A Cocky Arms Dealer Fleeced The Pentagon In ‘War Dogs.’ Now He’s Fighting For Movie Profits.

Efraim Diveroli was sleeping next to a naked prostitute in an Alban­ian hotel room when he was woken by the vibration of his mobile phone.

He saw it was his old schoolfriend and business partner David Packouz who was calling and ­angrily picked up.

As usual, Packouz was high on marijuana. Yet the news he was about to deliver was enough to bring the two young arms dealers back down to earth.

A Boeing 747 cargo plane carrying five million rounds of AK-47 ammunition that they had sold to the US military for use in Afghanistan had just been ­impounded on an airstrip in ­Kyrgyzstan.

About a dozen heavily armed soldiers working for the former Soviet state’s secret police had emerged from a hangar after the aircraft had touched down, confiscating the shipment and arresting the crew. The agents were demanding $US300,000 a day until the stand-off could be ­resolved.

“That’s insane,” screamed Diveroli. “Tell them this is a vital mission in the war on terror. Tell them that if they f. k with us, they f. k with the government of the United States.”

It was May 2007. Diveroli was 21 years old with little formal education. Packouz was 25 and had been working as a masseur until a few months earlier. Yet by bidding on supply contracts that the Pentagon had opened up to small businesses, and after trawling eastern Europe looking for old weapons stockpiles, the two young men had become a key part of the supply chain in the war in Iraq and the US fight against the Taliban.

This unlikely story of how two dropouts from Miami, Florida, had managed to land a $US300 million contract to supply arms used to support Afghan military forces in their battle with the Taliban has just been made into a big-budget Hollywood film. War Dogs stars funnyman Jonah Hill as Diveroli and Miles Teller as a character who resembles Packouz.

Hollywood did not need to exaggerate the details. Through sheer determination to get rich, the pair had inadvertently found themselves at the axis of global geopolitics and then, in Diveroli’s case, prison. In 2011, he was given a four-year sentence for defrauding the US military after Packouz blew the whistle to government prosecutors on how they had fulfilled the Afghan contract with Chinese equipment.

“These kids were brilliant and fearless, for good and for bad,” says Guy Lawson, author of Arms and the Dudes, the book on which War Dogs is based.

“They used 21st-century technology and a millennial, disruptive attitude to authority to get themselves incredibly deep into the world of arms dealing — not just with the Pentagon, but with Balkan thugs, Swiss gunrunners and on and on.

“In essence, the Pentagon used these kids as middlemen to go in and do what it couldn’t do itself — which was to deal with gun­runners and lords of war.”

He adds: “In short, they are the fall guys.”

Diveroli and Packouz grew up together in a strict Orthodox Jewish community in Miami Beach.

They were members of a group of grungy slackers who would skip school to play video games and smoke weed.

Packouz was skinny and played the guitar, harbouring vague intentions of becoming a rock star.

Diveroli was chubby and always the clown, often stealing yarmulkes from older boys and running away.

One Friday evening he slipped into the Beth Israel synagogue in Miami Beach and turned off the lights, knowing that no one in the strict Orthodox congregation would be able to switch them back on as it was the Sabbath.

After he had been kicked out of school at 14 for using drugs, Diveroli’s mother turned to her family for help. One of Diveroli’s uncles is the celebrity rabbi Shmuley Boteach, who had been a minister to Michael Jackson and wrote the best-selling book ­Kosher Sex.

It was his mother’s other brother who offered to help, however. Bar Kochba Botach, or Uncle BK, as Diveroli knew him, was an arms dealer in Los Angeles who sold guns and ammunition to police forces around the US. He was confident he could bring his errant nephew to heel by putting him to work in his warehouse.

Diveroli was sucked in by the glamour of Glock handguns and Micro Galil machineguns. He learnt how to break down and reassemble weapons. He developed a knack for sales. And he got his head round the red tape and jargon that one had to deal with to win contracts with US government agencies.

In the summer of 2004, aged 18, he returned to Miami to set up on his own. His father had set up a shell company named AEY, after his children’s initials. Diveroli took it over and started using it to bid on military contracts, employing contacts with experienced arms dealers to help with the logistics.

At the time, the Bush administration was facing criticism for awarding too many contracts to politically connected corporate ­titans such as Halliburton, where US vice-president Dick Cheney had been chief executive. So a new policy had been put in place to ensure that a bigger chunk of US defence spending went to small businesses.

They didn’t get any smaller than AEY, which Diveroli was running from his bedroom.

He started with small deals to supply bullets, making a few thousand dollars here and there. He would trawl the internet to find the best bargains.

Packouz had heard Diveroli brag that he was now an arms dealer but had paid little attention. When Diveroli asked him if he wanted to work for him, Packouz had one question: how much money do you have in cold hard cash sitting in your bank account? Diveroli’s response was: $US1.8m.

“For Diveroli, gun dealing wasn’t a business,” says Lawson.

“It was a way for him to live out his fantasies about what a tough guy does. The other guys were in for the ride.”

The two young arms dealers worked 18-hour days fuelled by high-grade marijuana. About once a week they hit the Miami nightclubs — graduating from seamy karaoke bars to upmarket joints full of glamorous girls.

Diveroli started living his life through quotations from his favourite film, Lord of War, a Nicolas Cage thriller about arms dealing. “Once a gunrunner, always a gunrunner” was a favourite one-liner.

Most of the contracts the two men won were for what the US army labelled as “non-standard” weapons — code for Soviet-made firearms such as the infamous AK-47 assault rifle and Russian-designed grenade-launchers.

These were not for US troops but were to be passed to the local army and police forces being trained to take over from the ­occupying forces. It was much cheaper than state-of-the-art American kit and it was what the local troops were used to. No conventional US supplier could provide such Soviet munitions. And US sanctions imposed on Russia and China had stopped the Pentagon buying directly at source.

All this made Diveroli’s and Packouz’s cargo highly important. According to Lawson, the shipment of five million rounds of AK-47 ammunition, which had been held up at the behest of Russian President Vladimir Putin, was eventually released after a personal visit to Kyrgyzstan by Robert Gates, who was then US defence secretary.

“We didn’t have any qualms in dealing with him (Diveroli) as he was registered as a US contractor,” says Simon Milne, the British-born airfreight broker who had secured the 747 for Diveroli that was seized in Kyrgyzstan.

“He had contracts with the US government, which we checked and verified. He had end-user certificates for the equipment he was buying, which was the most important thing. I didn’t realise how much of a cowboy he was.”

A US congressional report on Diveroli later found he had fallen short on at least seven military contracts. He had failed to make good on an order for 10,000 pistols to be sent to Iraq. He had sent poor-quality ammunition to US special forces. He had provided “potentially unsafe” helmets.

Diveroli always undercut his rivals. When the $US300m order for Afghan munitions came up, his proposal cost $US53m less than his nearest competitor.

At one stage it looked as though the two men would lose money on the deal. Then Packouz had an idea. A shipment of ammunition they had procured from the Albanian government was packed in heavy metal cases and wooden crates. If they transferred it to cardboard boxes, they could slash the fuel bill for shipping the ammunition by air.

It also got round a second problem: the bullets were made in China, a fact that was clear from the packing. To sell them to the US government would be illegal.

It was this deception that proved to be Diveroli’s undoing as the operation began to unravel. More than 80 other federal fraud charges were thrown out as part of a plea bargain that handed him a four-year prison sentence.

Since his release in late 2014, Diveroli has been unrepentant, insisting he had been set up by the US government.

He is suing Warner Brothers, the producer of War Dogs, for making a film of his life story without his contribution or consent. He has also produced his own memoir, Once a Gun Runner, which is being sold via his personal website.

Packouz claims Diveroli had stashed tens of millions of dollars before he was jailed. He is suing Diveroli for his share of the profits from legitimate contracts that they had handled before it all went off the rails.

“I had an expectation that they were going to be these really slimy guys,” Lawson says of the two stoner dudes. “It turned out they were just really smart kids who got in way over their heads and lived through this unbelievable adventure. Ask yourself: could you have done this at 21?”

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