Efraim Diveroli (b. 1985) was the founder of AEY Inc., a major weapons contractor for the U.S. Department of Defense that was prosecuted for violating an American arms embargo against China. In 2007, AEY provided 42-year-old substandard Chinese ammunition in ‘crumbling boxes’ that was re-branded and re-packaged. Documents showed that the company totaled more than $200 million in contracts to supply ammunition, assault rifles, and other weapons in 2007, despite the fact that his partner, David Packouz, and Diveroli were in their early 20s at the time.
As a result of the publicity surrounding the contract and the age of the arms dealers, the United States Army began a review of its contracting procedures. He was indicted on several dozen counts of fraud, and eventually pleaded guilty to a single count of conspiracy. He was sentenced to four years in federal prison. He is a subject of a 2016 Todd Phillips drama comedy film, ‘War Dogs,’ in which he is portrayed by Jonah Hill. The film was based on a ‘Rolling Stone’ article by Guy Lawson which he later adapted into a book titled ‘Arms and the Dudes.’ The film is heavily fictionalized and dramatized, and many of its events, such as the duo driving through Iraq, never took place.
Diveroli was born in Miami Beach, the son of Ateret and Michael Diveroli. The family was Orthodox Jewish and highly observant. His grandfather, Yoav Botach, is one of the wealthiest property owners in Los Angeles, and his uncle is controversial celebrity rabbi Shmuley Boteach. At the age of 14, Diveroli went to work for another uncle, who owned a police-supply business located in South Central LA. After a dispute with his uncle Diveroli returned to Miami in March 2001 at the age of sixteen. He told his father he wanted to open a business specializing in arms, ammunition trading, and defense contracts with the U.S. Government.
He convinced his father to sell him a shell company, AEY, Inc., named after the first initials of him and his siblings, which his father had incorporated as a small printing business, but hadn’t done anything with in years. Diveroli showed a penchant for arms dealing, and quickly made a name for himself within the industry. His young age and apparent talent led local media outlets to label him as an ‘arms wunderkind.’ Diveroli struggled with drug addiction, and was also labeled as a ‘stoner arms dealer’ by the media. Prior to his arrest for conspiracy, Diveroli was arrested in 2006 for beating up a parking attendant.
AEY focused on gray market arms, arms sold legally, but outside the commonly-used channels and at lower prices. They are typically sold without the permission or knowledge of the manufacturer. During the arms race of the Cold War, millions of weapons were stashed throughout Eastern Europe, ready for a war with the west. With the fall of the Soviet Union arms dealers started moving these vast amounts of weapons. The sales that followed formed the gray arms market where legitimate government sanctioned buyers could procure arms illegally. According to Guy Lawson: ‘The Pentagon needed access to this new aftermarket in order to arm the militias it was creating in Iraq and Afghanistan. The trouble was, it couldn’t go into such a murky underworld on its own. It needed proxies to do its dirty work — companies like AEY.’
Diveroli started working during this period of heavy arms trading as a teenager in a one-room apartment in Miami. Equipped with nothing more than a laptop, he sought to enter the industry from the seat of his couch. He began surfing solicitations on fbo.gov, or FedBizOpps, a government website where contracts are posted. He began by bidding on small contracts with the financial help of munitions supplier Ralph Merrill, with whom he did business during his time working for his uncle. By the age of eighteen, Diveroli had become a self-made millionaire by continuing to beat out big corporations like Northrop Grumman, Lockheed and BAE Systems. In the words of ‘Rolling Stone,’ Diveroli had ‘an appetite for risk and all-devouring ambition.’
After steadily increasing the size of his contracts and developing a track record of success, Diveroli’s company AEY, Inc. was awarded a $298 million contract by the Pentagon to provide arms and munitions to the allied forces in Afghanistan. In order to fulfill the US government contracts, Diveroli soon found himself dealing with dubious weapons traders, crooked diplomats, and soldiers of fortune; negotiating deals with foreign defense ministers, holding meetings at embassies, and taking calls from high-ranking Army officials. On March 27, 2008, the U.S. government suspended AEY Inc. for infringing upon the terms of its contract and violating a pre-existing arms embargo.
In 2016 Diveroli authored his true life memoir, ‘Once A Gun Runner…’