47 ammo to a hardened shelter to the west of the airfield, where it was determined the rounds no longer represented a risk to the president.

  That American officials had open access to the repacking operation provided Podrizki with yet more comfort that nothing was seriously amiss with shipping “Chinese” rounds to Afghanistan. The military section of the airport had been teeming with federal agents before Bush’s visit. No one had said a word about the giant stack of old crates with Chinese markings on the tarmac or AEY’s repacking operation.

  After returning to Miami, Diveroli had come to an agreement with the Albanians. AEY would receive a discount of two-tenths of a penny on each round of ammo, reducing the price to 3.8 cents. In return, Diveroli had agreed to cut Trebicka out of the repacking job, which was now being done by a company called Alb-Demil,II an entity seemingly controlled by the prime minister’s son and Mihail Delijorgji. The process was now moving much more quickly and efficiently. A short, stocky tough guy named Tony was in charge at the airport. As many as 7 million rounds were being unpacked, inspected, and repacked every week, enough for three or four planeloads to fly to Kabul.

  During the day, Podrizki came by to observe the work and make sure that quality controls were being enforced—and they were. Any substandard rounds were put aside. The vast majority of the ammo was old but in pristine condition and easily met the contractual standard of serviceable without qualification. The best proof was the Army signatures on the growing number of deliveries accepted in Kabul without complaint, apart from a small dispute about the thickness of the cardboard boxes the ammo was placed in—a typical contractor-government issue in the world of FedBizOpps.

  In Albania, Podrizki still had to deal with “informality” issues from time to time. To receive permission for AEY’s planes to land, for example, Podrizki had to pay a bribe of 2,000 euros to civil aviation authorities. One night three officers in the Albanian army’s transportation brigade that was trucking the ammo to the airport invited Podrizki out for a drink. They’d grown friendly, Podrizki thought. As they sat down, the Albanians said they couldn’t truck any more ammo to the airport unless he was paid a tribute for their efforts. By now Podrizki was an old hand in the Balkans, in a way.

  “We’re not paying you anything,” Podrizki said. “If you have a problem, take it up with the Albanians doing the repacking.”

  Sometimes Podrizki thought about the “Chinese” ammunition question, but less and less often. The transaction was so obviously beneficial to all concerned.

  “Bending the law is sometimes necessary, especially in a time of war,” Podrizki recalled thinking. “There was the law, and then there was what the law was intended to accomplish. Ammo was needed in Afghanistan. Through no fault of our own, it turned out that most of the ammo was ‘Chinese.’ But the contract wasn’t benefiting anyone in China. It was benefiting the United States and Albania and the Afghans. There was a lot of pressure to deliver, because it was peak of the fighting season. We were getting the job done.”

  In Afghanistan the summer of 2007 was the most violent in years. An assassination attempt against President Karzai was averted. Thirty-five civilians were killed when a bus exploded in Kabul, an event followed by the death of nearly a hundred innocent people in an American bombardment in the village of Hyderabad, in the south of the country. Based in sanctuaries in Pakistan, the Taliban and Al Qaeda turned frontier provinces like Kunar into killing fields.

  But at least the Afghanistan security forces finally had ample supplies of ammunition for their AK-47s. After months of excruciating pressure, the Afghanistan contract was running like clockwork. Three dudes from Miami Beach were supplying millions of dollars’ worth of ammunition to the Afghanistan army and police. Security forces going into battle during Operation Lastay Kulang, the struggle for Chora and the strike to kill Mullah Dadullah, were carrying AK-47 rounds from AEY. The security of a nation teetering on the brink of chaos was, in some good measure, in their hands.

  For David Packouz, the summer of 2007 was a time of deliverance. After months of round-the-clock work, he could now handle the logistics of the Afghanistan deal with a few phone calls and e-mails every day. He began to relax, breathe easy, arriving at work late in the morning and leaving in midafternoon. Still surviving on his life savings while awaiting payment from Diveroli, Packouz had stopped doing massages. He didn’t have to worry about money in the same way as he had: on paper, he was rich. Packouz used his spare time to visit his daughter and compose music for the album he was going to call Microcosm. The songs came to him in a creative flurry—“Waiting for the Call,” “Flickering Light,” “Carpe Diem.” For one of the numbers, “Change,” the inspiration came in a dream, the sentiments perhaps unlikely for a gunrunner:

  We can change our future

  We can remake our world into something better

  No matter how difficult the way

  Never lose hope for a better day. . . .

  Efraim Diveroli, meanwhile, didn’t let up on his insane work schedule. As always, wake and bake was followed by eighteen-hour days scanning for opportunities on FedBizOpps. Rather than focus on the Afghan deal, Diveroli continued to expand AEY’s horizons. He now had more than half a dozen people working FedBizOpps, searching for deals. He continued to win small contracts in Iraq, for helmets and ammo and military uniforms. No deal was too big or too small for Diveroli, with scores of contracts in various stages of performance—a high-wire act he was struggling to maintain.

  The result was a constant state of siege in the offices of AEY. Like a contract to supply $5 million worth of small-caliber ammunition to Iraq. Packouz had advised his friend against bidding on that deal, as the ongoing distraction would jeopardize their performance on the Afghanistan deal. Diveroli didn’t listen. Nothing was enough for Diveroli, Packouz was realizing, to his increasing dismay. Packouz was more than content with the $8 million or so he stood to make from the Afghan deal. Diveroli’s ambition was bottomless.

  So was Diveroli’s greed—or so it seemed to Packouz. One day Diveroli announced that he wanted to renegotiate their agreement on the Afghan deal. They had initially agreed that Packouz would get 25 percent of the profits from the parts of the deal he sourced. Now Diveroli said he’d provided all the finance for the deal, along with the majority of the contacts. Why should Packouz benefit as if he were an owner when he’d never risked any of his own money? Diveroli asked. Another structure needed to be found, Diveroli said, one that recognized the reality of the situation—or how he saw it.

  “I know what it’s like to get fucked out of a lot of money, therefore I would never knowingly do that to somebody,” Diveroli e-mailed to his friend. “However there is a huge difference between being dishonest and merely being greedy in the sense that I work hard and will collect ALL monies which I am rightfully entitled under the normal code of business practices.”

  “I have been working for zero salary for nearly two years,” Packouz replied. “I now have a child to support. Is an extra 2% or 4% of net profit, or whatever it is you’re trying to squeeze me for, really worth souring our relationship? Am I worth that little to you?”

  “I will not be guilt-tripped if you end up making less than you had in mind,” Diveroli replied. “I strongly believe the biggest issue here i
s that you got a little too big for your britches.”

  Packouz recalled that Diveroli started looking at him differently. Packouz could tell Diveroli was working things over in his head. Now that real money was in AEY’s bank account—millions and millions—Diveroli was about to be forced to pay Packouz a big chunk of change. Before Diveroli departed for Ukraine, to try to bargain for cheaper airfreight prices, he stopped by Packouz’s desk. Packouz recognized the look on Diveroli’s face—the one he had whenever he renegotiated a contract.

  “Listen, buddy, you and me, we got to talk,” Diveroli said. “I’ve been hearing a lot of complaints around the office lately. People are asking why you’re getting paid so much money.”

  “Who’s saying that?” Packouz asked, certain that Diveroli wasn’t telling the truth—why would the others at AEY care what Packouz was making?

  “Doesn’t matter. I can’t have my staff demoralized. I expect you to pull your weight.”

  “I’m running the Afghanistan deal basically on my own. It’s going great. I don’t need to work twenty hours a day to get it done.”

  “You see the team working on the Iraq contracts and you don’t jump in and help.”

  “I only get paid on the deals I work,” Packouz said. “If you want to bid on more contracts, that’s your business. But it doesn’t involve me.”

  “If AEY goes down, everyone goes down.”

  “I told you not to bid on the Iraq contracts. You should focus on the three-hundred-million-dollar deal, not some five-million-dollar contract. It’s a waste of time, so I’m not really interested.”

  “It might interest you to know that the employees think I should pay you a hundred grand and cut you loose.”

  “So you want to fuck me over?”

  “I didn’t say that’s what I want to do. I’m sure we can find a reasonable compromise.”

  Packouz knew he was trapped. He hadn’t been paid yet—that would come when the contract was completed. Diveroli now said he didn’t want to “give” Packouz all of the money he was claiming. It was as if Diveroli didn’t think Packouz had earned the money—and that it was up to his discretion to decide how much to pay him. It seemed to Packouz that Diveroli was doing what he’d said his uncle had done to him years before, by refusing to pay him his share. But how could Packouz stop him? How could Packouz have been so foolish not to see that Diveroli would turn on him someday?

  “You’re just looking for any excuse to squeeze down my share,” Packouz said.

  Diveroli shrugged. When he returned from the Ukraine in July, tensions escalated. Packouz stopped coming to the office, preferring to work from his pad in the Flamingo. Diveroli called and insisted that Packouz wasn’t entitled to the millions they’d agreed on. Diveroli said he’d “give” Packouz $280,000, a sum he considered to be more than generous for less than a year’s work on the Afghanistan deal.

  Packouz exploded. “If you fuck me, I will destroy you,” he screamed into the phone. He hung up.

  Worried, Diveroli called Alex Podrizki in Albania to mediate. Diveroli wanted to know what Packouz meant by saying he was going to “destroy” him. Podrizki called his friend, and Packouz explained that he was going to tell suppliers in the Balkans what Diveroli was really being paid by the Army, so they’d see his profit margin.

  “They’d know what a liar he was,” Packouz recalled. “I would tell them about the forged documents. Second, I was going to tell the Internal Revenue Service about his accounting bullshit. I didn’t know exactly what his problem with the IRS was, but I knew he was terrified of them. Lastly, I was going to tell the Army about the Chinese ammunition from Albania.”

  Podrizki was stunned. Not by Packouz’s threats: this was Podrizki’s first indication that repacking the Chinese ammo presented a potentially serious legal problem. Podrizki had understood from the beginning that Chinese rounds weren’t permitted, at least technically, but Diveroli had assured him that it was purely a contractual and civil-law matter. After Podrizki’s conversations with Robert Newsome of the US Embassy in Tirana, Podrizki had assumed that AEY had the tacit approval of the government. He’d explicitly talked about the Chinese ammo with Newsome, and he’d urged Podrizki to continue the good work. But things were not as they seemed, he was realizing.

  The same day, Podrizki relayed Packouz’s threats to Diveroli, sending the dispute to yet another level.

  “You tell him that if he does those things I can’t guarantee his safety. Tell him I will fucking kill him.”

  Podrizki reported back that Diveroli had made his own threats. Packouz decided to end the discussion.

  “You have threatened me, and that is something I can never forgive,” Packouz wrote by e-mail. “Our business and personal relationship is over.”

  “As a businessman I have learned to never be threatened as you have repeatedly done in the last few days,” Diveroli replied, denying he’d threatened Packouz. “As your best friend, who’s really hurt by this situation, I would like to sit down and work this out without getting any nastier with each other.”

  “Unfortunately, threats are the only thing that keep you from fucking me,” Packouz replied. “If you fuck me, I have nothing to lose and you have everything to lose. The consequences will be MUCH MORE DIRE for you. I promise you that. The more you push me, the angrier I get. So do yourself a favor and end it now. Otherwise, prepare for war.”

  The pair needed an intervention. In July of 2007, Packouz and Diveroli agreed to sit down with each of their lawyers. Before the meeting they had a quick exchange in the hallway.

  “Listen, dude, you fuck me, I’m going to fuck you,” Packouz said.

  “Whatever,” said Diveroli.

  “You don’t want the IRS to come and look around.”

  “Calm down. Don’t throw around three-letter words like IRS. We can find a settlement.”

  “We both know you’re shipping Chinese.”

  A deal was struck. The settlement would be as Diveroli proposed, $280,000 in cash. Packouz believed the lack of a written agreement made it impossible to prove their real deal. Something was better than nothing, Packouz reasoned. Payment was to be spread over two years, to ensure that Packouz didn’t sabotage the Afghanistan contract as he’d threatened.

  The last point of contention was Diveroli’s demand that Packouz sign a noncompete agreement. Packouz refused. Under no circumstances would he execute a document that forbade him from going into the arms business. In fact, his intention was to use the money he was getting from Diveroli to start bidding on federal contracts on his own, using the tricks he’d learned at AEY.

  For the rest of the summer, Packouz worked on setting up his business, named Dynacore Industries—he thought it sounded sexy. He applied for the relevant licenses—DUNS number, CAGE code, ATF Class 8 import permit. He put up a website for his new company, grandly outlining all the work Dynacore’s “staff” had done on Army contracts in Iraq and Afghanistan.

  “Sometimes you have to fake it until you make it,” Packouz recalled.

  Then he got lucky. When he’d traveled to Abu Dhabi a few months earlier, he’d met a Nigerian colonel who’d been lingering around the small-arms exhibit in the booth of a Russian arms company, but he’d been ignored. Packouz had taken the opportunity to introduce himself and tell the colonel that he would be happy to source any nonstandard munitions he wanted. The gambit had paid off. Soon after Packouz fell out with Diveroli, the Nigerian e-mailed to say he was looking for a large supply of AK-47s and ammunition for the country’s navy. Packouz approached Yugoimport, the Serbian company that both Diveroli and Thomet used, and they happily agreed to sell the guns. With a few e-mails and phone calls, Packouz had his first deal lined up—$1.5 million worth of Kalashnikovs and ammo, with a profit of $200,000 coming his way.

  With the Nigerian deal pending, Packouz decided to take a few weeks off. He lazed by the pool at the Flamingo, even if it meant risking running into Diveroli. He took his infant daughter to the zoo and for stroll
s along South Beach. As weeks passed, Packouz was developing a new sense of himself. He was a serious gunrunner now, wearing his wraparound sunglasses, carrying his silver briefcase, slipping through the streets of Miami Beach in his Audi. Then Packouz went a step further. He reasoned that Diveroli might calculate that it was cheaper to hire someone to kill him than to pay the money he owed. To protect himself, Packouz bought a .357 Taurus revolver, the first gun he’d ever owned.

  All the while, Diveroli continued accumulating enemies. One of his favorite sayings was “You can screw just about anybody once.” His cavalier attitude illustrated his immaturity: he miscalculated the risks he took by enraging the people he discarded. Like Kosta Trebicka. After the Albanian businessman had been cut out of the repacking deal months earlier, he’d complained constantly to Diveroli, calling and e-mailing to try to be put back on the deal, or at least to be paid for the thousands of dollars’ worth of useless cardboard boxes he’d been left stuck with.

  Refusing to go away quietly, Trebicka had initially tried to cause trouble for the Albanians who’d taken over the repacking job. He’d told the workers he’d hired that they were being fired because of corruption inside the Ministry of Defense. Trebicka’s incitement had led to protests and a few burned tires in the village where most of the workers came from. But it was impossible to sustain their anger; Trebicka had been wronged, not the workers.

  After losing the contract, Trebicka continued to stalk Podrizki in Tirana, claiming that they were “friends,” muttering about exacting revenge against Ylli Pinari, trying to find a way to get back in on the deal.

  Podrizki finally lost his patience and told him, “You fucked up. You overstepped your boundaries. You got what you deserved.”

  “I’m going to kill Pinari,” Trebicka said.

  The threat was empty, perhaps. But when Podrizki next saw Ylli Pinari, he felt obligated to warn him: “I don’t want to get in the middle of this, but Trebicka’s been talking about killing you.”