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This turned out to be prescient. On March 6, 2008 — three weeks before the Times story broke — Diveroli had registered Ammoworks in Florida. It was headquartered at an apartment in a gated community on Hayes Street in Hollywood. In April, an industry insider spotted him at an arms fair in Malaysia.
But in June, a federal grand jury in Miami indicted Diveroli, as well as Packouz and two other AEY associates, for fraud and conspiracy. Diveroli retained at least two government contracts for months after the indictment. "The contracts were for AK-47s and weapons repair parts," says Glenn Furbish, a senior audit manager for the Special Inspector General of Iraq Reconstruction (SIGIR). The contract for weapons repair parts is noteworthy for another reason: AEY had attempted to buy parts through websites in China. (New Times found web postings partly in Mandarin seeking the armaments.)
SIGIR confirmed Diveroli has been paid $10 million for the two contracts. It seems that while he was under federal indictment, the federal government made him a multimillionaire.
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This past September, Ammoworks moved to an office building on Michigan Avenue just north of Lincoln Road in Miami Beach. The firm wasn't listed in the registry downstairs, but its ninth-floor suite was spacious and sunlit, with a fitness ball for a chair. Though an employee there declined comment, the firm's website (ammoworks.net), which has since been scrubbed of most text, bragged about a fortune in government contracts: "Ammoworks has produced hundreds of millions of dollars' worth of firearms, ammo, and tactical gear among other things for our special forces in Iraq and Afghanistan."
In fact, Ammoworks might simply be a shell for AEY. Records show the Ammoworks website was bought and registered by AEY, and AEY's latest state filing lists Ammoworks' address on Michigan Avenue. In a brief interview, Diveroli acknowledged both companies are his. "Yes, I own Ammoworks, and I also own AEY," he said.
A salesman for Ammoworks, Boz Kramer, said in a phone interview that the firm is back-ordered in heavy-caliber Lithuanian .308 ammo, but that it can be obtained with a hefty minimum order of 28,000 rounds — or 140 "sealed military battle packs." According to its website, Ammoworks also sells AK-47 ammo "made in South Korea for a U.S. government contract."
Although Diveroli is awaiting trial and Ammoworks was placed on the blacklist, Kramer confirmed this past October the company was trying to sell indirectly. "We provide quotes to companies that are selling to the government," he said.
A U.S. official who spoke on condition of anonymity said, "It's often the case that a company will get suspended or debarred, and then the owners will form another company and start getting contracts through the new company."
Defense lawyers have asked U.S. District Judge Joan Lenard to throw out the case against Diveroli. The decision could come very soon.
Maybe Efraim Diveroli — the indicted 20-something, whom another unnamed official called a "ballsy little shit" — will use that well-worn stratagem to again sell arms for America's wars.