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Deal of the Century
March 21, 2011 6:00 PM   Subscribe

How two American kids became big-time weapons traders - "Working with nothing but an Internet connection, a couple of cellphones and a steady supply of weed, the two friends — one with a few college credits, the other a high school dropout — had beaten out Fortune 500 giants like General Dynamics to score the huge arms contract. With a single deal, two stoners from Miami Beach had turned themselves into the least likely merchants of death in history." (via; previously on arms contractors)
posted by kliuless (69 comments total) 26 users marked this as a favorite

 
Uhhhh.. Good for them?
posted by absalom at 6:01 PM on March 21, 2011 [1 favorite]


(spoiler)





Though, not really so much.
posted by absalom at 6:02 PM on March 21, 2011


Super compelling story... if nothing else, a great read. Totally something that shoulda ended up on This American Life...
posted by ph00dz at 6:03 PM on March 21, 2011


Welcome to the Flat World. Everyone can be Anything.

also, Pimpin' ain't easy...
posted by djrock3k at 6:03 PM on March 21, 2011 [1 favorite]


How much do I hate the "start with a HOOK in the middle of the story with no context and then jump waaaay back in time and tell it forward" device? A lot. Just tell the damn story. If it is compelling, let it compel.
posted by DU at 6:05 PM on March 21, 2011 [15 favorites]


There is a story about Khashoggi, the titan of arms merchants, he goes and sees Nixon in California with a briefcase containing a cool mill.
He leaves it behind.
posted by clavdivs at 6:17 PM on March 21, 2011 [1 favorite]


Well, kudos to these fine young gentlemen. What better than supporting kids who are doing what they love, whether it's trying to be pop starlets at 13 years old by paying a vanity record label $2000 or translating their passion for weapons and all things international into a business venture.

Kids! God love 'em, adorable scamps!

(You must excuse me now. I'm going to hide in my apartment until the morning school bus that picks the kids of families living in my building up and takes them all to school arrives. Until then, I will not be able to sleep.)
posted by anniecat at 6:17 PM on March 21, 2011 [1 favorite]


I had to double-check the release date; Lord of War predates when the events of this story took place by just a few years. Similar in some ways to Wag The Dog.

Oh, and what the hell with the page formatting? If it's the printed output, you're not going to be able to jump to some shit about Sheen.
posted by Old'n'Busted at 6:20 PM on March 21, 2011


Oh, and what the hell with the page formatting? If it's the printed output, you're not going to be able to jump to some shit about Sheen.

Isn't it the best?
posted by thsmchnekllsfascists at 6:25 PM on March 21, 2011


so which one is Seth Rogan and which one is James Franco?

so many great quotes:

"Here I was dealing with matters of international security, and I was half-baked. I didn't know anything about the situation in that part of the world. But I was a central player in the Afghan war — and if our delivery didn't make it to Kabul, the entire strategy of building up the Afghanistan army was going to fail. It was totally killing my buzz. There were all these shadowy forces, and I didn't know what their motives were. But I had to get my shit together and put my best arms-dealer face on."

"I was going to make millions," Packouz says. "I didn't plan on being an arms dealer forever — I was going to use the money to start a music career. I had never even owned a gun. But it was thrilling and fascinating to be in a business that decided the fate of nations. Nobody else our age was dealing weapons on an international level."

at least he's got his priorities straight.
posted by Lovecraft In Brooklyn at 6:28 PM on March 21, 2011 [6 favorites]


House arrest?

Also, I don't really see the point of this:

An ATF agent posing as an arms dealer spent weeks trying to wheedle Diveroli into selling arms. Diveroli refused, but he couldn't resist bragging about his exploits; as agents recorded his every word, he talked about hunting alligators and hogs in the Everglades with a .50-caliber rifle. Finally, the ATF agent lured Diveroli to a meeting, asking him to bring along a gun so they could go shooting together. Diveroli didn't bring a weapon — he knew that would constitute a felony. But the ATF agent, who had thoughtfully brought along a gun of his own, handed Diveroli a Glock to try out.

The temptation was too much. Adopting his best tough-guy swagger, Diveroli cleared the chamber and inspected the weapon. As always, the 24-year-old arms dealer was the star of his own Hollywood movie. No matter what happened, he told the agent moments before his arrest, he would never leave the arms business.


As it's presented in the story, what Diveroli was doing at that point was legal. Why bother?
posted by kenko at 6:30 PM on March 21, 2011 [1 favorite]


If you tell those youths to get off your lawn, do so politely.
posted by Blazecock Pileon at 6:37 PM on March 21, 2011 [2 favorites]


I'll skip the article and wait for the stoner comedy movie
posted by moorooka at 6:38 PM on March 21, 2011


Okay, can someone explain the actual crime here - Y'know, other than sending guns, with permission from the Pentagon, to Afghanistan so kids could kill each other in the name of their gods?

The link mentions "fraud", but the only specific violation mentioned sounds more like a technicality, buying from the "wrong" supplier.


kenko : As it's presented in the story, what Diveroli was doing at that point was legal. Why bother?

See: Marion Barry. "Entrapment" makes a nice idea in principle, but in practice, good luck using it as a defense. In the real world, the second he caught the gun "tossed gently" at his head rather than teleporting out of the way and letting it fall to the ground, he had committed a crime.
posted by pla at 6:38 PM on March 21, 2011 [2 favorites]


How much do I hate the "start with a HOOK in the middle of the story with no context and then jump waaaay back in time and tell it forward" device? A lot. Just tell the damn story. If it is compelling, let it compel.
How much better the man who doesn’t struggle, ineptly:
‘Tell me, Muse, of that man, who after the fall of Troy
Had sight of the manners and cities of many peoples.’
He intends not smoke from flame, but light from smoke,
So as then to reveal striking and marvellous things,
Antiphates, Charybdis and Scylla, the Cyclops.
He doesn’t start Diomede’s return from Troy with his
Uncle Meleager’s death, or the War with two eggs:
He always hastens the outcome, and snatches the reader
Into the midst of the action, as if all were known
,
Leaves what he despairs of improving by handling,
Yet so deceptive, in blending fact with fiction,
The middle agrees with the start, the end with the middle.
posted by nasreddin at 6:43 PM on March 21, 2011 [24 favorites]


alright, joking and movie rights aside, this should be kinda chilling:

The pair met at Diveroli's apartment to smoke a joint and discuss strategy. Supplying the contract would mean buying up hundreds of millions of dollars worth of ammunition for the kind of Eastern Bloc weapons that the Afghans used. Because such weapons were traded in the gray market — a world populated by illegal arms dealers, gun runners and warlords — the Pentagon couldn't go out and buy the ammo itself without causing a public relations disaster. Whoever won the contract to arm the Afghans would essentially be serving as an official front operation, laundering shady arms for the Pentagon.
posted by Lovecraft In Brooklyn at 6:57 PM on March 21, 2011 [3 favorites]


He always hastens the outcome, and snatches the reader
Into the midst of the action, as if all were known,


Damn, you just got Horaced.

I approve, obviously.
posted by Horace Rumpole at 7:13 PM on March 21, 2011 [2 favorites]


Wasn't this one of the subplots in "Freedom?"
posted by M.C. Lo-Carb! at 7:14 PM on March 21, 2011 [1 favorite]


This sounds like the main plot (in as much as there is a plot) of William Gaddis' JR, only in real life.

(Which you should all read, since it's one of the best novels, ever.)
posted by heurtebise at 7:20 PM on March 21, 2011 [1 favorite]


nasreddin: "He always hastens the outcome, and snatches the reader
Into the midst of the action, as if all were known
"

pwned!
posted by mwhybark at 7:25 PM on March 21, 2011


"It was totally killing my buzz."

oh lord
posted by mwhybark at 7:28 PM on March 21, 2011


If you tell those youths to get off your lawn, do so politely.

You kids get your goddamn rocket launcher off my azaleas!
posted by steambadger at 7:38 PM on March 21, 2011 [1 favorite]


I knew once they saw them we were in trouble. We were so stupid. If we didn't e-mail, we could probably have denied the whole thing. But there were the names and dates. It was undeniable.

I forget, how does encryption work with this? If I were to encrypt all my messages, and "forget" the key, is that the same as denying a phone call took place? They can't prove anything, can they even use the fact you have a bunch of encrypted e-mails as evidence you're up to something smarmy?
posted by geoff. at 7:41 PM on March 21, 2011 [1 favorite]


I swear we already had posts on these guys, or maybe it was TPM, but really -- they had moxy enough to bid on defense contracts, they won them, and then supplied them with sort of working stuff IIRC.
posted by cavalier at 7:44 PM on March 21, 2011


Reminds me of Deal of the Century with Chevy Chase and Gregory Hines. A comedy where they play arms dealers.
posted by blakslaks at 7:49 PM on March 21, 2011


Wasn't this one of the subplots in "Freedom?"

One of the things that bothered me about "Freedom" was I felt like Franzen had read about these same arms dealers a few years ago and worked it into his novel as a subplot without doing anything clever with it. A few things were different (truck parts instead of arms) but I'm pretty he based the subplot on this.
posted by bobo123 at 7:57 PM on March 21, 2011 [3 favorites]


Wasn't this one of the subplots in "Freedom?"

If Franzen only had the good sense to write Bill and Ted into the story. That would have been most excellent.
posted by TheShadowKnows at 8:02 PM on March 21, 2011 [2 favorites]


I forget, how does encryption work with this?

Um, generally with email, since you're sending the messages to someone else, you encrypt it so that they can read it. Unless you go out of your way, email encryption actually makes it more difficult to repudiate messages (by design; this is a feature), not easier. And even if you go out of your way (encrypt without signing), it's still points to you with the same level of confidence that a normal, unencrypted email would.

Using encryption to magically make messages on someone else's computer unreadable after letting them read them is a DRM-style problem; i.e. it's impossible and only idiots try.
posted by Kadin2048 at 8:34 PM on March 21, 2011 [2 favorites]


This is horrific. Of anything, I believe war should be done as correctly as possible. It just shows what the Bush administration stood for when they said "business" - the message seemed to be "let's take American tax dollars and give them to the foreign military establishment". The worst part was how they negotiated down the helmet quality... The cheapest contract isn't always the best. I feel for the people in Iraq/Afghanistan who have to work with the low grade products that they've been sold.
posted by niccolo at 9:06 PM on March 21, 2011 [1 favorite]


Using encryption to magically make messages on someone else's computer unreadable after letting them read them is a DRM-style problem; i.e. it's impossible and only idiots try.

The agents took the laptops/desktops of the suspects, and the messages were sent to Albanian gangsters in Eastern Europe, presumably they didn't have access to it. Assuming the messages were all stored locally, if you encrypt them only you could read them if you provide the key.
posted by geoff. at 9:16 PM on March 21, 2011


Decrypt them, rather.
posted by geoff. at 9:24 PM on March 21, 2011


He always hastens the outcome, and snatches the reader
Into the midst of the action, as if all were known,


I don't think the article did that at all.
posted by obiwanwasabi at 9:56 PM on March 21, 2011


Oh, and what the hell with the page formatting? If it's the printed output, you're not going to be able to jump to some shit about Sheen.

They no people read it this way. I actually did click one of the interstitial links for The American Hacker behind Wikileaks

Anyway this is an interesting story. TPM covered it a little bit when these guys got (spoiler alert) arrested.

One thing, though. The government, and especially the military/homeland security is becoming so large now that the best way to make money as a young entrepreneur is to sell to the government. That's obviously a problem for the country, IMO.
posted by delmoi at 10:29 PM on March 21, 2011 [1 favorite]


Yeah I hate the "here's the interesting part, now let me spend paragraphs on boring stuff no one cares about" style of writing as well. I don't think the article was a particularly bad example of this, but in general it's annoying.
posted by delmoi at 11:36 PM on March 21, 2011


I found the article a good read, but was a bit non-plussed at the end. The entrapment angle sucks, but the scale of what went on just adds to the banality of the end result.

These guys are still millionaires? Legally?
posted by Sparx at 11:54 PM on March 21, 2011


Dude, where's my car tank.


Interesting article, formatting awful.
posted by arcticseal at 12:21 AM on March 22, 2011


Great read. Thanks.
posted by Wolof at 12:38 AM on March 22, 2011


What a great story. I wish I could hire him.
posted by bokononito at 12:50 AM on March 22, 2011


These guys are still millionaires? Legally?
That's a good question. Presumably, they'd be entitled to keep all the money they made from their non-illegal deals, unless some fines were levvied.

It also sucks for the guy who got 7 months. If it hadn't been for his friends greed they could have made plenty of money on the contract with legit dealers.
I found the article a good read, but was a bit non-plussed at the end. The entrapment angle sucks, but the scale of what went on just adds to the banality of the end result.
I'm not sure if he was actually entrapped (or rather, I don't think the trap actually worked). He didn't agree to sell guns, and he didn't have his own gun. Was it illegal for him to shoot someone else's gun?
posted by delmoi at 12:53 AM on March 22, 2011


To master the art of federal contracts, Packouz studied the solicitations posted on fbo.gov. The contracts often ran to 30 or 40 pages, each filled with fine print and legalese.

I know this is only of interest to federal procurement nerds like me, but...

What is posted on fed biz opps is a solicitation. Potential vendors respond with an offer. If we accept your offer we form a contract, which incorporates the solicitation by reference. Even better, 30 or 40 whole pages? Fuck, it's like 110 pages to buy fluid milk where I work. It's just sloppy writing. It's not really that complicated.
posted by fixedgear at 2:32 AM on March 22, 2011 [2 favorites]


Were these guys stoned or something? The article doesn't make it clear
posted by fire&wings at 2:35 AM on March 22, 2011 [6 favorites]


The deputy director looked like he was ex-KGB — big and fat, in his sixties, with thick square glasses.

There's a bloke that looks like this in my local, should I be worried?
posted by biffa at 2:51 AM on March 22, 2011 [5 favorites]


I'll take the movie rights please
posted by AndrewKemendo at 2:52 AM on March 22, 2011


What a couple of scumbags.
posted by tommyD at 3:56 AM on March 22, 2011


Mark Thomas did something similar in his tv programme here in the UK

http://www.newstatesman.com/200604030014
posted by marienbad at 5:31 AM on March 22, 2011


It's just sloppy writing. It's not really that complicated.

Yup. I've worked with federal RFPs. The hard part isn't that they are complicated. The hard part is that it's an unholy mixture of boilerplate and specific information that occasionally contradicts the boilerplate. The hard part is the half-sentences and poorly-written stuff that makes it hard to decipher what it is they're looking for. The unnecessary legalese and jargon.

Okay, maybe military contracts are a bit different. I don't know.

Hey, though, I was pretty nauseated by this story. For so many reasons.
posted by entropone at 5:43 AM on March 22, 2011


No, I'm not disputing that our documents contain confusing and sometimes contradictory information. What I meant was that some of the words (solicitation, contract, offer) have really specific definitions that don't change and can't be used interchangeably.
posted by fixedgear at 6:06 AM on March 22, 2011 [1 favorite]


So federal agents can ask someone to commit a crime without it being thrown out as entrapment? Seriously?
posted by ged at 7:49 AM on March 22, 2011


So federal agents can ask someone to commit a crime without it being thrown out as entrapment? Seriously?

It's a 'sting'. Look up some of the stuff they've to catch "terrorists". There was a recent case a while back where they basically groomed some unemployed Muslim kid for months into being a terrorist, they actually paid him during this time, and when he found a job with a friend as a fisherman in Alaska, they put him on the no-fly list so that he couldn't actually take it.
posted by delmoi at 7:55 AM on March 22, 2011 [3 favorites]


Lots of people love heart-warming stories about cuddly sociopaths. That's why this story was, is, and will be movie gold.
posted by meehawl at 9:24 AM on March 22, 2011


The 2008 New York Times story.
With the award last January of a federal contract worth as much as nearly $300 million, the company, AEY Inc., which operates out of an unmarked office in Miami Beach, became the main supplier of munitions to Afghanistan’s army and police forces.

Since then, the company has provided ammunition that is more than 40 years old and in decomposing packaging, according to an examination of the munitions by The New York Times and interviews with American and Afghan officials. Much of the ammunition comes from the aging stockpiles of the old Communist bloc, including stockpiles that the State Department and NATO have determined to be unreliable and obsolete, and have spent millions of dollars to have destroyed.

... problems with the ammunition were evident last fall in places like Nawa, Afghanistan, an outpost near the Pakistani border, where an Afghan lieutenant colonel surveyed the rifle cartridges on his police station’s dirty floor. Soon after arriving there, the cardboard boxes had split open and their contents spilled out, revealing ammunition manufactured in China in 1966.

“This is what they give us for the fighting,” said the colonel, Amanuddin, who like many Afghans has only one name. “It makes us worried, because too much of it is junk.” Ammunition as it ages over decades often becomes less powerful, reliable and accurate.
posted by russilwvong at 9:54 AM on March 22, 2011


Another Florida story.
posted by doctornemo at 10:27 AM on March 22, 2011


I read this last night in bed. It's pretty fascinating, and now I totally want to be an arms dealer.

Anyone here speak Russian?
posted by elder18 at 10:30 AM on March 22, 2011


I've thought about becoming a scrap brass dealer, but it is too heavy for my bike trailer.
posted by Chuckles at 10:36 AM on March 22, 2011


In reality, the Pentagon had good reason to disqualify AEY from even vying for the contract. The company and Diveroli had both been placed on the State Department "watch list" for importing illegal firearms. But the Pentagon failed to check the list. It also ignored the fact that AEY had defaulted on prior contracts. Initially rated as "unsatisfactory" by the contracting office, AEY was upgraded to "good" and then "excellent"

There was only one explanation for the meteoric rise: Diveroli had radically underbid the competition. In private conversations, the Army's contracting officers let AEY know that its bid was at least $50 million less than its nearest rival.
How comes someone in the contracting offices upgraded the ratings? And what were the criteria used to assess and to revise the ratings? I wouldn't be much surprised to discover the contracting officiers knew all too well what was going on, and they were bought, possibily for a pittance.
posted by elpapacito at 12:29 PM on March 22, 2011


The solicitation was issued and the subsequent contract was awarded by Rock Island, not the Pentagon, but that's nitpicking.

As a former warranted contracting officer, these are the most disturbing parts of the article. The contracting officer let them know how much lower their offer was? That's a firing offense right there.

We make awards to firms that have defaulted, it happens sometimes, particularly in sole-source acquisitions.

Changing their ratings isn't completely unheard of. Proposals are submitted, their can be rounds of revisions during the negotiation process, and it's possible for ratings to be changed. It's unusual, and suspicious in this case, but not out of the question.

We're required to check epls which is supposed to be a consolidated list of parties excluded from receiving contracts, but, yeah, things fall through the cracks.
posted by fixedgear at 12:53 PM on March 22, 2011


Reminds me of the time I got really high and thought I was an arms dealer. Turns out I was actually just trying to sell a box of old GI Joe action figure rifles to a bunch of little green army men sitting on my shelf.

Turns out that NyQuil seriously fucks up my sense of scale and distance.
posted by quin at 1:59 PM on March 22, 2011


How much do I hate the "start with a HOOK in the middle of the story with no context and then jump waaaay back in time and tell it forward" device? A lot. Just tell the damn story. If it is compelling, let it compel.

tl;dr
posted by Twang at 4:10 PM on March 22, 2011


As a former warranted contracting officer, these are the most disturbing parts of the article. The contracting officer let them know how much lower their offer was? That's a firing offense right there.

Which is why I don't believe it happened. It may have come out after fact during the investigation but no one's sharing that information during post-award breifing. If you lose, you usually get to know what the winner did better/cheaper. Winners get to know when they start.

This acquisition was gone over with a fine-toothed comb after the fact. Everyone was looking for someone to throw under the bus. That no one ended up with tire tracks on their back is, to my mind, an indication that everyone agreed the problems were with the policies and priorities put in place by Congress and the Administration and the resources they allocated to oversight.

How comes someone in the contracting offices upgraded the ratings? And what were the criteria used to assess and to revise the ratings?

In large acquisitions, evaluations happen in stages. Contractors misunderstand things or forget to include/address things that are later clarified during discussions. There can be several iterations of proposal-discussion-revision depending on how the buy is set up. This isn't really that unusual. Google "past performance evaluation" if you want to know how that part of the process works.

There is much in the way of self-serving rationalization and narcissistic myth-making here. The reporter shows very little in the way of the skepticism warranted when recounting the tales of two known scammers. While the government probably wouldn't comment on the story, it would have been helpful for the reporter to talk to someone who wasn't a criminal about how federal contracting works. But then it would all be a little less sexy.
posted by the christopher hundreds at 4:44 PM on March 22, 2011 [1 favorite]


elpapacito : How comes someone in the contracting offices upgraded the ratings? And what were the criteria used to assess and to revise the ratings? I wouldn't be much surprised to discover the contracting officiers knew all too well what was going on, and they were bought, possibily for a pittance.

And, perhaps most importantly of all - SO WHAT???

These kids didn't secretly sell us out to Osama. They fulfilled the terms of the contract (or at least, would have) for $50 million less than the 2nd-lowest bidder.

We should feel some serious outrage here - Not that these kids sold arms to Afghanis (which seems like the only point most of you chose to read); not that they bought Chinese ammo; not that they liked their weed... But that a couple of stoner kids could undercut "real" DOD contractors - AND DELIVER!

Remind me again why we pay GE and Lockheed so friggin' much money???
posted by pla at 4:49 PM on March 22, 2011 [1 favorite]


pla, read the 2008 NYT article. The Bush administration outsourced its procurement of ammunition to these jokers, resulting in 40- or 50-year-old Chinese ammunition being delivered to the Afghan army. What the hell?
posted by russilwvong at 5:35 PM on March 22, 2011


They fulfilled the terms of the contract (or at least, would have) for $50 million less than the 2nd-lowest bidder.

No they didn't. They specifically violated their contract and tried to cover it up. Thus the fraud convictions. And they didn't deliver. They could charge less because they didn't care if they complied. The big companies knew they couldn't source that much ammo that cheaply.

Also, FWIW, ammunition manufacturing has been outsourced for more than the last decade. The government doesn't even make its own ammo, much less ammo for soviet guns.
posted by the christopher hundreds at 7:16 PM on March 22, 2011 [1 favorite]


Too bad Bill Murray will be way too old to play either of these guys when it comes time for the movie.
posted by Pirate-Bartender-Zombie-Monkey at 8:03 PM on March 22, 2011


nah, i think my joke will work out. there's a smart, charismatic one - that's Franco. there's a blustering, chubby one - that's Seth Rogan. no way they'd pass this up. it'll be Pineapple Express 2 or something
posted by Lovecraft In Brooklyn at 9:07 PM on March 22, 2011 [1 favorite]


the christopher hundreds : No they didn't. They specifically violated their contract and tried to cover it up. Thus the fraud convictions. And they didn't deliver. They could charge less because they didn't care if they complied. The big companies knew they couldn't source that much ammo that cheaply.

russilwvong : pla, read the 2008 NYT article. The Bush administration outsourced its procurement of ammunition to these jokers, resulting in 40- or 50-year-old Chinese ammunition being delivered to the Afghan army. What the hell?

Okay...

"These stockpiles range from temperature-controlled bunkers to unheated warehouses packed with exposed, decaying ammunition. Some arsenals contain ammunition regarded in munitions circles as high quality. Others are scrap heaps of abandoned Soviet arms. The Army’s contract did little to distinguish between the two.
[...]
What this meant was not defined. An official at the Army Sustainment Command said that because the ammunition was for foreign weapons, and considered “nonstandard,” it only had to fit in weapons it was intended for."

Sorry, it still sounds like they fulfilled the terms of the contract.

The contract just sucked and didn't specify quality or sources.
posted by pla at 3:37 AM on March 23, 2011


(That said, I have to admit the NYT write-up makes them sound quite a lot less sympathetic, more like loophole-exploiters than happy kids who stumbled across a sweet deal and did a barely-passable job... And that hair! Ugh! I count as a terminal fashion-victim, and even I can tell the '80s wants its hair back).
posted by pla at 4:03 AM on March 23, 2011


Sorry, it still sounds like they fulfilled the terms of the contract.

What part of "it can't be from China" is hard to understand? The contract said this. The state department confirmed that pre-embargo goods weren't excluded. They sent Chinese ammo anyway and tried to cover its origins. The specifically violated their contract.
posted by the christopher hundreds at 6:40 AM on March 23, 2011 [1 favorite]


I'll take the movie rights please

Paramount nabs 'Wheeler Dealers'
posted by rochi at 1:22 PM on March 26, 2011


AEY has been temporarily banned from receiving military contracts.
posted by Harald74 at 5:58 AM on March 29, 2011


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