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

by Guy Lawson

  “Efraim used to be a very funny guy,” Podrizki recalled. “Cynical but hilarious. We used to sell pot and jewelry to tourists together along Miami Beach. He had an old .22 that we’d take to the range to shoot, and we used to joke about sawing off the barrel and attaching laser sights and a fifty-round clip—making this shitty gun super-tactical. But then Efraim changed when he started to be an arms dealer. He became all about making money. He wasn’t funny anymore—he became controlling, overbearing, arrogant. He was a smart guy, in a lot of ways, but he became one-dimensional.”

  / / / / /

  In the spring of 2005, Diveroli came across an opportunity on FedBizOpps that promised to give him a chance to win a contract far larger than anything he’d attempted. The $51 million contract was called an ID/IQ, meaning an Indefinite Delivery, Indefinite Quantity solicitation. Diveroli learned that in an ID/IQ contract the Army couldn’t say with certainty the amount of arms it wanted, or how long the deal would run. But it wanted to select a single company to fulfill the many orders that would follow as the United States tried to prepare Iraqis for combat.

  The previous ID/IQ deal in Iraq, which was about to expire, had been won by a company called Taos. In the normal course of business, Taos would be the strong favorite to retain the deal. But Diveroli had other ideas. As usual, he contacted Thomet for quotes. Rocket-propelled grenades, mortar rounds, Russian-style machine guns—Thomet had access to matériel all over the Balkans. Diveroli entered his bid, heaving a large sigh.

  “Then I got an e-mail saying that I’d won the contract,” Diveroli recalled. “I’d won a fifty-one-million-dollar deal! I went out and celebrated like crazy. But the next day I found out that there was one major caveat. The same damn contract had been awarded to four other companies at the same time.”

  Instead of giving the whole ID/IQ contract to one winner, the Pentagon was going to conduct “mini-competes.” AEY received an initial order for $500,000 in ammunition, but the rest of the order was cut into small contracts for Diveroli and his adversaries to bid on—companies like Taos, DLS, Blane International.

  “Later on I would learn the significance of these companies,” Diveroli recalled. “But at the time I figured they were big companies and I was the little guy. Right away I started winning the mini-competes. I was beating the big boys at their own game.”

  A normal commercial enterprise would assign perhaps a dozen people to the job. Not AEY: Diveroli worked alone. He was now on the phone with Thomet two, three, four times a day. The individual contracts were relatively small—a thousand pistols, half a million dollars’ worth of a specific kind of ammo, a million dollars’ worth of grenades. Whatever he was after, Diveroli knew that if anyone could find the arms, it was Thomet. He’d bound large quantities of weapons and ammos in storehouses in Bosnia, Croatia, and Albania. It made Thomet one of the few reliable sources in the market.

  Diveroli didn’t know or care what Thomet did to get the arms to Baghdad—nor did the US government. The Army wanted guns and ammunition in Iraq as quickly and cheaply as possible, and Diveroli was delighted to do the job.

  As he continued to triumph on FedBizOpps, Diveroli was acquiring a reputation inside the Green Zone in Iraq. A Texan named Howard Lowry, who operated his own one-man company in Baghdad, also competed for the ID/IQ deals. Working in a war zone, Lowry had firsthand knowledge of the dangers of being an arms dealer. The Army’s procurement officers were sometimes on the take, Lowry learned, but in such a lawless environment nobody was investigating or prosecuting the crimes. Rival contractors roamed Baghdad in armored vehicles, notoriously shooting at Iraqi civilians with impunity, and competitors sometimes uttered violent threats to each other. Lowry recalled talking to Diveroli during the ID/IQs competition and being struck by both his youth and his lack of awareness of the nature of the world he’d entered.

  “The Army’s contracting officers told me Diveroli was an arrogant little snot,” Lowry recalled. “There were rumors floating around that he was a cocaine dealer. No one could understand how this kid could come up with the money to bid on contracts.”

  On the phone one day, Diveroli boasted to Lowry that he was going to “kick his ass” in the mini-competes. Lowry laughed, but he wasn’t impressed by Diveroli’s manner, which came across as insolent and immature.

  “I told him that he didn’t understand that he was in a very dangerous business,” Lowry recalled. “I wasn’t threatening him. I was letting him know that arms dealing was a very, very high-testosterone business. There were a lot of big egos. Diveroli told me not to worry. He said he knew everything about the business—literally everything. I told him he had no idea what he was getting himself into.”

  As he neared his twentieth birthday, Diveroli imagined he was forging an identity as a gunrunner. He was beginning to believe he was the equal of or even better than hardened arms dealers like Henri Thomet. As Diveroli sat in his apartment in Miami Beach lighting a bong, the perils of war were little more than an abstraction.

  * * *

  I. Diveroli’s uncle would later tell the New York Times that his nephew didn’t leave empty-handed—but with his customers.

  II. Rajiv Chandrasekaran, Imperial Life in the Emerald City (Vintage, 2007), 155–66.

  III. “Iraq: Before Rearming Iraq, He Sold Shoes and Flowers,” Los Angeles Times, November 6, 2005.

  Chapter Two

  SAVE THE KING

  In 2004 Efraim Diveroli did $1,043,869 in business with the US government. In 2005 that number leaped to $7,238,329, as he liked to boast to his buddies David Packouz and Alex Podrizki. Diveroli was getting rich, and he reveled in his triumphs. He finally moved out of his tiny studio into a one-bedroom apartment overlooking the ocean in a building called Executive Condos. He hired a cleaning lady to come to his place once a week to get rid of the worst of the squalor. He treated himself to a black Mercedes. It was used, but still: the luxury sedan spoke to the status he’d achieved in such an improbable way at such a young age.

  Smoking dope with David Packouz, Alex Podrizki, and their gang of Orthodox kids, Diveroli constantly bragged about the deals he was doing. Diveroli was younger than the other dudes in their posse, who were now in their early twenties and mostly going to college. Diveroli had always been the designated clown, the one who mooned patrons in the Eden Roc’s exclusive dining room and was willing to take up any dare. But his personality was changing as he grew more obsessed with business. So were his appetites.

  “I started to see my first girlfriend,” Diveroli recalled. “She was a Jewish girl, artsy, pretty. My second love was drugs and alcohol. I loved to get high. I couldn’t enjoy life sober. I would wake up to a joint. I’d smoke another for lunch. In the evening, I’d drink and snort cocaine. My buddies would all get high, too, but I was always the extremist, doing the most drugs and making an asshole out of myself when I was wasted. My girlfriend hated all the drugs—the weed, the Ecstasy, the mescaline, the ketamine, the hallucinogenic mushrooms, and probably some other shit I can’t remember.”

  Nothing mattered to Diveroli as much as business and money and getting high. He started to fight with his girlfriend more and more often. The couple broke up, got together, and broke up again, every few weeks—an emotional roller coaster.

  Then a friend told Diveroli that his girlfriend had cheated on him. Diveroli got drunk that night and drove over to her parents’ house, where she lived, parking his car on the front lawn.

  “I started to bang on her bedroom window, demanding to talk to her,” Diveroli recalled. “Her mother came out and threatened to call the police—which she then did. In a matter of minutes the relationship was gone forever.”

  Diveroli’s ex-girlfriend obtained a restraining order. The brush with the law could have chastened Diveroli, but he was heedless. He was too caught up in his new life as an arms dealer to care—or to worry that he might be spinning out of control.

  On the contrary, Diveroli was convinced he needed to expand his business. He was g
oing to turn AEY into a conglomerate. But his bandwidth was already stretched to the breaking point. He needed help. Whom in his posse could he trust? Who was smart, ambitious, and looking to make a lot of money?

  David Packouz was a few years older than Diveroli and studying science at college—an attribute that impressed the younger man greatly. They’d been friends since Diveroli was twelve and Packouz was sixteen, and both attended the same synagogue—or, to be more accurate, both skipped the services to smoke reefer and wreak havoc.

  “Efraim would steal the yarmulkes of older kids,” Packouz recalled. “He’d pick on the boys with short tempers, the ones he knew he could get a reaction from. He’d run off with their yarmulke and they’d chase him and finally catch him and beat him a little. Then when they’d walk away, he’d steal the yarmulke again. He was an annoying kid who enjoyed being an annoying kid. My friends liked him because it was fun watching him annoy uptight people. I wasn’t so crazy about him.”

  Now twenty-four, Packouz was good at school, but he couldn’t imagine spending his life as a scientist in a lab coat doing research. Privately, he longed to be a rock star. He spent hours practicing the guitar and dreaming of performing in front of arena-size audiences. His music was soulful, layered with complex movements, a blend of Pink Floyd, Alice in Chains, and Simon and Garfunkel—though he knew that sounded like a strange combination.

  To get the chance to sing, sometimes Packouz went to open-microphone nights at clubs in Miami, but his main outlet was karaoke in a basement bar called the Studio. While others treated karaoke as an excuse to get drunk and bellow power ballads, Packouz took his performances seriously, concentrating on pitch and timbre as he imagined himself to be a real rock and roller. To develop a distinctive look, and to hide premature balding, he’d shaved his head, making his sharp blue eyes more striking.

  “I planned on recording an album one day when I had enough money,” Packouz recalled. “But the truth is that I didn’t know what I was going to do with myself.”

  To support himself, Packouz advertised his services as a masseur on Craigslist. He figured that massage beat flipping burgers for minimum wage, even if fending off the sexual advances of clients was often a problem.

  But Packouz had found another way to make money. He told Diveroli that he’d started to trade goods on the Internet to supplement his income. Packouz bought textiles online on websites like Alibaba.com, purchasing bibs and towels and sheets from manufacturers in Pakistan and India, then selling them to a contact in Miami who supplied old folks’ homes. The business was tiny, with deals worth only a couple of thousand dollars for each transaction, but he’d fulfilled a few contracts and was starting to concentrate more on the Web—in essence, the same twenty-first-century business model Diveroli was following on a much larger scale.

  Apart from their burgeoning online businesses, the thing that Diveroli and Packouz had most in common was money. Both were very, very interested in money. Diveroli was already well off, at least for someone so young, but the early wealth only made him want more. Packouz was effectively broke, but he didn’t want to stay that way. Massage was never going to allow him the means to pursue a professional music career, he figured, nor would a job as a scientist. He was looking for a way to make a lot of money—the faster the better.

  Diveroli and Packouz had other characteristics in common. Like a fondness for pot and the propensity to get in trouble. Both were raised in Orthodox Jewish families, but they’d rebelled against the rules and rites of their faith. Both had been kicked out of Hebrew school. When Packouz was booted for failing a drug test, his parents sent him to Israel, to a school that specialized in helping Jewish kids with substance-abuse issues. It turned out to be a great place to get high.

  “I took acid by the Dead Sea,” Packouz said. “I came across this guy, an American hippie, who said his name was Moses. I had a transcendental experience. I experienced infinity.”

  The son of a rabbi, Packouz grappled with his faith. At college, he’d taken an anthropology class and learned about the many cultures of the world. The experience changed his view of religion. Packouz wanted to know why there were so many events in the Bible that couldn’t literally be true, as he’d been taught in Hebrew school—like Noah’s flood, or so-called facts in the Torah that were obviously contradicted by scientific evidence.

  “I started to ask real questions,” Packouz said. “I talked to the rabbis, and they didn’t have good answers. They just wound up using insults and put-downs, like I was a kid who knew nothing. I finally realized that there weren’t answers to these questions because human beings wrote the Bible, not God. I realized I had to develop my own philosophy—my own morality and ethics. So I became an atheist. Science became my religion. I came to hope that science could deliver what religion had always promised. I figured that was a much more likely scenario than an invisible man in the sky who was full of contradictions.”

  When Packouz got together with Diveroli and Alex Podrizki and the others in their group to smoke dope, he shared his thoughts. The gathering of a dozen or so Orthodox kids might have looked like any other collection of stoners telling each other not to bogart the spliff. But despite the slacker appearances they were intelligent and engaged. They had long, involved conversations about science, geopolitics, Miles Davis, religion. All except Diveroli. He talked about business: Guns and money, money and guns—that was all he was interested in. And war.

  Diveroli told his friends he was going to turn AEY into a multibillion-dollar company. He wanted to trade weapons on a global scale. He wanted a Gulfstream V private jet and a staff of hundreds. That was the kind of success Diveroli imagined for himself: the life of a billionaire. But with the added degree of difficulty—and frisson of excitement—that came with making his fortune practicing the black art of arms dealing.

  Packouz didn’t share Diveroli’s outlandish hopes, at least not yet, but he was impressed by his friend’s determination and success. In December of 2005 Diveroli decided to approach Packouz about working together. By then, Diveroli had decided from his experience that hard work and the ability to make a deal were what mattered, not the amount of money or the thing being traded. Bidding on bibs in Karachi to catch the drool of a septuagenarian in Miami Beach was no different from buying a cache of AK-47s from a Bosnian thug via a Swiss arms dealer for delivery to Baghdad. In theory.

  One evening Diveroli made plans to go out with Packouz. The pair rarely hung out together alone; they were both much closer to others in their circle. Diveroli was in an expansive mood when he picked up Packouz in his Mercedes to go to a party a local rabbi was throwing. The party was designed to entice kids like Diveroli and Packouz back to the straight and narrow, to meet someone nice, to settle down, to stay in the fold—free liquor, good food, and a gathering of pretty Jewish girls. Packouz recalled that for them it was just a cheap night out—and a chance to get lucky.

  “You and me, let’s talk some business,” Diveroli said as they drove through the warm winter evening. You and me: the sentence structure was part of the persona Diveroli was perfecting—the swaggering, tough-guy cadence that matched his idea of how a gunrunner should talk.

  “You and me, we can make money together,” Diveroli said.

  “You know I’m interested in making money,” Packouz said.

  “I know you’re a real smart guy. You’ve done some business. I could really use a guy like you.”

  Passing Biscayne Bay, luxury cruise ships in one direction, the silver skyscrapers of Miami in the other, Packouz turned to Diveroli. “What do you actually do?” Like the other friends in their group, Packouz knew that Diveroli was an arms dealer, but he didn’t know any of the details.

  “I sell all sorts of stuff to the United States government. Let me tell you, in Iraq there’s a gold rush going on. George Bush has opened the money floodgates.”

  “So I read in the papers.”

  “I’m in a prime position to capture quite a bit of that money. I have
been getting a lot of it already. I’m doing all kinds of deals, selling the weapons and ammo to the government that they’re giving to the Iraqi national army.”

  “What kind of weapons?”

  “You name it. AK-47s, RPKs, light machine guns, grenades, 7.62-by-39 ammo, 7.62-by-54 ammo. I’m wrapping up a big contract right now.”

  Packouz said it sounded like a risky business.

  “It is,” Diveroli said. “That’s what keeps all the schmucks and pussies out.”

  Diveroli grinned in his peculiar way—half smirk, half wink. He had a talent for making deals, and one of the components of being successful in business was knowing how to seduce the other party.

  “You and me, we’ve known each other forever,” Diveroli said. “I know you’re smart and you’ve got balls. That’s why I’ve picked you to be my partner.”

  Packouz hadn’t agreed to be Diveroli’s partner, of course—but the presumption was typical. Diveroli assumed that, because he’d selected Packouz, he’d obviously want to sign on. Diveroli explained that he had more work than he could handle himself. With Packouz on board, Diveroli said they could blow AEY into something big.

  “I’m flattered,” Packouz said. “Fortune favors the brave.”

  “Absofuckinglutely.”

  They rode in silence for a time as Packouz contemplated the proposal. Where did selling guns fit in his worldview? Was it morally permissible to be an arms dealer? The guns were being used to fight Islamist extremists, after all. The business was perfectly legal, and the customer was the US government. But wasn’t there an inherent evil to selling death—wasn’t profiting from the blood and suffering of others wrong?

  Something about Diveroli was irresistible. Not charismatic, quite, but funny in a half-crazy and fearless way. He was somehow larger-than-life. Not physically: Diveroli wasn’t large in stature, but his personality was forceful. He was obviously going to make it to the big time, come what may.