REAL “War Dogs” Arms Dealer Exposes INSANE Government Corruption, Fraud, & National Coverups

Added: Mar 25, 2024

David's Background

David grew up in a traditional Orthodox Jewish family in Israel, where he felt restricted by the strict religious practices. He attended an all-boys school and had limited interaction with girls until he was 17. His father, a rabbi, instilled values of empathy and taking care of others, but David eventually found the rituals and rules of the religion stifling.

Comparison of Cultures

David highlights the differences between Israeli and American cultures, noting that Israel is more traditional and family-oriented. He mentions the aggressive negotiating style of Israelis in business dealings, contrasting it with the more reserved approach in American culture. He also reflects on the positive and negative aspects of religion in society, acknowledging the value of empathy but also the potential for exclusion and judgment.

SD Card Business

David started his SD card business by purchasing bulk orders from wholesalers he found online. He would then sell them on eBay, making a profit of around 30-40%. He hired his younger brother to help with shipping and eventually expanded his business. However, a bad shipment of defective SD cards led to the downfall of his business.

Meeting Efraim Diveroli

While in college, David met Efraim Diveroli at a mutual friend's house. Efraim had been sent to live with his uncle in Los Angeles after getting kicked out of an Orthodox Jewish school for smoking weed. He became involved in his uncle's pawn shop, where he started selling guns and eventually moved on to selling guns on online forums. As he gained more knowledge and experience in the industry, he began to see opportunities to make significant profits. His uncle supported his endeavors and received a cut of the profits. David eventually got involved in the business himself as he became Efraim's partner.

Government Contracting Process

David explains that government contracting involves bidding on contracts posted by government agencies on websites like sam.gov. The government looks for the best value in terms of price, quality, delivery time, and reliability when selecting a supplier. Winning a contract means delivering the specified goods or services within the agreed-upon timeframe and getting paid typically within 30 days.

Profit Margins

David mentions that profit margins on government contracts can vary, with some contracts offering margins of 10-20%. He also highlights the importance of thorough research and negotiation in finding suppliers for specific contract requirements. He shares his experience of winning a contract for 50,000 gallons of propane, which resulted in an $8,000 profit.

Relationship Dynamics with Efraim

David describes Efraim as a workaholic who expected the same level of dedication from him. While Efraim's intense work ethic contributed to his success, it also strained their relationship. David found it challenging to balance work with his other interests, leading to conflicts with Efraim. Despite the demanding nature of their partnership, David acknowledges Efraim's charm and humor but also highlights his extreme behavior, such as excessive drinking and drug use.

Red Flags in Efraim's Behavior

Early on in their partnership, David noticed red flags in Efraim's behavior, such as his lack of empathy and willingness to deceive others for personal gain. Efraim's focus on winning at all costs and his ability to manipulate situations to his advantage were evident in his business dealings. He would often underbid on contracts and then try to substitute cheaper items to increase his profit margins, even if it meant screwing over his business partners.

Despite warnings from David, Ephraim decided to go after multiple deals instead of focusing on the $300 million contract. This decision led to conflicts between them, with Ephraim refusing to pay David for his work on the Afghan deal.

$300 Million Afghan Deal

The $300 million Afghan deal came about as a result of the US government's plan to arm the Afghan army for the long term. With the Russians being blacklisted as a supplier, the government turned to multiple suppliers in Eastern Europe to fulfill the massive ammunition order. The Afghans were accustomed to using Soviet weapons like the AK-47, making it necessary to source ammunition from various Eastern European countries.

The Afghan deal ultimately led to legal troubles for Efraim, as the government began investigating the contracts and uncovering discrepancies in the procurement process. Efraim's lack of proper accounting practices and willingness to bend the rules to his advantage eventually caught up with him, leading to lawsuits and ongoing legal battles.

Bidding Process and Challenges

Packouz describes the extensive work that went into determining the pricing for the bid. He spent two months researching and contacting suppliers, many of whom were in Eastern Europe and difficult to communicate with due to language barriers. The process involved creating spreadsheets, making lists, and even faxing quotes back and forth. 

Winning the Contract

After submitting their bid, David and his team were surprised to learn that they had won the $300 million contract. The initial task order was only $600,000, but they soon received a $50 million task order, signaling the start of their delivery process. The contract required them to deliver a large volume of ammunition to Afghanistan, with a focus on efficiency and cost-effectiveness.

Navigating Logistics and Negotiations

As they began the delivery process, David and his team encountered various challenges, including the need to secure overflight permits and navigate through unstable regions. They also had to renegotiate prices with suppliers to ensure profitability. One particular supplier in Albania was selling ammunition at a higher price than what they were paying, leading to tensions and negotiations to lower costs.

Dealing with Chinese Ammunition

A significant revelation came when they discovered that the ammunition sourced from Albania had origins in China, which violated the terms of their contract. Despite the potential risks, they decided to repackage the ammunition to avoid detection. David recounts the discussions Efraim, who was adamant about renegotiating prices and securing better deals, even at the risk of losing the contract.

Negotiating with Albanian Officials

Efraim's aggressive negotiation tactics led to a meeting with Albanian officials, including a member of organized crime. The officials proposed a deal where they would handle the repackaging of the ammunition in exchange for a slight discount. This arrangement caused friction with the original box supplier, who eventually exposed their activities to the media and law enforcement.

Consequences and Fallout

The revelation of their actions led to a series of repercussions, including media attention and an investigation by the FBI. The situation escalated as their dealings with Albanian officials and organized crime came to light, jeopardizing their contract and reputation. Despite their attempts to navigate the complex web of negotiations and logistics, the consequences of their actions ultimately caught up with them.

The Raid and Federal Investigation

A competitor of Efraim made false claims about his business practices, leading to a raid on their office. During the raid, authorities discovered the Chinese ammunition being supplied to the US Army. Despite cooperating with the investigation, David was charged with fraud for submitting false documents related to the origin of the ammunition. The government threatened them with up to 355 years in prison but offered a plea deal for a maximum of five years if they admitted guilt.

The New York Times Article

Following the raid, a front-page article in the New York Times exposed their operation, painting them as irresponsible arms dealers supplying low-quality ammunition to Afghan allies. The negative publicity led to Congress holding hearings and the cancellation of their contract with the US Army. The pressure from the media and political scrutiny forced the government to take action against David and Efraim.

Legal Consequences and Plea Deal

David decided to plead guilty to the charges to avoid a lengthy and costly legal battle. He was facing the possibility of spending the rest of his life in prison if he fought the charges. Efraim initially fought the case but eventually pleaded guilty as well. The government focused on the fraudulent documents submitted for each aircraft delivery of Chinese ammunition, leading to the fraud charges against them.

House Arrest

After three years of legal battles, Packouz is sentenced to seven months of house arrest, a relief compared to the potential five years in prison he could have faced. He describes the experience of house arrest as soul-sucking, with strict rules and constant monitoring by probation officers. However, he finds solace in the fact that he is not incarcerated and can still be with his family.

Impact on Business and Personal Life

The fallout from the arms deal had a significant impact on David's personal and professional life. He faced financial difficulties, legal troubles, and the stress of being involved in a high-profile scandal. The loss of the contract and the negative publicity tarnished his reputation in the arms dealing industry.

War Dogs

The Rolling Stone article about David's story catches the attention of Todd Phillips, the director of The Hangover movies, who sees the potential for a film adaptation. The movie "War Dogs" is based on Packouz's experiences and the fraudulent arms deal he was involved in. David was involved in the writing process of the movie, providing insights and stories to the screenwriter.

He states that the movie is about 70% accurate to real life, with some dramatic elements added for entertainment value. One notable scene in the movie, where the characters go through the "triangle of death," is based on a real experience of the screenwriter, Steven Chin, and not David himself. Despite some inaccuracies, David finds the movie to be a mostly accurate portrayal of his story.

Ethical Considerations 

David reflects on his moral objections to selling war-related objects and the impact of his association with Efraim Diveroli. He recounts a disturbing incident where Efraim proposed arming the king of Nepal to suppress pro-democracy protests, leading David to question his involvement. While acknowledging the complexities of government waste in spending, he maintains a nuanced view on war, emphasizing the importance of considering the context in which weapons are used.

War Dogs Academy

Inspired by his own experiences, David co-founded War Dogs Academy, an online course aimed at teaching individuals how to navigate the government contracting system. The academy also offers support in securing funding for contracts, addressing a common stumbling block for contractors. He sees a significant opportunity in the government contracting space, given the substantial amount of money the government allocates for such contracts.

Reconciliation with Efraim

David reveals that he has been banned from government contracts for 15 years but recently got off the blacklist. Despite past animosity towards Efraim, he expresses a willingness to reconcile if Efraim were to apologize and repay the money owed. David acknowledges the potential risks involved in partnering with Efraim but remains open to the idea if the circumstances align.