by Guy Lawson
Mentavlos had recently started working at the DCIS, and he was looking to make a big case. To begin his investigation of Diveroli, Mentavlos contacted the Army’s Sustainment Command Center in Rock Island, Illinois, and requested copies of all AEY’s contracts, task orders, and end-user certificates—a request that was ignored for months. But by February 2007, as Diveroli and Packouz were swapping snorts of cocaine to celebrate their great good fortune in winning the Afghanistan contract, the investigation begun by Blane’s speculations was slithering through the DCIS with serpentine efficiency. Sitting in an office in Fort Lauderdale, Mentavlos had drafted an affidavit to justify federal agents’ raiding AEY’s headquarters. The DCIS was planning to seize all of AEY’s files and computers. The agency seemed to be looking for a crime—any crime. A fishing expedition was the legal term for such a venture.
On August 23, 2007, the DCIS was ready to make its move. First thing that morning, Mentavlos and other agents stormed AEY’s offices brandishing a search warrant and instructing the company’s employees to freeze and touch nothing, lest they tamper with evidence. A SWAT team was on standby—though law enforcement found only a small gathering of kids working the Internet.
August 23 was also the day David Packouz was to receive the first installment of his settlement payment from Diveroli. At ten in the morning, he got a call from Diveroli’s personal assistant, who said frantically, “The government just raided the office.”
“What? The government? Which agency? Why?”
“I’m not sure. They just walked in and told everyone to step away from their computers and to leave the office. They boxed up all the paperwork and took it away.”
“Holy shit. We are so fucked. Thanks for telling me. I really appreciate it.”
Packouz hadn’t been in the office for weeks, but he knew there were multiple reasons why AEY’s headquarters might be raided. He also knew what the likely explanation was—even if the DCIS knew nothing about the Chinese ammunition being repacked in Albania before the raid.
“I figured it had to be the Chinese ammo,” Packouz recalled. “I knew the e-mails about the Chinese repacking job were incredibly incriminating. I knew that once federal agents saw those, we’d be in trouble. We were so stupid. If we didn’t e-mail, we probably could’ve denied the whole thing. But there were names and dates. It was undeniable. I realized I was going to get caught no matter what I did, so I better turn myself in first.”
Packouz called his friend Alex Podrizki in Albania and told him about the raid. Packouz told Podrizki how the agents were going to find the e-mails about the Chinese ammo and how it might be a federal crime.
Sitting in his room in Tirana, Podrizki reeled. First he needed to know what had really happened in Miami. Podrizki phoned Danny Doudnik, who’d become his main contact at AEY. Podrizki didn’t mention that he knew about the raid; he was trying to see if Doudnik and Diveroli would tell him the truth. As they talked, Doudnik didn’t mention the raid, so he plainly was not going to level with him. Podrizki told Doudnik he needed a bunch of documents quickly. Doudnik said he was out of the office and didn’t have the papers with him and that it was going to take a while to get them.
“Why not go to the office?” Podrizki asked. “It’s urgent.”
“I can’t.”
The stress in Doudnik’s voice was palpable.
“What’s the matter?” Podrizki asked.
Podrizki could hear murmuring in the background. “Tell him there was a bomb threat,” he heard Diveroli whisper.
Doudnik repeated the lie.
“Are you guys okay?” Podrizki asked, feigning concern.
“It’s okay,” Doudnik said.
Podrizki hung up. He had to make a plan. Now. The Albanian police could be outside his door, for all he knew. First, he needed to get out of Albania and away from what suddenly appeared to be a crime scene at the repacking operation at the airport. Catching a plane was too risky, Podrizki decided. He was too well known at the airport. Leaving his meager belongings behind, he caught a cab to the edge of Tirana and got out. After the cab had driven away, he hailed another and directed the driver to take him to the port city of Durrës. Podrizki was now off the grid: no one would know where he was.
At Durrës, Podrizki bought a ticket for the ferry to Italy. He paid cash. As the ship put out to sea, he sat in the bar downing raki after raki and considered running to a country that had no extradition treaty with the United States. He replayed events from the past few months. He recalled how strange it was that Diveroli hadn’t gone to the airport to see the repacking when he was in Albania. He remembered how Diveroli had borrowed his laptop for half an hour one day. Now he realized that Diveroli could’ve planted incriminating evidence on the hard drive. Diveroli could have been scheming to lay the whole repacking plot on Podrizki. There was no way of knowing how ruthless Diveroli could be. It was every man for himself, Podrizki realized.
Podrizki stepped out of the bar onto the deck of the ferry. He looked around to be sure no one was watching. He quietly slipped his laptop overboard, the computer disappearing into the black Adriatic Sea.
In Miami, David Packouz hired a lawyer and tried to figure out if he had a defense. Was the repacking really illegal? Was the ammo really “Chinese”? Did the federal government know it was receiving Chinese ammo? He had many possible arguments he could try to make, Packouz’s lawyer said. But it was extremely expensive to mount a legal defense against the limitless resources of the federal government.
“You got two options,” the lawyer said. “You can fight, which is going to cost a minimum of two hundred thousand dollars. Or you can plead guilty. Your parents got a house they can put a second mortgage on?”
“I’m not doing that to my parents,” Packouz said. “What about a public defender?”
“You mean ‘public pretender.’ You’ll be one of two hundred cases he’s working. You’ll be lucky if he remembers your name.”
“You’re saying I can only effectively defend myself if I have lots of money?”
“That’s the system—how much justice can you afford.”
“What happens if I plead guilty?”
“You become the government’s bitch. Pretty much, you’re pulling down your pants and begging them not to fuck you too hard.”
“But I’m already bent over.”
“The way of the world.”
The lawyer arranged for a sit-down with Michael Mentavlos of the DCIS. An agent from the Immigration and Customs Enforcement agency named Oscar Garcia was working the case with Mentavlos. Garcia was older, near retirement, a veteran. Garcia led the meeting. He explained to Packouz that he had to confess to every crime he’d committed. A guilty plea applied to all possible forms of guilt.
“Keep in my mind we have all of AEY’s files, computers, and e-mail accounts,” Garcia said. “We’re going to find everything eventually. If you omit anything or lie about anything, we’ll come down on you like a ton of bricks.”
“What if I forget something?” Packouz asked.
“Then it’ll be a judgment call for us. Don’t put us in that position.”
Packouz had prepared with his lawyer. He might be charged with fraud, he understood, but his lawyer believed that with a full confession he might be able to avoid indictment. Packouz spoke slowly as he tried to recall everything he’d seen and done that might possibly be illegal. He told them how Diveroli had ordered him to falsify documents to send to arms companies in Bulgaria and Albania. He described the bait-and-switch tactics Diveroli used with Army procurement officers, bidding with brand-name Belgian guns and then persuading them to accept cheap Korean knockoffs. He told them about Diveroli’s Save the King Package and the attempt to sell arms to Nepal. The investigators took careful notes. Mentavlos had a habit of frowning at Packouz, as if trying to intimidate him.
“Now I’ll tell you the thing that makes me most nervous,” Packouz said.
“Saving the best for last, huh?” Garcia said.
Mentavlos and Garcia exchanged a glance and burst out laughing.
“If it makes you feel any better, we already know about the Chinese ammo,” Garcia said. “We found a to-do list in Diveroli’s papers, and one of the items was ‘Repackage Chinese ammo.’ ”
“That sounds incriminating,” Packouz said.
“No kidding.” Garcia laughed. “Now this is very important. I want you to think hard. Did any government official know about what you were doing? Were they involved, getting paid or anything else?”
“Not that I know of.”
Afterward, Packouz prayed he wouldn’t get indicted. He prayed he wouldn’t go to prison, though he’d been told he could face years behind bars. The prospect of doing time in a federal penitentiary because of repacked “Chinese” ammo seemed crazy to Packouz—and Garcia seemed to agree, though he was careful not to make any promises. Packouz’s lawyer said he felt that he could deal with Garcia—he was mature and levelheaded. But Mentavlos was another matter—he seemed unpredictable.
Packouz was now at the mercy of the government. So was Alex Podrizki, who’d returned to Miami, hired a lawyer, and confessed all to the federal agents. Special Agent Mentavlos promised to “go to bat” for them both. Diveroli was his real target, Mentavlos said. But Packouz and Podrizki thought there was something sinister in Mentavlos’s gung ho attitude.
Packouz wanted to know what he could do to make a living—could he still work on arms deals? Mentavlos said that he could, provided he didn’t break the law. Relieved, Packouz said he was working on a lead to sell a large number of AK-47s to a Nigerian colonel. A Serbian company was going to supply the weapons.
“Very interesting,” Mentavlos said, sniffing the chance of making another case. He suggested Packouz help him set up a sting operation against the Nigerian. Packouz figured Mentavlos had simply assumed that the Nigerian had to be a fraudster—with no evidence whatsoever.
“Can you tell the Nigerian you’ve got a better source in the States?” Mentavlos asked. “Invite him here. We can set up a warehouse filled with AKs and bust him. That would really help your case.”
“What?” Packouz asked. “The guy’s totally legit. He’s planning on going to Serbia any day to inspect the guns with Nigeria’s top brass.”
Mentavlos laughed. “Trust me. The guy’s not legit. Can you set up a deal like that?”
“Everyone knows the cheapest prices for Eastern Bloc ammo come from Warsaw Pact countries. They’d never believe I got a better price in America.”
“Okay. But you can’t do the deal. You’re an important witness in our case and we can’t have you getting in trouble.”
Packouz was crushed. The deal was perfectly legal. He’d obtained the necessary licenses and was counting on the $200,000 in profit he would make from the transaction, not least to pay his legal fees. The Nigerian deal also promised to lead to other African deals. But Mentavlos had killed that opportunity for no apparent reason, other than an unfounded assumption of criminal activity.
“Mentavlos wanted me to do a fake sting deal,” Packouz recalled. “I didn’t think the Nigerian was a criminal or a fraud. It seemed to me that Mentavlos would do anything to make a case. He wasn’t trying to solve crimes—he was making them up. I thought it was pretty disgusting coming from someone with so much power.”
As part of Packouz’s cooperation deal, the DCIS put Packouz to work going through more than one hundred thousand e-mails, looking for evidence that further incriminated Diveroli. Day after day, Packouz read AEY’s e-mail archives with amazement. Packouz read how Diveroli had attempted to squeeze Ralph Merrill out of the deal and then hide his profit margins from the older man. Merrill obviously had no idea of Diveroli’s true margins or business practices.
The DCIS was delighted with Packouz’s diligence. “You’ve saved us a lot of time and legwork,” Mentavlos said. “All the agents here are fully supportive of keeping you and Podrizki out of the indictment.”
“So Alex and I won’t be indicted?” Packouz asked.
“We’ll sure do everything we can for you guys. It’s not up to us, of course. But they usually listen to what we have to say, so I’d say it’s looking good for you guys.”
“Wow. That’s a huge relief.”
“But that’s contingent on us continuing to receive the same level of support and honesty from you.”
“I’m one hundred percent on board. There’s no going halfway on this.”
“Exactly.”
Packouz reenrolled in college and now aimed to complete a degree in science. But he was stone-cold broke and running up large legal bills; dealing with the DCIS required his lawyer to read through evidence and prosecution documents, even if he was never indicted, which was proving to be extremely expensive. To make a few bucks, Packouz was working as a masseur again, but he still had to figure out a way to support himself and his daughter.
Meanwhile, Diveroli was still rolling in money, Packouz knew, because of the millions he’d made with AEY, much of it legitimate earnings. Packouz reasoned that he’d missed out on his payment from Diveroli by a matter of hours—why not try to get at least some cash? He’d done perfectly legal deals with Diveroli—gun parts, scrap metal, propane for the Army. Leaving aside the Afghanistan deal, Packouz figured he was owed $17,000—money he needed badly.
Packouz called one of Diveroli’s cousins and a meeting was arranged. The two estranged friends hadn’t talked in months. After the raid, Diveroli had wondered if Packouz had betrayed him and snitched to the DCIS. Diveroli had finally decided Packouz wouldn’t act against his best economic interests and jeopardize the money he had coming.
As they greeted each other, Diveroli behaved as if they were still best friends, giving Packouz a bear hug. A bong was produced and Packouz was offered a hit. He played along. Diveroli seemed just as cocky as ever, eager to pump him for information.
“Crazy shit going down, eh?” Diveroli said.
“Crazy,” Packouz said, looking up from the bong.
“The government try to contact you?”
“I told them to talk to my lawyer,” Packouz lied.
“Excellent! That’s the way to handle these bastards. You can’t let them run you over. If they smell blood in the water, they go into a feeding frenzy.”
“You think you can freeze them out?” Packouz asked.
“I’ve got the best damn lawyers money can buy working on it. I’m going to crush those motherfuckers.”
“You still delivering on the contract from Albania?”
“You think a federal investigation is going to slow us down? You know how we roll.”
“Just be careful, dude. Sounds like serious trouble.”
“Listen, buddy, you keep your head down and this shitstorm is going to pass. They’ll forget about us. Then you and I can settle our business and you’ll get the money you rightly deserve.”
“I hope so.”
Leaving the apartment, Packouz decided he should tell Mentavlos that he’d met with Diveroli. The investigator was furious. He ordered Packouz to tell him of any future meetings with Diveroli.
“Mentavlos wanted me to wear a wire on Diveroli,” Packouz recalled. “In my mind, telling the government everything that had happened was one thing. But entrapping someone, even Diveroli—that was a whole new low. I wasn’t willing to play along with Mentavlos’s schemes, even though I could see that it would be in my interests. Mentavlos seemed like he’d do anything to get Diveroli.”
The prospect of going to prison gave Packouz a new direction in life. All the fights with his girlfriend now seemed trivial. They’d reunited and were focused on their daughter, with Packouz taking the lead in child care.
“There’s nothing like hardship to bring people together,”
Packouz said. “I savored spending as much time with my daughter as possible.”
But darker voices still beckoned Packouz. He had his company, Dynacore, and the knowledge he’d obtained working with Diveroli. He’d lost the Nigerian deal, but mankind’s thirst for weapons was never slaked, and Packouz figured he should try to cash in. The business was perfectly legal, after all, and it offered the chance to make a lot of money quickly. Packouz found a financier who was willing to back him on FedBizOpps deals, anything up to $5 million, which put Packouz back in the game. He was aiming to become an arms dealer in his own right. Like Henri Thomet. Like Diveroli.
“I told myself I’d make a few million—five was my goal—then I’d kick back and do what I loved to do,” Packouz recalled. “I’d make music, play with my daughter, travel. But now I doubted that I’d stop if I reached the five-million-dollar mark. Diveroli already had that much money and it hadn’t stopped him. He still worked like a dog. Once you’re making millions, a large part of you is only concerned with making money. You want more and more. You make money for the sake of making money. I was afraid that was what I would become.”
* * *
I. Moshe Schwartz, “Wartime Contracting in Afghanistan: Analysis and Issues for Congress” (CRS, 2011).
II. John T. Tierney, “Warlord, Inc.: Extortion and Corruption Along the U.S. Supply Chain in Afghanistan” (Congressional Subcommittee on National Security and Foreign Affairs, 2010).
III. Aram Roston, “How the US Funds the Taliban,” Nation, November 11, 2009.
IV. Aram Roston, “Congressional Investigation Confirms: US Military Funds Afghan Warlords,” Nation, June 21, 2010.
