Miami Beach, FL – Four Indicted in Munitions Fraud

Miami Beach, FL- Last year, the State Department e-mailed a young Miami Beach munitions dealer, telling him that he could not sell Chinese weaponry to the U.S. government to help supply allied forces in Afghanistan.

But Efraim Diveroli, the 22-year-old president of AEY Inc., and three of his employees didn’t take no for an answer.
Instead, they conspired to defraud the federal government by selling it more than $10 million of Chinese-made machine-gun rounds, telling U.S. officials that the ammunition was from Albania.

Diveroli and his co-workers, who made their first appearances in federal court in Miami on Friday, even arranged to have ”Made in China” markings removed from the wooden crates shipped to Afghanistan.

The 71-count indictment charges Diveroli, his company, and employees David Packouz, 26, of Miami, Alexander Podrizki, 26, of Miami, and Ralph Merrill, 65, of Salt Lake City, Utah, with defrauding the U.S. and other procurement offenses. The foursome are set for arraignment on July 9.

A lawyer for Diveroli said the government’s indictment was flawed, noting that the federal regulation cited in the indictment prohibits the sale of ammunition acquired “directly or indirectly, from a Communist Chinese military company.”
”The regulation does not prohibit an American from selling Chinese-made ammo to the U.S. Army if the ammo was acquired before the 1989 Chinese munitions embargo,” attorney Howard Srebnick said in an e-mail.

‘Mr. Diveroli did not acquire the Chinese-made ammo, `directly or indirectly,’ from any Communist Chinese military company,” Srebnick said. “The government knows Mr. Diveroli purchased the Chinese-made ammo from the Albanian government, which had acquired the ammo back in the [1960’s] and 70’s, before the Chinese embargo and before Mr. Diveroli was even born.”

In late March, the U.S. Department of Defense suspended Diveroli’s $300 million military contract, which included the $10 million Chinese-made ammunition shipment, as was reported at that time by VIN News. But Immigration and Customs Enforcement had been investigating Diveroli and his company before then, officials said.

Diveroli’s grandfather, Angelo, who lives in North Miami-Dade County, said that he questioned whether the indictment was political. ”I think there’s somebody behind this,” he said.