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Arms Dealing Company Was Listed As ‘Minority-Owned’

Arms Dealing Company Was Listed As ‘Minority-Owned’

When a congressional committee examines how nearly $300 million in government contracts for an arms deal to Afghanistan’s army and police was given to a tiny Miami Beach-based company led by 22-year-old Efraim Diveroli, it is expected to question how the company, AEY Inc., qualifies as minority-owned, as was listed on the application.

Minority-owned companies, also classified as “disadvantaged,” receive preferential treatment in the awarding of contracts.

Those close to the case, which made front-page headlines last week in The New York Times, note that since 1984, chasidim have qualified under that category, along with Hispanics, African Americans, Indians and others. (Jews are not otherwise categorized as a minority.)

David Packouz, a 25-year-old licensed masseur, who is listed as vice president of the company, told The Jewish Week that neither he nor Diveroli are chasidic, that he was only a consultant to the company, and that he was unaware of the minority-owned designation on the application.

Diveroli declined to comment. But attention into the workings of AEY Inc., and how it managed to procure such a major, lucrative government contract, is growing in the wake of the lengthy investigative article in the Times, which suggested that the company may have been involved in illegal arms trafficking and that the arms may have been substandard.

Packouz’s father, Kalman, a rabbi who is executive director of the Aish HaTorah Jerusalem Fund, said his son had not been involved in the company for the last 10 months and “is not involved in all this.”

“I know that Efraim Diveroli has been doing this [arms dealing] since he was 17, and that he has been successful at being able to fulfill contracts,” Rabbi Packouz said.

Diveroli’s grandfather, Angelo Diveroli, 73, of North Miami Beach, said his grandson has records to prove that all of his transactions were legal. “The military checked him out” before awarding him the contracts, he said. “They came to Miami Beach. No one gets $300 million in contracts for nothing. They checked. He was awarded the contracts because he had a good price. He didn’t steal the contract. He made a bid and they checked his credentials.”

He said his grandson started his business from scratch with only a computer in a “tiny apartment in Miami Beach.”

Young Diveroli started his company after both he and his father learned the business from Diveroli’s uncle, Bar-Kochba Botach, the owner of Botach Tactical in Los Angeles, a military and police supply company. Botach told The Times, “They just left me and took my customer base with them. They basically said, ‘Why should we work for Botach? Let’s do it on our own.’”

The senior Diveroli said his grandson is “now living in a rented apartment. People think he lives in a mansion. Not true. He is a hard-working person. He works with Asia, which is a 16-hour time difference, so he works day and night.”

He called his grandson a “genius who knows everything about weaponry. He could tell a weapon a mile away. He is a very religious boy. He’s not chasidic, but my grandson studied in yeshivas all over the world, [including in] Baltimore and Jerusalem.”

The elder Diveroli disclosed that his grandson is more than an arms dealer because he has contracts for a variety of products with countries in South America and Central America.

“Whatever they need he supplies,” he said. “And it’s not just weapons. There are things like machinery, agricultural products and tractors. … Whatever is on the Internet he supplies. He finds a good price. He is a businessman in his blood.”

Asked about allegations that some of the munitions his grandson sent to Afghanistan were manufactured in China, making their procurement a violation of U.S. law, Diveroli replied: “He says it’s not true. We have lawyers that are going to clarify everything.”

The senior Diveroli said it is possible that some of the munitions sold to the U.S. came from China, but he insisted that his grandson did not deal directly with China.

“We have an embargo with Cuba,” he explained. “But if you go there, you find many American products [sold to Cuba from other countries]. If he bought it from you and you got it from China, how would he know?”

The Army last week suspended AEY from any future government contracts pending an investigation into the Chinese ammunition and Diveroli’s claim that he sold munitions made in Albania.

As the government investigation was started, the House Oversight and Government Reform Committee launched its own inquiry into the arms shipments. A spokeswoman for Rep. Henry Waxman (D-Calif.), the committee chair, said invitations to appear before the committee April 17 had been sent to Diveroli, Packouz, the company’s vice president, and Levi Meyer, its general manager.

“We’ll look at the federal contracts awarded to AEY to supply weapons and munitions to the forces in Iraq and Afghanistan,” the spokeswoman said. “The committee will also be looking at the performance and compliance with U.S. laws and government contracting regulations. And I believe we’ll try to understand how the company got the contract and how well it performed. It’s too early to say what our next step will be. We’ll wait to see what the investigation reveals.”

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