The saga of a young Florida-based arms dealer has tangentially touched down in Montana. Ammoworks Inc., a defunct Miami Beach ammunition dealer owned and operated by Efraim Diveroli, filed suit last month against several parties in Stevensville alleging a string of unfulfilled ammo supply contracts from 2010the same year Diveroli was arrested for possession of a firearm by a convicted felon during an elaborate Bureau of Alcohol, Tobacco, Firearms and Explosives sting in Brevard County, Florida.
Diveroli's Hollywood-esque rise and fall has been well documented in The New York Times, The Washington Post, Details magazine and other national news outlets. At age 18, the high school dropout began landing defense contracts with the U.S. government as president of his first company, AEY Inc. By 2007, when Diveroli was 21, AEY had received a two-year contract worth as much as $298 million to supply ammunition to Afghan security forces. Media reports styled him as a real-life 20-something Lord of War, a swaggering gun enthusiast and the product of a family that, as Rolling Stone wrote in a 2011 feature story, specialized in supplying law enforcement agencies with everything from Kevlar jackets to Glocks.
"Efraim was a Republican because they started more wars," David Packouz, Diveroli's business partner in AEY, told Rolling Stone. "When the United States invaded Iraq, he was thrilled. He said to me, 'Do I think George Bush did the right thing for the country by invading Iraq? No. But am I happy about it? Absofuckinglutely.' He hoped we would invade more countries because it was good for business."
But in early 2008, the U.S. Army suspended AEY's munitions supply activity after a field investigation uncovered possible acts of fraud by the company. Federal prosecutors accused AEY of shipping millions of rounds of degraded, decades-old Chinese ammunition to Afghanistan in direct violation of a ban on Chinese munitions. Diveroli—who had worked to secure munitions for AEY's defense contracts from Soviet-era stockpiles in Eastern Europe—pleaded guilty to one charge of conspiracy in 2009. According to corporate records accessed on the Florida Department of State's website, he'd registered Ammoworks as an active company even as AEY was being investigated.
Ammoworks is now a closed corporation. Its Montana lawsuit comes as part of a wrapping-up of old business, according to Ammoworks' attorneys, and alleges that Bitterroot Valley Ammunition and Components, a Stevensville company founded by Darren Newsom in 2007, failed to make good on several contracts throughout 2010. According to a complaint filed in U.S. District Court in Missoula Sept. 3, Ammoworks claims BVAC took money up front for hundreds of thousands of rounds of ammunition that it failed to supply, then did not refund the payments.
"I feel it's a strong case," says Missoula attorney Sean Bracken, co-counsel for Ammoworks. "It's a clear breach of contract case, and Ammoworks is owed money."
Calls to a Stevensville phone listing for Darren Newsom rang directly to ProGrade Ammo Group LLC, the ammunition company that purchased BVAC in 2011. ProGrade Ammo is listed as a defendant in Ammoworks' complaint. The company was unaware of the suit when contacted by the Independent, and did not respond to a request for comment by press time.
This isn't the first legal dispute Ammoworks has pursued in the process of closing down. Earlier this year, the company leveled similar allegations against the Tennessee-based manufacturer Widener's Reloading & Shooting Supply Inc. Court records show the case, stemming from two alleged breaches of consignment agreements in March 2010, was settled out of court.
As Ammoworks continues to seek payment for alleged breaches, Diveroli himself is serving out a four-year sentence resulting from the 2010 ATF bust. An affidavit submitted by ATF Special Agent Kevin McCann to U.S. District Court in Orlando outlines two intense months of investigation into Diveroli's alleged violations of the Arms Export Control Act while he was awaiting sentencing for the 2009 conspiracy charge. The case, according to the affidavit, began when an unnamed federal firearms licensee approached federal officials in July 2010 with information that Diveroli had suggested the two "partner up together in order to purchase and sell machine guns for profit." McCann and other agents monitored Diveroli's attempts to find an importer for magazine drums from a factory in South Korea, and eventually set up the sting using an undercover ATF special agent.
Diveroli met the undercover agent in Brevard County Aug. 20, 2010, and proceeded to handle several firearms the agent had brought to the meeting. Diveroli "stated he wanted to shoot the firearms," the affidavit says, and took a side trip to a Wal-Mart to purchase several hundred rounds of ammunition. Diveroli was arrested when he returned, sitting in the passenger seat of an Audi convertible with the ammo nestled behind him.
Shortly after Rolling Stone's article appeared the following spring, Variety reported that Hangover director Todd Phillips had optioned the film rights to Diveroli's story.