stevenhyde
09-01-09, 14:03
http://www.miamiherald.com/459/story/1210533.html
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A Miami Beach munitions dealer will face up to five years' imprisonment this fall after pleading guilty to defrauding the U.S. government by selling banned Chinese-made machine-gun rounds to the Army to supply allied forces in Afghanistan.
Efraim Diveroli, 24, admitted in a plea agreement Friday that he conspired with other employees of his company, AEY Inc., to sell the military $10.3 million of prohibited Chinese munitions that they tried to disguise as being made in Albania.
In return for pleading to one count of making false statements to the government, the U.S. attorney's office in Miami agreed to drop 84 other procurement charges and a forfeiture allegation. AEY also pleaded guilty Friday to the same count. Diveroli and his company may still have to pay restitution to the government.
Diveroli's deal with the Pentagon was only a fraction of his government business. His company contracted to sell about $300 million in weapons and munitions to the U.S. Army one year before he and three others were indicted on conspiracy and procurement offenses in March 2008. The indictment triggered congressional hearings on why the Pentagon was doing business with such a young man.
Two other employees, Alexander Podrizki and David Packouz, pleaded guilty in May, but an AEY investor, Ralph Merrill of Utah, still faces trial.
The case centered on a Chinese-made weapons embargo passed by Congress in 1989 in response to the massacre of dissidents in Tiananmen Square. Despite normalized trade relations with China, it has remained in effect.
Diveroli's lawyers, Howard Srebnick and Hy Shapiro, sought to have the indictment dismissed, saying he didn't violate the U.S. embargo because the Albanians acquired the Chinese munitions during the Cold War -- 15 to 30 years before the embargo took effect. Diveroli didn't buy them from Albania until late 2007.
But U.S. District Judge Joan Lenard disagreed, denying their motion to dismiss the high-profile case. Once that happened, Diveroli, described by his grandfather as a weapons ``genius,'' faced daunting odds if he had gone to trial. If convicted by a jury, he would have gone to prison for much longer than five years.
In 2007, the State Department e-mailed the young Miami Beach munitions dealer to tell him that he could not sell Chinese weaponry to the U.S. government to help supply allied forces in Afghanistan, according to an indictment.
But Diveroli, president of AEY, and three of his employees didn't take no for an answer, prosecutors said. They even arranged to have ``Made in China'' markings removed from the wooden crates shipped to Afghanistan to conceal the origins of the weaponry, prosecutors said in court papers.
``[They] ultimately chose to conceal the ammunition's Communist Chinese origin by having the ammunition removed from the wooden crates and metal tins that bore the Chinese markings, disposing of papers containing Chinese markings, and repacking the ammunition in cardboard boxes,'' according to a factual statement signed by Diveroli and the prosecutors.
After they devised a way to conceal the true origins of the 90 million machine-gun rounds, Diveroli and his employees used ``this issue'' as leverage to secure a lower price for the munitions from its subcontractor and Albania's Military Export and Import Co., Assistant U.S. Attorneys James Koukios and Eloisa Delgado Fernandez said.
By providing ammunition made in China, instead of Albania, AEY derived excess profits of about $360,000 from the government, the prosecutors said.
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A Miami Beach munitions dealer will face up to five years' imprisonment this fall after pleading guilty to defrauding the U.S. government by selling banned Chinese-made machine-gun rounds to the Army to supply allied forces in Afghanistan.
Efraim Diveroli, 24, admitted in a plea agreement Friday that he conspired with other employees of his company, AEY Inc., to sell the military $10.3 million of prohibited Chinese munitions that they tried to disguise as being made in Albania.
In return for pleading to one count of making false statements to the government, the U.S. attorney's office in Miami agreed to drop 84 other procurement charges and a forfeiture allegation. AEY also pleaded guilty Friday to the same count. Diveroli and his company may still have to pay restitution to the government.
Diveroli's deal with the Pentagon was only a fraction of his government business. His company contracted to sell about $300 million in weapons and munitions to the U.S. Army one year before he and three others were indicted on conspiracy and procurement offenses in March 2008. The indictment triggered congressional hearings on why the Pentagon was doing business with such a young man.
Two other employees, Alexander Podrizki and David Packouz, pleaded guilty in May, but an AEY investor, Ralph Merrill of Utah, still faces trial.
The case centered on a Chinese-made weapons embargo passed by Congress in 1989 in response to the massacre of dissidents in Tiananmen Square. Despite normalized trade relations with China, it has remained in effect.
Diveroli's lawyers, Howard Srebnick and Hy Shapiro, sought to have the indictment dismissed, saying he didn't violate the U.S. embargo because the Albanians acquired the Chinese munitions during the Cold War -- 15 to 30 years before the embargo took effect. Diveroli didn't buy them from Albania until late 2007.
But U.S. District Judge Joan Lenard disagreed, denying their motion to dismiss the high-profile case. Once that happened, Diveroli, described by his grandfather as a weapons ``genius,'' faced daunting odds if he had gone to trial. If convicted by a jury, he would have gone to prison for much longer than five years.
In 2007, the State Department e-mailed the young Miami Beach munitions dealer to tell him that he could not sell Chinese weaponry to the U.S. government to help supply allied forces in Afghanistan, according to an indictment.
But Diveroli, president of AEY, and three of his employees didn't take no for an answer, prosecutors said. They even arranged to have ``Made in China'' markings removed from the wooden crates shipped to Afghanistan to conceal the origins of the weaponry, prosecutors said in court papers.
``[They] ultimately chose to conceal the ammunition's Communist Chinese origin by having the ammunition removed from the wooden crates and metal tins that bore the Chinese markings, disposing of papers containing Chinese markings, and repacking the ammunition in cardboard boxes,'' according to a factual statement signed by Diveroli and the prosecutors.
After they devised a way to conceal the true origins of the 90 million machine-gun rounds, Diveroli and his employees used ``this issue'' as leverage to secure a lower price for the munitions from its subcontractor and Albania's Military Export and Import Co., Assistant U.S. Attorneys James Koukios and Eloisa Delgado Fernandez said.
By providing ammunition made in China, instead of Albania, AEY derived excess profits of about $360,000 from the government, the prosecutors said.
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