Arms and the Dudes: How Three Stoners from Miami Beach Became the Most Unlikely Gunrunners in History (2015)

Chapter Thirteen


“Supplier Under Scrutiny on Arms for Afghans,” read the headline on the front page of the New York Times on March 28, 2008. A large photograph of a jumble of small-caliber ammunition showed rusty, discolored, substandard rounds. The caption said that AEY had supplied the ammunition, which was true, but the image was misleading. The substance of the story was about the millions of rounds of ancient “Chinese” Albanian ammo AEY had sold to the Army. But the photograph wasn’t of the rounds from Albania—it was from the small amount of Bulgarian ammo AEY had shipped to Afghanistan, ammo the Army had rejected. The Bulgarian rounds amounted to thirty thousand of the tens of millions of rounds AEY transported to Kabul, less than .0001% of the total. But that didn’t matter: the strong inference was that the faulty Bulgarian ammo was a representative example of the quality of rounds AEY had sold to the Army.

Looking at the Times article, David Packouz’s heart sank. Accompanying the story were photographs of him and Efraim Diveroli. They weren’t ordinary pictures, though: the newspaper had published mug shots of the duo, taken more than a year earlier on the night they got into a fight with the valet at the Flamingo. The Times rarely published mug shots, generally reserving such prejudicial images for stories about convicted criminals or fugitives. Packouz and Diveroli had been convicted of nothing; they hadn’t even been indicted. But the pair stared balefully through bloodshot eyes in the pages of the Times.

“Diveroli and I looked like hardened criminals in the mug shots,” Packouz recalled. “I knew that was a very bad sign.”

In the first few sentences, Chivers described how dependent the Afghans were on the US military for logistics and munitions in the war against the Taliban and Al Qaeda. “But to arm the Afghan forces that it hopes will lead this fight, the American military has relied since early last year on a fledgling company led by a 22-year-old man whose vice president was a licensed masseur,” the Times reported. “With the award of a federal contract worth as much as $300 million, the company, AEY Inc., which operates out of an unmarked office in Miami Beach, became the main supplier of munitions to Afghanistan’s army and police forces.”

Packouz felt a growing sense of dread. Chivers quoted military and government officials questioning how “Diveroli and a small group of men principally in their twenties and without extensive military or procurement experiences landed so much vital government work.” According to Chivers, AEY was an “immature company” allowed to “enter the murky world of international arms dealing on the Pentagon’s behalf—and do so with minimal vetting and through a vaguely written contract with few restrictions.” The Times said that the problems could have been avoided “if the Army had written the contracts and examined bidders more carefully.”

Chivers noted that much of the ammunition AEY had shipped from Albania to Afghanistan was forty years old and had been manufactured in China, making its procurement a possible violation of American law. To illustrate the poor quality of the ammunition AEY had supplied, Chivers quoted an Afghan colonel saying much of it was “junk.” Chivers also quoted a munitions expert saying Albania’s stockpile was “substandard for sure,” along with an Army press spokesperson in Kabul who said that “while there were no reports of ammunition misfiring, some of it was in such poor condition the military decided not to issue it.”

Chivers contrasted the Army’s contract and AEY’s performance with NATO and Russian standards for handling munitions, which required methodical ballistics testing and measures to protect ammunition against aging, humidity, and environmental conditions. “But when the Army wrote its Afghan contract, it did not enforce either NATO or Russian standards,” Chivers wrote—as if the lax requirements had been a matter of negligence by the Army, not a deliberate policy.

Chivers noted the importance of the State Department’s watch list, “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.” Chivers’s reporting questioned whether the Pentagon was adequately vetting business done in its name.

“Put very simply, many of the people involved in smuggling arms to Africa are also exactly the same as those involved in Pentagon-supported deals, like AEY’s shipments to Afghanistan and Iraq,” Chivers quoted the arms researcher Hugh Griffiths as saying.

The explosion in Gërdec was mentioned, but only as an illustration of how shoddy and dangerous Albania’s stockpile was. Instead, the story focused much of its attention on the “personal problems” of Efraim Diveroli. Chivers detailed Diveroli’s record of misdeeds, from the fight with the valet at the Flamingo to the argument with his girlfriend that resulted in a call to the police; Diveroli had “stalked her and left threatening messages,” the Times reported. Chivers recounted how Diveroli had once supposedly shoved another girlfriend to the ground and turned up at her house drunk and banging on windows and doors—“allegations that were never ruled on.” The cumulative effect was a portrait of Diveroli as a violent, out-of-control fraudster and con man, with Packouz as his comically unqualified partner.

“There were so many factual errors in the article,” Packouz maintained. “Like the picture of Bulgarian ammo on the front page. The Times took the absolute-worst rounds, using ammo that had been rejected, as if it was typical of what we shipped. It seemed to me like Chivers was trying to discredit us. How could the government award such a huge contract to a kid and his masseur vice president?”

In his book The Gun, Chivers wrote eloquently about the durability and reliability of the Kalashnikov, noting that ancient weapons from the 1950s and 1960s could still be found in use in the mountains of Afghanistan. “The wooden stocks of these aged AK-47s showed dents and dings,” Chivers wrote of the ancient Afghan guns. “Otherwise most of these rifles appeared to be in excellent order, ready to fire for decades more.”

But Chivers didn’t apply the same standards to the “Chinese” AK-47 rounds. The ammo was old and it wasn’t pristine, like the new rounds issued to NATO soldiers. But it worked—millions upon millions of rounds had been accepted by the Army and fired by Afghan soldiers in combat, with no documented reports of misfirings or issues related to quality.

“Chivers made no mention of the fact that the vast majority of the ammo we supplied was fully functional, including the ‘Chinese’ rounds from Albania,” Packouz said. “The Times was right. The surplus ammo was old, and we hadn’t done rigorous ballistics testing, but the contract didn’t require those things. Chivers focused on making the government look incompetent, instead of realizing that the government had made a calculated decision to get the cheapest possible ammo to the Afghans as quickly as possible.

“In truth, we were being paid to do what the Army couldn’t do for itself. It was impossible to send American soldiers to Tirana to buy the AK-47 ammo. They’d get caught up in the corruption for sure—just like we did. But Chivers never wrote about that or put the story in the larger context of what the Army was doing standing up armies in Afghanistan and Iraq—how they were using private companies like ours to be gunrunners on their behalf.”

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The reaction to the Times story was swift. The time difference between New York and Tirana was six hours. The AEY article was posted at midnight, 6:00 a.m. in Tirana. At precisely 6:06, the regional security officer in the US Embassy in Albania circulated an e-mail to the power players in the embassy. The officer had speed-read the Times piece and had great news to report:

“No mention of embassy involvement—thank God!”

The dudes were no longer the only dudes. In the days that followed, it would emerge that the true dudes were now prosecutors and investigators and diplomats and military officers taking deep, heady hits on the bong of power. The Justice Department was now hell-bent on bringing indictments against as many of those involved as possible. The Pentagon was determined to defend its honor and avoid looking foolish, even as it dissembled and hid the more damning truth that AEY wasn’t an aberration but a good representation of how the procurement system operated. The Army also hid the fact that there were serious ammunition shortages because of the prosecution. Likewise, the State Department was terrified that its long-standing knowledge of what AEY was doing in Albania would emerge, along with evidence of possible American complicity in Gërdec. In effect, the Times story’s most proximate consequence was a series of byzantine overlapping and self-contradicting attempts inside the government to shift blame, bury evidence, and feign innocence—like teenagers afraid their stash of weed would be found.

Against the limitless resources of the US government, Packouz, Diveroli, Podrizki, and Ralph Merrill didn’t stand a chance. AEY’s woes had always been as much political as legal. If Diveroli had invested in a high-end Washington lobbyist or attorney, the company would likely have found a solution to its Albanian problem long ago. Now the situation was overtly political, in myriad ways, including as a means for the Democratic majority in the House of Representatives to attack the Bush administration. Thus, on the day the Times article appeared the chairman of the House Oversight Committee, Henry Waxman, announced that he would be conducting an extensive investigation into the AEY affair.

The Army likewise mounted a political campaign. The Times had claimed that the quality of the AK-47 rounds was poor. This key assertion was belied by the facts, the Army said in a press release:

“Safety and performance are the Army’s top priorities when it comes to ammunition, for both our allies and our own armed forces. First, is the ammunition safe? Second, does the ammunition work? To date, we have not received any reports, from our units in the field or our customers, the Afghan army, concerning the safety or performance of the ammunition provided through this contract.”

On the same day, federal investigators working on the AEY case received a letter from the National Ground Intelligence Center (NGIC) in Virginia regarding the quality of AEY’s Albanian “Chinese” ammunition. Investigators had sent the agency one hundred rounds of the AK-47 ammo to assess for quality.

The NGIC report stated that age wasn’t the crucial question when it came to quality. “The NGIC has encountered ammunition from combat theaters that proved effective (in that it fired from a weapon) despite manufacturing dates as far back as the 1950’s.” The report said that packing was essential to the longevity of ammunition. “The rounds sent to NGIC displayed every indication of suitable storage (casings were clean, showed no signs of corrosion).”

The NGIC noted that the Albanian ammo had been stored in the best possible manner—triple-layered, first in waxed-paper wrappings, then in hermetically sealed metal tins, and finally inside crates. The NGIC wasn’t asked to test-fire the ammunition—normally a routine part of providing an opinion about the quality of munitions—but testing the ammo would risk its being found to be perfectly functional.

Federal law enforcement and the Army were directly contradicting each other. Caught in the middle, Diveroli tried to resist the onslaught. Over his head, now to the point of drowning, Diveroli set out to counter the central thesis of the Times article when he hired a company called HP White Laboratory Inc. to test-fire the ammo AEY had purchased in Albania. The results were conclusive: the “Chinese” ammunition AEY had been selling to the Army was serviceable without qualification.

But what was the view of the US Army in Kabul and, through it, the Afghan army and police? Chivers had quoted one Afghan soldier, but nothing indicated that the reporter had questioned the people who might know best—senior officials in the Combined Security Transition Command.

After the Times story appeared, the Army asked Colonel Howard Davis, director of logistics in Afghanistan, to report on the “status” of the ammo AEY had delivered.

“The ammunition from AEY has been of good quality,” Colonel Davis replied. “When queried, the senior mentors in each Afghanistan region reported that they have not received any complaints from the ANA or ANP concerning the quality of the ammunition received.”

Sitting in his office in Bountiful, Utah, the Mormon businessman Ralph Merrill read the Times article in dismay. Like the three dudes in Miami Beach, Merrill feared that he would be indicted, particularly after reading the piece. The story was written in a highly prejudicial manner, Merrill believed.

“The fact of the matter was that the Army kept ordering, using, reordering, and paying for the ammo for months after the raid on AEY’s offices and it found the e-mails about Chinese rounds,” Merrill recalled. “The Department of Defense was happy and satisfied with the matériel, and they were very reluctant to terminate the contract—an act which cost the government millions of dollars and caused serious damage on the battlefield in Afghanistan.”

But the New York Times had framed the story—and in the middle of that frame were David Packouz and Efraim Diveroli, staring grimly out from their mug shots.

In the days after their faces appeared in the Times, the arms-dealing dudes became celebrities, in a bad way. Poster boys for the serial incompetence of the wars in Iraq and Afghanistan, they seemed to personify the entire war effort in Afghanistan.

Despite the story, the Afghans still needed a vast stockpile of ammunition: hundreds of millions of AK-47 rounds, half a million sniper cartridges, 3 million heavy-machine-gun bullets, along with thousands of mortar, howitzer, and rocket-launcher rounds. AEY was the only feasible supplier, and canceling the contract had caused severe shortages in Afghanistan. But none of that mattered in the end.

On March 29, 2008, a new request for proposals was posted on FedBizOpps.

The bidding process began anew.

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On the day the Times story appeared, Kosta Trebicka nervously checked the newspaper’s website every five minutes on his computer in Tirana. Trebicka knew that he had an enormous amount riding on what Chivers wrote—and not just legal jeopardy. Trebicka had taken on the Albanian prime minister and the defense minister—two of the most powerful figures in a country infamous for its lawlessness and violence. Trebicka hoped that the publicity from the Times would provide him some form of protection in Albania. Perhaps the revelation of corruption inside the Albanian government would have consequences, Trebicka hoped, and officials would be held accountable.

In the weeks that followed, it seemed to Trebicka that the Times story had no impact in Albania. The only person who seemed to care about the article was Michael Mentavlos of the DCIS, who was outraged that Trebicka had disobeyed his direct order and talked to the Times. Soon after the article ran, Mentavlos flew to Tirana and called Trebicka, screaming and demanding a meeting. Afraid, Trebicka lied and said he was out of the country. Three days later, he gave over to the seemingly inevitable and met with Mentavlos. The investigator told Trebicka he had to travel to Florida to testify in the AEY investigation. To Trebicka, it appeared as if Mentavlos would do anything to convict Diveroli.

“Mentavlos said that when I am in front of the lawyers I have to say that Efraim Diveroli and Alex Podrizki did know that they were illegally selling Chinese ammo to Afghanistan,” Trebicka later recalled. “I answered that I cannot do it, since they never had expressed themselves literally in my presence something like this.”

Days later, Trebicka received an e-mail from congressional investigators. He called Mentavlos and told him about the House Oversight Committee’s interest in talking to him.

“Mentavlos told me that in three days I have to be in Florida and not to stop in Washington, DC, or give any documents to the committee,” Trebicka recalled. “Again, I was surprised by him.”

Trebicka flew to the United States—but at his own expense, to avoid any connection to the DCIS. He first went to Washington to meet with congressional investigators and tell them what he knew about AEY and Gërdec and Mentavlos. Trebicka then flew to Miami, where he was given an odd reception. As he spoke to the prosecutors in Florida, describing the corruption in Albania, it began to dawn on him that their aggressive attitude signaled that he might be a target for indictment. The notion was bizarre to Trebicka: he was a whistle-blower, not a criminal.

But Trebicka was saying things law enforcement plainly didn’t want to hear. Like Trebicka’s version of his meeting with the American diplomat Robert Newsome in Tirana, in May of 2007, and how Trebicka said he’d told Newsome AEY was shipping “Chinese” ammunition to Afghanistan before a single round had arrived in Kabul.

“Our special witness Kosta Trebicka is up to new tricks,” an embassy official in Tirana wrote to his colleagues. “He told Special Agent Mentavlos that he is going to testify in front of Congress that he told Robert Newsome about the Chinese ammunition in 2007 and that Rob told him it was legal and to go ahead with the contract.”

“For the record, this is untrue,” another American official in Tirana wrote to officials inside the embassy. “Trebicka may say it, but it is untrue. Flatly.”

Newsome wrote, “To be very clear—I never told Trebicka any such thing.”

Trebicka represented a threat to the entire case against the dudes because the truth was unwieldy and contradictory, and contained elements that might point away from a jury’s reaching a guilty verdict—or, as was the case in 98 percent of federal prosecutions, guilty pleas that make a trial unnecessary. Prosecutors in Florida then told Trebicka that he was required to provide sworn testimony in front of the grand jury in the AEY case. Trebicka began to fear that he was being lured into a perjury trap and that it would be his word against the word of American government officials. It seemed to the bewildered Albanian that the strange and ruthless prosecutors would do whatever they needed to do to win—even put him in prison.

Unable to stand the pressure, Trebicka finally decided to flee the United States. He didn’t tell anyone he was leaving the country—he simply boarded a plane for France. He stayed in Paris for a few days, lying low. The authorities in Miami tried to force Trebicka’s hand. Assistant US Attorney Eloisa Fernandez e-mailed Trebicka to demand that he confirm his travel plans to return to Miami so she could set a date for his testimony before the grand jury. Mentavlos was copied on the e-mail.

“From now on we have to communicate through my lawyer,” Trebicka replied. He would no longer voluntarily testify, as he was concerned for his own safety, legally and physically.

Returning to Albania, Trebicka wrote an e-mail to congressional investigators. The House was supposedly looking into the entire AEY affair—how the Army acquired weapons for Afghanistan, how the dudes from Miami Beach had won the contract, how illegal “Chinese” ammo had been shipped from Albania. But Trebicka suggested a new line of inquiry—the abuse of power by American investigators: “Now I think is time to tell the truth to everybody of how the investigator for the Department of Defense, Mr. Michael Mentavlos, tried (according to my personal opinion) to obstruct the justice.”

Trebicka described his encounters with Mentavlos, beginning in October, when the Albanian had finally learned from the investigator that selling “Chinese” ammunition was illegal. Trebicka told how Mentavlos had instructed him not to talk to any journalists, most especially the Times. Trebicka said that Mentavlos had also told him not to talk to any lawyers—including lawyers in Albania. “I was surprised,” Trebicka wrote. “I asked him why? He answered that it would harm a very serious investigation he had worked on for three years. I tried to believe, but it was a vague situation.”

Then there was the matter of Gërdec. The lethal explosion was tied to the same politicians who’d profited from AEY’s contract, Trebicka said. In his letter to congressional investigators, Trebicka asked why Mentavlos had done nothing to investigate Gërdec, after he’d received documents from Trebicka linking the Albanians involved in the AEY case to the disaster? Trebicka was one of the few people who could tie Defense Minister Mediu, Ylli Pinari of MEICO, and Mihail Delijorgji to both the AEY deal and the explosion in Gërdec.

Which was more important to the American government, Trebicka wanted to know, “nailing Diveroli, or stopping a tragedy?”

But Trebicka’s letter had no impact—not in Albania and not in Washington. The congressional oversight committee issued a report condemning AEY for supplying faulty munitions, without mentioning critical ammunition shortages in Afghanistan, the explosion in Gërdec, or potential American complicity in corruption in Albania. As far as Trebicka could see, all that mattered to the prosecutors and investigators was putting Efraim Diveroli behind bars.

By the summer of 2008, Kosta Trebicka just wanted the whole affair to go away. He still had his various successful businesses and his wife and his children. But there were threats—phone calls in the night, hard looks on the streets of Tirana, whispers of warning. Trebicka took precautions, like changing his cell phone number regularly and using aliases when he stayed in hotels in Albania. He confided to family and friends that he was scared.

Trebicka was right to worry—the truths he had revealed did indeed threaten many powerful interests. On September 12, 2008, Kosta Trebicka’s body was found in a field along a rural road near the village of Korcë. There appeared to have been a car accident—but it had occurred in the middle of nowhere, on a flat stretch of road with no other vehicles involved. Somehow, for no apparent reason, Trebicka’s Jeep had suddenly flipped over, and his body had been catapulted through the air, landing an improbable fifty yards from the vehicle.

Casting more doubt on the situation, one of the first people to arrive on the scene was a former bodyguard for the prime minister. The authorities claimed that Trebicka had been on a hunting trip. A rifle and a dead partridge lay on the ground next to his body. But friends said that Trebicka never went hunting alone, and that the area where his body was found wasn’t a good place to hunt.

Days after Trebicka’s death, an American state trooper from Virginia, Kevin Teeter, was dispatched to Tirana to inspect the location of the incident. Torrential rain had erased tire tracks, so the investigator had to rely on evidence collected by the Albanian police. Inspecting photographs, sketches, and the damaged vehicle, Teeter concluded that Trebicka had indeed been killed in an accident. “The driver made an abrupt turn left, which caused the vehicle’s weight to sharply shift to the right,” he wrote in his report. “The vehicle overturned onto its right side shattering the passenger side door glass and ejecting the driver onto the ground through the open roof area.”

The investigation Teeter undertook was limited. The investigator apparently didn’t inspect the autopsy report, if one was conducted; as far as Teeter knew, Trebicka could have had a bullet in the back of his head. Still, the report had the stamp of the Virginia State Police on its cover, providing the imprimatur of American authority, a powerful symbol in Albania that effectively closed Trebicka’s case forever.

“If it was an accident,” said an Albanian activist who’d worked with Trebicka on his anticorruption campaign, “then it was a very strange kind.”

Alex Podrizki agreed. When he was asked by prosecutors what he thought had happened, he said he didn’t know—and no one would likely ever know, because of Albanian corruption. But he said that he was virtually certain it wasn’t an accident.

“The prosecutors weren’t happy with my answer,” Podrizki said. “But Kosta’s death was too convenient for too many people—Albanian and American. He had made a lot of enemies.”

/ / / / /

Despite assurances from Special Agent Mentavlos, after the New York Times story ran both David Packouz and Alex Podrizki were indicted, along with Efraim Diveroli and Ralph Merrill. There were three investigators working the case before the story ran, Packouz was told, but a dozen more were assigned afterward. Despite the Times story, federal prosecutors in Florida never presented any evidence that the ammunition supplied by AEY was faulty or failed to meet the standards described in the contract. The simple reason was that the ammo was of good quality.

But that didn’t stop the authorities from issuing press releases that wrongly claimed the contrary.

“When these contractors intentionally cut corners to line their own pockets, they risk the safety and lives of our men and women in uniform,” US Attorney for the Southern District of Florida Alexander Acosta said. “Such callousness and disregard for the lives of our soldiers and allies will not be tolerated and will be vigorously prosecuted.”

“In this day, when our soldiers and our coalition partners are fighting to keep us safe, it is reprehensible that greed and disregard for human safety have resulted in such dangerous fraud,” the director of the DCIS said.

In fact, the opposite was true. The greatest peril to Afghanistan security forces wasn’t AEY, as the government claimed. It was the US government itself.

The Pentagon had set out to circumvent domestic and international law by creating its own protocols to acquire weapons, to speed getting arms to Afghanistan—and then the Pentagon’s own law-enforcement agency had thwarted that effort. No one responsible for the fiasco would be held accountable—apart from the fall guys.

The AEY case vividly illustrated the kaleidoscope-like nature of the disaster of the war effort in Afghanistan. Major Ronald Walck, the Army’s logistics person who’d received AEY’s ammo at the airport in Kabul, seemed to recognize this. In the aftermath of the AEY fiasco, he left Afghanistan and returned to school to write a master’s thesis. His subject was failure. The epigraph was taken from Dietrich Dörner’s classic book The Logic of Failure: “Failure does not strike like a bolt from the blue; it develops gradually according to its own logic. When we watch individuals attempt to solve problems, we will see that complicated situations seem to elicit habits of thought that set failure in motion from the beginning.”

So the saga of AEY ended.

So the war in Afghanistan was lost—not in any great battle but in the quiet desperation of three dudes and a doomed cause.