Arms and the Dudes: How Three Stoners from Miami Beach Became the Most Unlikely Gunrunners in History (2015)
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 going 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.”
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.
They arrived at the rabbi’s house.
“How much money are you making?” Packouz asked.
“Serious money,” said Diveroli.
“That’s confidential information.” The car came to a stop.
“If you had to leave the country tomorrow, how much money would you be able to take with you?”
“Cold, hard cash.”
“I’m going to tell you, buddy. But not to impress you. Not because I’m bragging.” Diveroli paused, as if he were about to reveal his deepest secret. “I have one point eight million dollars in cash in the bank.”
Packouz stared in disbelief. He’d expected a significant amount, given Diveroli’s incessant talk about money. But nearly $2 million? Diveroli was only twenty years old. He was a ninth-grade dropout.
Diveroli grinned at Packouz with a glint in his eye, as if to say, Can you fucking believe it?
“Dude” was all Packouz said.
/ / / / /
AEY now had a staff of two. The global headquarters was Efraim Diveroli’s oceanfront one-bedroom apartment. In its small alcove, the pair sat on opposite sides of a table. Diveroli and Packouz each had a laptop computer, one a beaten-up Dell, the other a junker Toshiba. A desktop computer sat on the table but it was useless because it constantly froze. Each also had a cell phone and a subscription to a discount Internet phone service. The bong lived on the coffee table in the living room—an essential home appliance.
“I figured I was going to make millions,” Packouz said. “I didn’t plan on being an arms dealer forever, like Efraim. I’d never even owned a gun.”
Their agreement stipulated that Packouz would work entirely on commission, with no salary. Account Executive was his title. Diveroli would stake his money to finance the contracts Packouz found on FedBizOpps. Packouz had a little money saved, so he figured he could live on that while he tried to make his first transaction—supplemented by the occasional massage gig.
But the first opportunity Packouz brought to the new relationship had nothing to do with arms. Before joining up with Diveroli, Packouz had come across an offer on Alibaba.com for a large number of Xbox 360s. At the time, the video-game console was a worldwide craze, with stores unable to keep up with demand. Packouz had found a supply quoted online at $320 per unit. Retail was $400. But he knew that Xboxes were being sold on eBay for double and triple the retail price. He figured he could buy the Xboxes online and sell them to local bigbox stores like Costco and Sears and make a fortune.
But there was a catch: the minimum order was one hundred thousand units and payment had to be made at the time of delivery. The total cost would be $32 million. Diveroli didn’t have anything like that amount of money. But if they could find someone to finance the deal they stood to make millions. For two weeks the pair worked the phones trying to find a hedge fund or high-net-worth individual willing to take the risk. They agreed that they’d split the profits fifty-fifty.
“I quickly saw how talented at business Efraim was,” Packouz recalled.
The broker running the deal on Alibaba.com didn’t want to tell Packouz and Diveroli where he was getting the Xboxes, lest he get cut out of the transaction. But Diveroli persuaded him to reveal his source by saying he had a guaranteed buyer and he’d split the profit with the broker. As soon as Diveroli had the name, he dumped the broker and moved on through a daisy chain of three other brokers until they reached the large electronics company behind the deal.
“Efraim was only a kid, but he was too smart for grown men,” Packouz recalled. “I was sure I was going to be rich. It was very exciting. But first we needed to finance the deal.”
“Gentlemen,” Diveroli said to a New York hedge fund they approached to lend them the money. “I need thirty-two million dollars, and I happen to be thirty million dollars short.”
Packouz smiled at Diveroli’s audacity. But no one was willing to back such a dicey deal relying on the word of two kids. Packouz was crestfallen. In days he’d gone from being a broke massage therapist to a multimillionaire and then back to penury. Being around Diveroli was dizzying—but in a thrilling way.
“Look, buddy, we tried to make a lot of money fast but it didn’t work out,” Diveroli said, consoling Packouz over a bong that evening. “You and me, let’s get started on some real business—the business I know.”
Diveroli logged on to FedBizOpps and showed Packouz what a Pentagon solicitation looked like. He explained the various meanings behind technical terms like single source, which indicated that the government was going to award the contract to only one bidder. Best value required the government to weigh a number of factors in awarding contracts, including that AEY was a small business and should thus be viewed more favorably than the large corporations who’d long dominated federal procurement.
Packouz was impressed by Diveroli’s command of the language of defense contracting. The solicitations ran to thirty or forty pages. Each word and phrase in the long, dense paragraphs of technical terms was pregnant with legal meaning. For a high school dropout, Diveroli was incredibly sophisticated when it came to business, Packouz could see.
Scanning FedBizOpps, it occurred to Packouz that he and Diveroli had the perfect education for the devilishly difficult task of navigating the website. As religious students in Hebrew school, they’d been forced to study documents that bore an uncanny resemblance to government contracts.
“Reading the Talmud as Orthodox Jewish kids had prepared us for this kind of work,” Packouz recalled. “The Talmud is a complex legal document written in a foreign language. You’ve got to study it line by line. There are references to other sections and other books, just like there was in the contracts. As a kid in the super-religious school I went to, I was forced to study the Talmud for four hours every day. Efraim and I had been taught how to really concentrate on concepts that other people would find mind-numbingly boring.
“There were a lot of suppliers who didn’t know how to work FedBizOpps as well as we did. I’m talking about big companies with experienced adult staff. Diveroli really had mastered the system, and he was teaching me the secrets. You had to read the solicitations religiously.”
Working alongside Diveroli, Packouz saw that searching FedBizOpps and working on winning contracts was all that he did. Diveroli never read a book or a magazine. He didn’t watch television or follow the news. His sole focus in life was poring over the website, looking for deals.
“Money was all he cared about,” Packouz recalled. “Literally. He didn’t talk about sports or politics or culture. He would do anything to make money.”
Packouz was mesmerized by Diveroli’s work ethic—if not his ethics. Even as Diveroli was occupied fulfilling the Iraq contracts he’d already won, he constantly bid on new contracts. Eighteen-hour shifts blurred one into the next. Days were spent contacting manufacturers in the United States to find the cheapest prices for weapons for AEY to bid on. Nights, the pair worked the phones with arms dealers in Eastern Europe, who had the Communist Bloc weapons the Army was desperate to get to Iraq. At two or three in the morning, Packouz would crash on Diveroli’s couch to save the time it took to drive to his studio apartment. As dawn broke, Packouz would wake to find his new partner hitting the bong and scanning FedBizOpps.
“Working with Efraim was a twenty-four-hour ordeal,” Packouz recalled. “I had never seen anyone work so hard. It didn’t matter if Efraim was tripling his money on a deal, he always tried to squeeze every last penny. One of his favorite lines was ‘If the other guy’s happy, then there’s still money left on the table.’ ”
A solicitation for night-vision goggles was a typical example of Diveroli in action. The manufacturer Diveroli contacted for a quote was a giant defense company. If the company’s executives knew about the contract on FedBizOpps, they would likely bid on it themselves, so Diveroli went for a diversion. He said he was buying thousands of goggles for an unnamed foreign government. He said he was competing with a Chinese goggles manufacturer so he needed a low price. Then Diveroli held out the promise of more orders in the future.
Ordinarily, a corporation would protect its pricing structure, particularly for its network of dealers. But Diveroli knew how to play on the venality of the executives: promise excellent volume, no hassles, no harm, easy money. Lured by Diveroli’s sleight of hand, the manufacturer agreed to give AEY a price even lower than it gave to its own dealers. Adding his usual 9 percent profit margin, Diveroli won the contract by underbidding the competition—including the company’s regular dealers.
Trouble appeared when Diveroli actually placed the purchase order and the manufacturer learned that the customer was really the US Army. Furious, it refused to sell to him. Fine, Diveroli said, I’ll tell the government you reneged on the deal and substitute Chinese goggles. Diveroli was talking on the speakerphone, smiling at Packouz. They could hear the men on the other end of the line cursing. Who is this little motherfucker? Who does he think he’s dealing with? He’s going to snitch on us to the federal government? Diveroli stifled a laugh when they buckled and agreed to the sale.
“That’s how you squeeze yourself into the middle of a deal,” Diveroli said afterward.
Under Diveroli’s guidance, Packouz prepared a bid on a multimillion-dollar contract to supply hundreds of SUVs to the US Embassy in Pakistan. The size of the deal promised to make Packouz a huge profit. The scale of the stakes was one of the most astonishing aspects of FedBizOpps: just winning one medium-size contract could make Packouz a millionaire.
Packouz spent weeks tirelessly trying to source the vehicles, eventually finding a dealer in Karachi with a supply of cheap SUVs. But the solicitation required ongoing service for the vehicles, which AEY wasn’t able to provide. Packouz didn’t win the contract, but simply going through the bidding had been uplifting. FedBizOpps was like a casino, Packouz realized. Even if there was only a 10 percent chance of success—even if there was only a 1 percent chance—the sums of money were so large it seemed just a matter of time before he won a contract and made a fortune. After all, the living proof of that possibility was sitting on the far side of the table, talking to his drug dealer about scoring cocaine for that night.
In the early months of their new business relationship, Packouz won a couple of small contracts—seventeen thousand gallons of propane to an Air Force base in Wyoming, $70,000 worth of Second World War–era rifles to train Special Forces at Fort Bragg. The profits were tiny. Packouz was learning, watching, whetting his appetite, biding his time.
But dealing with Diveroli had a flip side. Packouz watched his friend with a sense of wonder—but also sometimes dread. Packouz clearly saw that Diveroli was a genius. He was also a liar. He misled directly, indirectly, compulsively—almost as if telling a lie were better than telling the truth as a matter of principle.
When the pair traveled to Las Vegas for an arms trade show, Packouz watched in disbelief as Diveroli received a call from a procurement officer in Iraq threatening to cancel a contract because of repeated delays in the delivery of a large shipment of helmets for the Iraq army. The first load of helmets had arrived late, and then they’d been sent to the Abu Ghraib prison, not Baghdad. The mistakes were typical of Iraq: transportation was incredibly dangerous, with roadside bombings occurring daily, and tracking goods was essentially impossible.
But the procurement officer in Baghdad didn’t seem to care about the realities on the ground, at least not in this instance. He told Diveroli he was going to kick AEY off the contract. This was worrisome. The government could cancel a contract for convenience, which meant it had changed its mind and was no longer going to purchase the goods. The other form of cancellation was for cause. Losing a contract for cause was a serious matter. It could be disastrous for AEY’s performance rating with the Pentagon; one of the main considerations the government used in awarding contracts was prior performance; a canceled contract would be a permanent blot on the company’s record. Diveroli needed to persuade the procurement officer to change his mind. The line was poor. Standing in the middle of the SHOT Show—a huge gun show held in a cavernous convention center in Vegas—Diveroli had to yell into his cell phone to be heard.
“Efraim launched into one of the most intricate and heartfelt sob stories I’d ever heard,” Packouz recalled. “He gave a barrage of excuses for the delayed delivery. It was everyone else’s fault.”
Diveroli begged the procurement officer not to cancel the contract. His voice was shaking and his eyes were welling with tears. He said that if the deal fell through he’d be ruined. His tiny business would go into bankruptcy. He was going to lose his house. His children would go hungry. His wife would leave him. He was begging for his life—and all of it was completely made up. But he was totally convincing. The procurement officer backed down.
“I’d never seen more skillful lying,” Packouz said. “I didn’t know if Efraim was psychotic, or if he was acting. But he believed what he was saying—at least while he was talking.
“There was no doubt that Efraim knew how to make money, and how to get people to do what he wanted. I figured that after I made a couple of million I’d go out on my own. I told myself that I would never deal dishonestly with anyone myself.”
It seemed to Packouz that Diveroli was so consumed he’d come to inhabit an alternate reality. His conversations often sounded as if he were acting in a scripted movie, like Diveroli’s collection of sayings. Some were taken from Lord of War, one of the rare movies he took the time to see—not once or twice but over and over. “Where there’s a will, there’s a weapon,” Diveroli would say. Or: “There are three basic types of arms deals—white being legal, black being illegal, and my personal favorite, gray.”
Other sayings were his own. Packouz began to write them down, partly for entertainment, partly to keep track of the morality—or amorality—of the world he now inhabited. “You can fuck almost everybody once and get away with it,” Diveroli would say. Or: “I don’t care if I have the smallest dick in the room, as long as I have the biggest wallet.” Or: “If you see a crack in the door, kick the fucker open.” And: “Once a gunrunner, always a gunrunner.”
“Efraim was still a kid, but he didn’t see himself that way,” Packouz recalled. “He would go toe-to-toe with high-ranking military officials, Eastern European mobsters, executives for Fortune 500 companies. He didn’t give a fuck. He’d take them on and win, and then give them the finger. And I was following in his footsteps.”
Once a week, or so, the pair hit the clubs of South Beach. Diveroli kept his cocaine in a small plastic bullet, retiring to the bathroom every half hour for another snort. After pounding Grey Goose, Diveroli would be high and drunk and ready to pick up a girl. His opening lines were beyond terrible: “Hey, baby, everybody’s got a price, so what’s yours?” Or: “Your pants are like a mirror, baby—I can see myself in them.”
The Rodney Dangerfield–like approach often ended in disaster. Once, reaching out to grab the backside of a passing woman, Diveroli said, “You and me, baby, the backseat of my car in ten minutes.” The woman’s boyfriend wasn’t amused. A mountain of a man, he grabbed Diveroli by the scruff of his neck and threw him against the wall. Packouz jumped in the middle.
“He’s drunk,” Packouz said. “He’s really, really drunk. He didn’t mean anything by it.”
Kicked out by the bouncers, Diveroli was giddy as they walked to his car.
“The world is full of shitheads,” Diveroli said, throwing his arm around Packouz. “You’re the only guy I can trust. I consider you my best friend. You watch, we’re going to become billionaires one day. You and me, we’re going to be flying around in our own private jets soon. You and me, we’ll come back and crush those motherfuckers.”
Packouz was unnerved by Diveroli’s calling him his best friend. Packouz certainly didn’t feel the same way. But he wasn’t going to express his ambivalence. Not when the promise of riches was so temptingly close.
One evening, Packouz convinced Diveroli to go to his favorite karaoke joint. Packouz wanted to sing, not just get wasted. Diveroli loved the idea, if not the idea of staying sober. The Studio was an underground bar with no cover charge and big crowds on the weekend. When Packouz went onstage, he sang U2’s “With or Without You,” followed by Pearl Jam’s “Black.” As always, he took the performance seriously, singing gently, careful to stay in key, and drawing a nice round of applause when he was done.
Diveroli jumped onstage with mock bravado. His voice was loud and completely off-key—for comic effect. He sang “It’s My Life” by Bon Jovi, followed by “Rape Me” by Nirvana. For an encore, he sang Tim McGraw’s country power ballad “Live Like You Were Dying.” As he bellowed out the tunes, Diveroli tore off his shirt and gyrated his hips in mock-rock-star fashion, garnering whoops and hollers.
Afterward, Diveroli went to the bathroom to do a line of coke. Walking out of the men’s room, he saw an attractive young Asian woman sitting on a couch by herself. Diveroli sat down next to her.
“So, do you do coke?” he asked.
The woman appeared shocked, but she answered. “Well, not in a really long time.”
“Do you want to?”
The pair vanished into the men’s room. The woman, Suzie,I was a college student. She gave Diveroli her number, but when he called her the next day she didn’t pick up. Diveroli dialed and redialed and redialed until she relented and answered. He persuaded her to have dinner that night. So began a tumultuous two-year relationship.
In contrast to Diveroli, Packouz was shy around girls. He was twenty-four years old at the time and he’d had only one serious girlfriend. But his luck was about to change. Entering the lobby of an upscale condo called the Flamingo in Miami Beach one afternoon, he caught the eye of a pretty young woman. Packouz was carrying his massage table on his shoulder. He’d continued to advertise his services on Craigslist to support himself until he made his fortune with Diveroli. The woman was wheeling a massage table on a cart. She was lithe and lean and looked to be around his age. Packouz had been rushing to his appointment, but now he slowed down.
“I’ve got to get one of those carts for my table,” Packouz said to the woman.
“You should,” she replied. “Carrying your table over your shoulder like that will give you neck and shoulder problems.”
“I’m very strong. I can handle it.”
Packouz wondered if she might be flirting and asked, “Where did you study massage?”
“Me, too,” Packouz said excitedly. “Here’s my card. If you want to trade massages sometime, let me know. I could really use one.”
“Sounds good. Here’s my card.”
Packouz had her number. Sara was her name. She was Spanish—and she was a knockout. He’d taken the risk and it had paid off; fortune favored the brave, as he’d decided when he signed on with Diveroli. He disciplined himself and waited two days before calling, time calculated to make him look interested but not desperate. She offered to host, and after a few sessions of exchanged massages they went out for sushi and started to date.
The dudes both had girlfriends. FedBizOpps was humming with opportunities as the unfolding fiasco in Iraq fueled the tiny company. Packouz was receiving a rare education. He wasn’t learning how to make a living—he was learning how to make a killing.
In Baghdad, the pickings were easy for Diveroli. Because procurement officers were rotated in and out of Iraq, Diveroli could rely on their inexperience. He won the soldiers over with fake wild-eyed patriotism and a keen sense of how to play to the military; he could “Yes, sir” and “No, sir,” with the best of them. To get the inside dirt on a solicitation, he’d call the soldier in charge in Baghdad and pretend to be a colonel or even a general seeking an update on the progress of the contract.
“He’d be toasted and you wouldn’t know it,” Packouz recalled. “He was incredibly effective. And relentless. He seemed to know every trick in the book. Business just came naturally to him. He was always looking for an edge. He was always looking to squeeze himself into deals—that’s the word he used. I started calling him Squeeze-a-Roli. Or Sleaze-a-Roli. It was truly unbelievable to watch.”
Scanning FedBizOpps, Diveroli didn’t limit himself to Iraq. Packouz watched as Diveroli won a State Department contract to supply high-grade FN Herstal machine guns to the Colombian army. The guns were to be used in the fight against FARC rebels in the mountains of Colombia, a hot war that had caused mass casualties. The deal was lucrative for Diveroli, but he wasn’t satisfied—as usual, he wanted more and more. Using his wiles, he convinced the procurement officer from the State Department to allow him to substitute Korean-made knockoff guns, instead of the top-quality, Belgian-made Herstal—a swap that doubled his earnings.
As they toiled away, a story appeared in the newspapers about a rebellion in Nepal. The country was ruled by a repressive regime led by King Gyanendra. The reports said that the Nepali civilian population was fighting for its freedom. Loktantrik Andolan was the name given to the revolution, translated as “democracy movement.” According to the coverage, in this dirty civil war civilians regularly “disappeared.”
Diveroli didn’t read the stories about Nepal for their news content. He didn’t care about politics or human rights. To the young gunrunner, Nepal looked like a business opportunity.
Diveroli named his initiative to supply King Gyanendra with what he needed—ammo, RPGs, mortars—the Save the King Package. Packouz watched in silence as Diveroli hunted for quotes for enough weapons to start a small army—or suppress a democratic movement. Attack helicopters were the first priority—the aircraft that would enable the king to strafe his Maoist enemies. The mysterious Swiss arms dealer Henri Thomet was Diveroli’s collaborator, just as he was on the Iraq contracts. Diveroli and Thomet talked on the phone constantly and exchanged countless e-mails as they tried to source Balkan matériel for Nepal.
“People are rebelling against their king and you’re going to help crush them?” Packouz finally asked, incredulous.
“Don’t be an idiot,” Diveroli said. “If it isn’t me, it’ll be someone else.”
“That’s probably true, but it doesn’t make what you’re doing right.”
“It’s a good thing you’re not involved in this deal.”
Packouz could feel that things were changing—and getting more dangerous. Selling arms to the US government to fight insurgents in Iraq was one thing. He could believe in that cause, at least enough not to wonder if he was participating in a criminal conspiracy. As long as the weapons he was trying to trade weren’t being used for a specifically evil purpose, Packouz had no qualms. But Diveroli never had qualms, Packouz was beginning to realize. If he kept going with Diveroli, Packouz could easily wind up involved in something illegal, morally repugnant, or both.
“Efraim was devoid of moral purpose,” Packouz recalled. “He understood that the Nepal deal was wrong, but he chose not to care. It bothered me. His skills as an arms dealer came at a price. I was getting nervous, on edge. I thought I could learn a lot from him. I was learning a lot, actually. Not all of it very nice. I was caught up in the money. But I could also see the danger.”
Packouz’s life was changing in other ways. One evening his girlfriend told him she was pregnant. It was an accident. Packouz was stunned into silence. She said she was going to keep the baby, no matter what. If Packouz was willing to help her, she’d stay in Miami, but if he wasn’t going to step up and take responsibility she was going to move back to Spain to be close to her parents.
“I was very torn,” Packouz recalled. “We didn’t have a strong foundation for our relationship. She was a very strong-willed person and I’m a lifelong rebel, so we’d had some conflict. But in the end I decided that I wasn’t going to let my child grow up without a father. Diveroli and I were about to travel to Paris, to a big arms show. I told my girlfriend that I was going to stand by her and the baby. Now I knew I had no choice about arms dealing. I had to sell a ton of guns.”
Packouz pushed his ambivalence and fear aside. He was now in—all the way in.
I. Not her real name.