In 2007, a 21-year-old won a $300M weapons contract from the U.S. military.
He had no office.
No experience.
Just Gmail and a ton of nerve.
What followed became a global scandal, an FBI case, and a Hollywood film.
Here’s how Efraim Diveroli gamed the war machine:
He had no office.
No experience.
Just Gmail and a ton of nerve.
What followed became a global scandal, an FBI case, and a Hollywood film.
Here’s how Efraim Diveroli gamed the war machine:
Picture this:
You’re 21.
You don’t have a degree, a license, or even an office.
But you’re supplying ammo to the Afghan army on behalf of the Pentagon.
This is the story of Efraim Diveroli.
And how he hacked the U.S. war economy.
You’re 21.
You don’t have a degree, a license, or even an office.
But you’re supplying ammo to the Afghan army on behalf of the Pentagon.
This is the story of Efraim Diveroli.
And how he hacked the U.S. war economy.
Efraim was no average teen.
He grew up in a wealthy Orthodox Jewish family in Miami.
At 15, he persuaded his father to sell him a shell company: AEY Inc.
He had one mission: break into the arms trade.
He grew up in a wealthy Orthodox Jewish family in Miami.
At 15, he persuaded his father to sell him a shell company: AEY Inc.
He had one mission: break into the arms trade.
By 18, Diveroli was bidding on U.S. military contracts through a government site called FedBizOpps.
He used aggressive underbidding, dirt-cheap suppliers, and sheer nerve to undercut global defense giants.
He used aggressive underbidding, dirt-cheap suppliers, and sheer nerve to undercut global defense giants.
His edge?
AEY was technically a “small disadvantaged business.”
That status gave him access to Pentagon contracts even without track record.
And he exploited it fully.
AEY was technically a “small disadvantaged business.”
That status gave him access to Pentagon contracts even without track record.
And he exploited it fully.
Enter: David Packouz, 23.
A massage therapist and Efraim’s old friend.
He joined AEY in 2005.
Together, the duo won 149 government contracts worth over $10 million, mostly small parts, scopes, and ammo.
Then came the big one.
A massage therapist and Efraim’s old friend.
He joined AEY in 2005.
Together, the duo won 149 government contracts worth over $10 million, mostly small parts, scopes, and ammo.
Then came the big one.
In January 2007, AEY made a wild bid:
A $298 million contract to supply 100 million rounds of AK-47 ammo and rockets to Afghan forces.
They underbid competitors by $50 million and won.
At 21, Efraim was now one of the Pentagon’s biggest ammo suppliers.
A $298 million contract to supply 100 million rounds of AK-47 ammo and rockets to Afghan forces.
They underbid competitors by $50 million and won.
At 21, Efraim was now one of the Pentagon’s biggest ammo suppliers.
The problem?
They had no inventory, no warehouse, no infrastructure.
They sourced cheap, Cold War-era ammo from Albania but it was made in China, violating U.S. laws banning Chinese military imports.
They had no inventory, no warehouse, no infrastructure.
They sourced cheap, Cold War-era ammo from Albania but it was made in China, violating U.S. laws banning Chinese military imports.
The “solution”?
They repackaged the crates.
Stripped Chinese labels.
Stamped them with Albanian markings.
Classic bait-and-switch.
Until it all unraveled.
They repackaged the crates.
Stripped Chinese labels.
Stamped them with Albanian markings.
Classic bait-and-switch.
Until it all unraveled.
U.S. inspectors flagged the ammo:
It was poor quality, untested, and unreliable.
The Pentagon realized it had been duped.
By 2008, the Army suspended AEY and the FBI launched a full-scale investigation.
It was poor quality, untested, and unreliable.
The Pentagon realized it had been duped.
By 2008, the Army suspended AEY and the FBI launched a full-scale investigation.
AEY’s house of cards collapsed.
Diveroli, Packouz, and others were indicted for fraud, conspiracy, and making false statements.
Efraim pled guilty.
In 2011, he was sentenced to 4 years in prison.
Diveroli, Packouz, and others were indicted for fraud, conspiracy, and making false statements.
Efraim pled guilty.
In 2011, he was sentenced to 4 years in prison.
But that wasn’t the end.
The story became a Rolling Stone article: “Arms and the Dudes.”
And then, in 2016, it hit Hollywood.
War Dogs, starring Jonah Hill as Diveroli and Miles Teller as Packouz.
A dramatized, but eerily accurate, retelling.
The story became a Rolling Stone article: “Arms and the Dudes.”
And then, in 2016, it hit Hollywood.
War Dogs, starring Jonah Hill as Diveroli and Miles Teller as Packouz.
A dramatized, but eerily accurate, retelling.
Diveroli sued Warner Bros, claiming they stole his memoir.
He lost.
But his name stayed in the headlines.
Meanwhile, Packouz reinvented himself as a music tech entrepreneur.
He lost.
But his name stayed in the headlines.
Meanwhile, Packouz reinvented himself as a music tech entrepreneur.
The scandal exposed massive holes in U.S. procurement.
Congress held hearings.
The Pentagon tightened controls on vendor vetting.
AEY is now a case study in how not to run a war economy.
Congress held hearings.
The Pentagon tightened controls on vendor vetting.
AEY is now a case study in how not to run a war economy.
At its core, this wasn’t just a story of fraud.
It was a story of:
• Loopholes
• Greed
• Inexperience
• And how war creates markets with no moral compass
That's how a 21-year-old hacked a trillion-dollar system with WiFi and nerve.
It was a story of:
• Loopholes
• Greed
• Inexperience
• And how war creates markets with no moral compass
That's how a 21-year-old hacked a trillion-dollar system with WiFi and nerve.
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But an underdog in the online space,
Then you're in the right place. We help founders and VCs build an unforgettable personal brand on X.
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But an underdog in the online space,
Then you're in the right place. We help founders and VCs build an unforgettable personal brand on X.
If you want similar results, then book a quick call with us
calendly.com/articulatehq/3…
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