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

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  HOW THREE STONERS

  FROM MIAMI BEACH

  BECAME THE MOST UNLIKELY

  GUNRUNNERS IN HISTORY

  / / / / / / CONTENTS / / / / / /

  Epigraph

  Author’s Note

  One: Hell-Bent

  Two: Save the King

  Three: Crash and Burn

  Four: Hello! Is This Ukrspeteksport?

  Five: Task Order 001

  Six: Circumvention

  Seven: Gegh

  Eight: Gjakmarrja

  Nine: 22 Bunkers

  Ten: Korrupsioni

  Eleven: Operational Necessity

  Twelve: Gërdec

  Thirteen: The Frame

  Epilogue

  Photographs

  Acknowledgments

  About Guy Lawson

  Index

  For my mother, Mary

  Of arms and the man I sing.

  —Virgil, The Aeneid

  / / / / / / AUTHOR’S NOTE / / / / / /

  In January of 2007, two kids from Miami Beach won a Department of Defense contract to supply $300 million worth of ammunition to the Afghanistan military. David Packouz and Efraim Diveroli were still in their early twenties but they’d become good—very, very, very good—at bidding online for federal arms contracts. The dope-smoking buddies had become so skilled at winning Pentagon munitions deals they’d beaten a dozen corporate competitors to become the sole winners of the contract to provide the Afghan military with everything from 100 million rounds of AK-47 ammo to thousands of tons of grenades, mortar rounds, and aerial rockets. The massive contract called for enough ammunition to literally create an army—which was precisely what the United States was attempting to do at the time.

  As Packouz and Diveroli set out to fulfill the $300 million contract, they were joined by another dude from their Miami Beach posse named Alex Podrizki. As it happened, the trio had picked an excellent moment to turn themselves into international gunrunners. In the early months of 2007, the wars in Afghanistan and Iraq were both going badly. Years earlier, the United States had invaded the two countries with little thought for the aftermath and the inevitable need to rebuild distant, fractious Muslim societies. As the nations simultaneously descended into the chaos of raging insurgencies, the Bush administration surged tens of thousands of American soldiers into Iraq. This left the Pentagon with few resources to deploy to Afghanistan, as an underdog presidential candidate named Barack Obama noted frequently on the campaign trail. In desperation, the United States decided it needed to provide greater strategic support to the Afghanistan military and police—and it needed to do so quickly. The ammunition contract was thus part of a major initiative to try to bolster Afghanistan’s security forces and turn the tide against the Taliban.

  The Afghanistan arms deal was a reflection of a change in defense contracting policy for the United States. In the early days of the conflicts in Afghanistan and Iraq, the Pentagon had awarded multibillion-dollar, no-bid contracts to companies like Halliburton and Blackwater, causing public outrage at the way well-connected insiders were profiting from the wars. In response, President Bush changed the rules to require that most defense contracts be posted on the government’s website, be open to competition, and have terms that were favorable to small businesses, giving even tiny players such as Packouz and Diveroli and Podrizki a chance to go up against the largest conglomerates in the military-industrial complex.

  The logistics of acquiring and transporting arms on this scale presented serious challenges. Adding another layer of difficulty, the Afghans and Iraqis both used Soviet Bloc weapon systems. This meant the ammunition for the Afghanistan contract would have to be sourced entirely from formerly Communist countries—many nations notorious for corruption and illegal arms dealing. For this strategically vital and politically sensitive endeavor, the Department of Defense relied on three twentysomethings—one a licensed masseur, another a ninth-grade dropout, the third a small-time pot dealer.

  Incredibly, at least according to the official version of events, instead of supplying the Pentagon with high-quality ammunition, Packouz and Diveroli and Podrizki shipped a mountain of the cheapest possible surplus rounds from arms caches in the Balkans. A story that appeared on the front page of the New York Times in March of 2008 reported that they had the audacity to scam the federal government, supplying faulty, ancient, rusty munitions; cheating the Army; and endangering the lives of innocent Afghan soldiers. The Times article made the dudes celebrities, of a kind. But it also raised serious questions. How could three so obviously unqualified and inexperienced kids be trusted with such a massive defense contract? How had they fooled so many people for so long? Was the contract typical of the way the world’s lone superpower was fighting the wars in Afghanistan and Iraq? What did the debacle say about America’s ability to triumph in the war on terror?

  As a writer for Rolling Stone, I knew the magazine was always looking for a certain kind of story—“tales about young people doing f—ked-up things,” to use the precise words of my editors. The three friends from Miami Beach certainly seemed to qualify. It appeared they might also provide an interesting, even unique, prism into the secretive and mysterious world of international arms dealing. The improbable voyage Packouz, Diveroli, and Podrizki had taken included geopolitical intrigue, Albanian mobsters, a shady Swiss arms dealer, and an underhanded conspiracy to repackage millions of ancient surplus Chinese-made AK-47 cartridges—all leading to federal indictments for fraud, a congressional investigation, and a scandal that made the US government look not only ridiculous but incompetent.

  I knew from experience—this is a trick of the trade—that the best time for a journalist to approach criminal defendants is after they’ve been sentenced and their legal jeopardy is at an end. So I waited until David Packouz and Alex Podrizki were about to be sentenced for the federal fraud counts they’d pleaded guilty to. When I contacted Packouz’s attorney, he said his client was willing to meet, so I traveled to Florida; Podrizki wasn’t interested in talking at the time. Standing before a judge in Miami’s shiny, new federal courthouse, Packouz received a suspended sentence for his role in the Afghanistan contract fraud; Podrizki likewise avoided prison. Their buddy, Diveroli, wasn’t so lucky, sentenced to four years behind bars because he was the mastermind of the operation.

  In court, the government portrayed Packouz and Diveroli and Podrizki as low-life fraudsters, three sleazy kids who’d do anything to make money. In the Times, Packouz’s qualifications as a massage therapist played prominently, along with detailed reporting on Diveroli’s checkered personal history. The mug shots of Packouz and Diveroli that ran in the newspaper made them look like hardened criminals. But in person David Packouz was a surprise. He was smart and well-spoken, a sharp observer of events with a keen memory, an easy laugh, and an ironic appreciation for the absurdity of what he’d lived through. Unlike the Hollywood image of an arms dealer—a soulless thug merchandizing death—Packouz seemed like the kind of kid who could just as easily have started a dot-com business in Silicon Valley. Instead of inventing a killer app, Packouz and his friends had fashioned themselves into
gunrunners—precocious, cunning, and astonishingly successful gunrunners. In winning the $300 million contract, three kids from Miami Beach had turned themselves into the least likely arms dealers in history—until their fraud was discovered and the Pentagon turned on them.

  The Rolling Stone article I wrote attracted more attention than any other piece I’d ever published, the improbable tale somehow capturing a measure of the madness of a decade of war and lawlessness; it was a story so strange it could only be true. But I knew there was more to tell—much more. A federal judge had placed a number of documents in the case under seal. Unwilling to let the case go, I spent months paging through court transcripts, studying defense-contract regulations, and drafting Freedom of Information requests. When I pursued interviews with the officials involved, the silence was deafening—and highly suspicious. Finally, as I kept digging, I received documents from confidential sources determined to reveal the truth. Then the ringleader of the arms-dealing operation, the force of nature named Efraim Diveroli, began to talk to me from prison. Alex Podrizki agreed to tell me about his experiences in Albania. Likewise, an older Mormon businessman from Utah named Ralph Merrill, who’d financed the deal and was also convicted of fraud, wanted to have his say about how events had unfolded.

  Another story began to take shape—one that had never been reported. The three stoners from Miami Beach had taken a wild, incredible trip into the innermost reaches of the world of international arms dealing. But the tale also had a serious side, with important political and legal implications. I discovered that during the wars in Iraq and Afghanistan the government of the United States had turned itself into the biggest gunrunning organization on the planet, with virtually no oversight from Congress, law enforcement, or the press. As the Pentagon desperately tried to stand up new armies in Kabul and Baghdad, paying private contractors billions to acquire a vast array of weapons from formerly Communist Bloc countries, it had made little attempt to vet its business partners and turned a blind eye to rampant fraud—sometimes with murderous consequences. The US government had used a string of brokers like Packouz and Diveroli and Podrizki to insulate it from the dirty work of arms dealing in the Balkans—the kickbacks and bribes and double-dealing. They also set up the brokers to act as scapegoats should the extralegal operation ever be exposed. The story of the three dudes from Miami Beach vividly illustrated the failures of the wars in Afghanistan and Iraq. It was a tale that the government tried to bury—until now.

  This is a story you were never meant to read.

  Guy Lawson

  New York, New York

  June 2015

  Chapter One

  HELL-BENT

  The e-mail confirmed it: the delivery was back on track, after weeks of maddening, inexplicable delays. It was May 24, 2007, and the e-mail said that a cargo plane had just lifted off from a military airstrip in Hungary and was banking east over the Black Sea toward Kyrgyzstan, some three thousand miles away. After stopping to refuel at an air base in Bishkek, the plane would carry on to Kabul, the capital of Afghanistan. Aboard the plane were eighty pallets loaded with 5 million rounds of AK-47 ammunition, for the Soviet Bloc weapons preferred by the Afghan National Army.

  Reading the e-mail in his tiny office in Miami Beach, David Packouz breathed a sigh of relief. The shipment was part of the $300 million ammunition contract Packouz and his friends Efraim Diveroli and Alex Podrizki were attempting to fulfill for the Department of Defense. Packouz and his buddies were still in their early twenties, but they’d been contracted by the US Army to deliver a huge amount of munitions to the Afghanistan military. Bidding online, on the website where the Pentagon posted defense contracts for public competition, the stoner dudes had beat major corporations to win the Afghan contract. For weeks in the spring of 2007, Packouz had toiled tirelessly trying to obtain flyover permissions for the ammo from the countries between Hungary and Afghanistan—all formerly part of the Soviet Bloc. Working with nothing more than a cell phone, an Internet connection, and a steady supply of high-quality weed, he’d finally succeeded in getting the ammo en route to Kabul. But along the way Packouz had repeatedly encountered mysterious, invisible forces seemingly conspiring to stop him from delivering the ammo—the kind of political complications inherent in gunrunning.

  Five thousand miles away, in the Balkan city of Tirana, Albania, Packouz’s friends Efraim Diveroli and Alex Podrizki were also dealing with menacing and mysterious forces as they tried to arrange for 100 million rounds of AK-47 ammo to be transported to Kabul. Alone in a notoriously lawless country, Diveroli and Podrizki were trying to negotiate with an Albanian mafioso taking kickbacks, as well as a Swiss gun dealer running the deal through a Cyprus company seemingly as a way to grease the palms of shadowy operators allegedly associated with the prime minister of Albania. Or so it appeared—knowing the underlying truth was often impossible in international arms dealing. As if those woes weren’t enough, Diveroli and Podrizki were also overseeing an operation to deceive the Pentagon by covertly repacking the AK-47 rounds into cardboard boxes to disguise that they had been manufactured decades earlier in China—a possible violation of American law.

  Gunrunning, the three dudes were learning the hard way, was a tough business.

  In Miami, David Packouz replied to the e-mail about the Kyrgyz ammo with excitement: the ammo was finally on its way. His workday at an end, he got in his new Audi A4 and drove home through the warm South Florida spring evening, windows open, U2’s “Beautiful Day” blasting on the stereo. What was happening was incredible to Packouz. He had no training as an international arms dealer, other than what he’d learned on the job from his friend, the twenty-one-year-old dynamo Efraim Diveroli. Packouz was only twenty-five years old, and his only postsecondary education was half a bachelor’s degree’s worth of chemistry credits, along with the diploma he’d earned from the Educating Hands School of Massage; until recently, he’d made his living as a masseur advertising his services on Craigslist. Now Packouz was a central player in the delivery of an entire arsenal to Afghanistan, responsible for chartering dozens of flights from all over Eastern Europe, obtaining flyover permissions from countries like Turkmenistan and Uzbekistan, and placating overwhelmed American soldiers on bombed-out tarmacs in Kabul trying to build the Afghan army in the midst of a hot war.

  Winning the $300 million Afghan deal was changing Packouz’s life in myriad ways. He’d moved out of his dive studio apartment, into a condo in a flashy seaside building called the Flamingo. According to his calculations, he was about to become a multimillionaire. And that was just the beginning. Soon he was going to have enough money to kick-start his dream of a career as a rock musician. No more fending off the advances of massage clients who assumed he was a prostitute. No more self-doubt. No more existential angst. Soon he was going to be rich—and he was going to be famous.

  Arriving home at his condo, Packouz packed the cone of his new Volcano electronic bong, took a deep hit, and felt the pressures of the day drift away into a clean, crisp high. Dinner was at Sushi Samba, a hipster Asian-Latino fusion joint. Packouz was exhausted but exhilarated—the improbable turn his life was taking was thrilling, even if it required extremely hard work. As his miso-marinated Chilean sea bass arrived, his cell phone rang.

  The freight-forwarding agent they’d hired was calling from New York and he sounded panicked: “We’ve got a problem. The plane has been seized on the runway in Kyrgyzstan. The Kyrgyz secret service won’t let it take off for Kabul.”

  “What are you talking about?” Packouz said, straining to hear over the restaurant’s pounding music.

  “Local customs and security personnel—the local KGB—are fucking with us. They won’t explain anything. I need diplomatic intervention from the United States.”

  “That’s bullshit!” Packouz shouted. “We worked for weeks to get the permits.”

  “The Kyrgyz KGB is blackmailing us. They say you have to pay a three-hundred-thousand-dollar fine for every day the plane sit
s on the runway.”

  Packouz was baffled, stoned, unable to grasp the implications of what he was being told. He had no idea that the ammo he was attempting to ship to Afghanistan was now a bargaining chip in a game of geopolitical brinksmanship between George W. Bush and Vladimir Putin. The Russian president didn’t like NATO expanding into Eastern Europe, nor did old-school Communist elements inside the Kyrgyz intelligence apparatus. The United States was also being extorted to pay a higher rent for its use of the Bishkek airport as a refueling and staging area—a vital strategic link for the war in Afghanistan. Then there was the recently imposed ban on Russian companies’ selling arms to the US government, denying the Russians the chance to compete for the huge Afghan ammunition contract. The Russians were orchestrating a tit-for-tat reaction, it appeared; it was known in global arms circles that the Afghans were running out of ammunition, so slowing the supply line was a devilish way to hurt American interests.

  “It was surreal,” Packouz recalled. “Here I was dealing with matters of international security and I was half-baked. I didn’t know anything about the situation in that part of the world. But I was a central player in the Afghan War—and if our ammo didn’t make it to Kabul the entire strategy of building up the Afghanistan army was going to fail. It was totally killing my buzz. But I had to get my shit together. I had to put on my best arms-dealer face.”

  Stepping outside the restaurant, Packouz cupped a hand over his cell phone to shut out the noise. “Tell the Kyrgyz KGB that ammo needs to get to Afghanistan right now,” he shouted into the phone. “This contract is part of a vital mission in the global war on terrorism. Tell them that if they fuck with us they’re fucking with the government of the United States!”

  Hanging up, panicking, Packouz decided he needed to talk to Efraim Diveroli, the leader of their operation. Diveroli was asleep in his hotel in Tirana when Packouz reached him. Still groggy from a long night of carousing, Diveroli was sleeping next to a prostitute who’d been provided to him by an Albanian businessman hoping to ingratiate himself with the young American gunrunner.