Diveroli gets back $4.2 million

TIRANA, Jan 27 – The U.S. Army had suspended a Miami Beach company owned by Efraim Diveroli from doing any government contract work for reportedly providing Chinese-made ammunition to the Afghanistan army in violation of its contract and U.S. law.
However, the Miami Beach munitions dealer could get back $4.2 million. The 23-year-old businessman-owner of AEY Inc., Diveroli could get back the money frozen by the government.
Along with his three co-workers, Diveroli was indicted last summer on charges of selling banned Chinese-made machine-gun rounds to the U.S. Army to supply allied forces in Afghanistan.
Prosecutors recently agreed to unfreeze the money — along with Diveroli’s 2007 Mercedes-Benz S550 — after realizing it indeed came from some of the company’s $300 million in weapons sales to the U.S. military, but none involving the Chinese munitions.
Getting back the millions, however, is a small victory. Diveroli, whose grandfather once described him as a weapons ”genius,” still faces charges of conspiring to sell the military $10.3 million of prohibited Chinese munitions that he and his employees tried to disguise as being made in Albania.
The case centers 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.
Now Diveroli’s lawyers are pushing 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. Diveroli didn’t buy them from Albania until late 2007.
Prosecutors said a Defense Department regulation in AEY’s contract prohibits suppliers from providing munitions ”acquired directly or indirectly from communist Chinese military companies.”
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 the indictment.
But Diveroli, the president of AEY Inc., 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, they said in court papers.
In order to conceal the ammunition’s true origin, the defendants repackaged the ammunition and falsely represented that it had been manufactured and originated in Albania, wrote assistant U.S. attorneys James Koukios and Eloisa Delgado Fernandez.
The improbable story of Diveroli’s activities broke in March 2008, when The New York Times reported that he had allegedly misled the Army by saying that most of the machine-gun cartridges he sold to the U.S. Army were from former Soviet-bloc countries — not China.
The revelation that the Army was doing business with such a young adult for hundreds of millions of dollars of weaponry shocked members of Congress.
The House Committee on Oversight and Government Reform, headed by then-Chairman Henry Waxman, R-Calif., conducted a June hearing that examined not only the contract but allegations that a U.S. ambassador to Albania and an Albanian defense minister may have been involved in a cover-up to conceal the true origins of AEY’s munitions supply.