Camp Gagnon - Gun Runner Reveals How Make MILLIONS Selling Weapons | David Packouz

Episode Date: May 7, 2024

David Packouz is an American arms dealer and the central subject of the 2016 Todd Phillips film War Dogs. In 2005, Packouz joined Efraim Diveroli in Diveroli's arms company AEY Inc. By 2007, AEY secured a nearly $300 million U.S. government contract to supply the Afghan Army with 100 million rounds of AK-47 ammunition. 🏞️ Sign up for free and exclusive updates: https://camp.beehiiv.com/The ammunition that AEY had secured originally came from China, violating the terms of AEY's cont...

How do I make $10 million in three years selling weapons? That's a good question. The most likely way you would succeed is to do it through the legal federal government system. Step two. Now you need to find suppliers and the first place you look at, surprisingly, is Google. And you just Google for weapons manufacturers. Different weapons manufacturers make different types of weapons and ammunition, so you have to find the ones that are making specifically what you're looking for. Step three. You need to deliver that ammunition from where the source is to the point of

delivery. Not all logistics companies are willing to transport ammunition. You have to calculate both the cost of the source as well as the cost of transportation. And now once you have your total cost, you bid it to the government. Depending on how well you know the industry will usually depend on how much of a profit margin you put on top of it. What can go wrong? A lot can go wrong. Now, let's say I get into shady business. Could I get killed? There's always an element of risk. Nothing is risk-free. David Thank you for being here man

I really really appreciate it This is gonna be a lot of fun And I brought you here actually for a specific reason I'm a standard comedian I'm a podcaster But I'm thinking of quitting Yeah I'm thinking of quitting at all

Now you're gonna be a sit down comedian I might be a sit down comedian Dude But actually better than that I think I I kind of want to be like an arms dealer Oh yeah I want to get involved in like

In distributing weapons Okay global conflicts And making millions of dollars That's a good business to be in It's a decent business, right? Especially nowadays. So I brought you here for a specific reason.

If I wanted to become, let's say a 10 millionaire In, I don't know, three, five years And I wanted to do it by distributing weapons and ammunition To different conflicts around the globe. How do I do it? So that's a good question, right? Well, I would say the, the easiest way to do it, I mean, there's, there's, I guess it's, I wouldn't say the easiest way,

but definitely the more, the most likely way you would succeed at doing it is to do it through, uh, the legal federal government system. Okay. Sounds kind of boring so far, but I'm interesting. Right, right. Well, you know, you'll be a little less bored when you're making that 10 million. Okay. Yeah, yeah. Yeah. 10 million. How do we do it? Yeah. So the government, uh, spends the United States government spends about $6.7 trillion every year. And about, about $800 billion of that goes to the military. They put out 30,000 contracts every single day, right? So the way it works is the way the government buys stuff is that whenever they want to

buy anything, they're legally required to, with the exception of the CIA, right? They have a black budget where they don't tell you what they spend it on. Oh, really? Yeah, yeah. They spend, I think, something like $8 billion, and we have no idea what they spend it on. So that first figure that $800 billion is just public. Yeah, that's public. And then there's a separate $8 to $10 billion.

Yeah. That's for CIA Special Ops. Yeah, exactly. Do you know anything about that? I don't know anything. There's a reason they call it the black budget. But I figured if someone knew. Yeah, no, I don't.

If I did know, I wouldn't tell you. Yeah, okay, that's fair. So that makes me feel like you definitely do know. Oh, well, I can neither confirm nor deny such an allegation. Off the record. Okay, so black budget aside, I can't go that route. Right, you can't go that route. But I could go the regular public route.

Yes, you could bid on government contracts. The way it works is that whenever they want to buy anything, and this goes not just for weapons, but for all the boring stuff too, like clothing and food and services like laundry services and landscaping services and janitorial services, the government needs all that stuff, right? Because they're an enormous organization all over the world. And whenever they want to buy anything, the rule is that they have to get the best deal for the taxpayer, right?

So they, it's a way to avoid waste, right? And corruption. So the way it works is they need to post what they want to buy on their official website, which these days is sam.gov, like Uncle Sam. SAM. SAM. Does it stand for something? Maybe. I'm not really sure.

They changed the name from back when I was doing it. It used to be called FedBizOps, like federal business operas. But they changed it to Sam. I think they, it was, you know. They needed a rebrand. Yeah, yeah, yeah. It is a rebrand. They redid the website.

It looks a little nicer. That's so funny. Yeah, yeah. Though it's, I've, I've talked to some of my friends who are still in the business. They really hate the new website. Oh, really? Yeah, because apparently they took away some of the functionality that made it easier to search for things. Interesting.

So if I went to sam.gov right now, it would show me all the contracts? Yeah. It would show you all the contracts. Can I try? Yeah, go for it. I mean, there's going to be a massive amount of stuff that's probably not relevant. But you can search for things. You can search for like ammunition, for example,

and you'll find all the contracts that they're looking to buy ammunition for. Okay. Yeah. I'm here in sam.gov. Yes. So you see this right over here. It says 556 special ball long range ammunition. I see that.

Right? So here. Here we go. So this is going to the Department of the Navy. Okay. And let's see. So their original response date, that means that you have until May 13th to submit your bid. Okay.

Right over there. All right. We've got a couple weeks. That's fine. Yeah, you got a couple weeks. And they don't have any set aside. So that means that this contract can be bid on by anybody, right? That's good news.

I'm anybody. Right. However, if you're getting into this, you would qualify for a small business set aside. So you would want to look for small business set aside. Oh, there's actually an incentive structure for me. Yeah, there's an incentive. Exactly. Yeah.

And if you were a woman-owned business, you would get a special set-aside. If you're a veteran-owned business, you get a set-aside. If you're a disabled veteran-owned business, you get special-owned. They do have, like, economically disadvantaged, like locations. You hear that, Brandon? Yeah. I'm going to put Brandon in charge of this whole thing, okay? I need to find like a black disabled woman.

A veteran. Yeah, and I'm going to put her in charge of the company. Yeah, absolutely. So then we get all these opportunities. So they do have rules. She does have to own like 51% of it. So yeah. So as long as you're okay with that.

Yeah, we'll make 20 million and then I'll cut back. So if you look over here, they're looking to buy 39 million cartridges. That's 39 million rounds they're looking to buy. This is a big contract. That's a big one. That's a big contract. Which probably means that you're not going to qualify for this to bid on this as a beginner. Right, because any contract that's above $250,000, you need to have past performance, which means that you need to prove that you've done this kind of business before so that they feel comfortable giving you that contract.

Of course. But up to $250,000, you could win that contract with zero experience. As a brand new company who's never won a federal contract in your life, you can win a contract worth up to $250,000. That's considered small, right? Wow. Yeah. And once you get a few of those, then you could bid on the money. the bigger contracts like this and win the multi-million dollar contracts.

That's remarkable. Yeah. So I'm sorry, did you have more on that thought? Oh, I was going to say that it's not just, as I said, you know, it's not just ammunition. You know, you can literally, the government buys everything. So if you want to, yes, you could specialize in ammunition. You could specialize in weapons or anything. But you can make many millions of dollars selling pretty much anything to the government because

they buy everything. Wow. Hey, what's up guys? Sorry to interrupt this amazing program, but I need a little bit of help. If you're watching this on YouTube, you can probably see our subscriber number right down here. And if you're able to, it would mean the world if you could subscribe. That is the best way to support this show. Because when you subscribe, I'm able to show it to potential guests or to different brands and stuff like that. And it really, really helps grow the show, get us cooler guests, have cooler conversations.

And it helps everything so, so much. So if you don't mind, thank you so much. Let's get back to it. Now, in my mind, I was like, the government, obviously the U.S. government is trying to create all of these products. You know, they need weapons, they need clothes, they need boots,

they need grenades, they need all this stuff. I just assumed they called up Lockheed, or they called up Raytheon, or they called up some other type of military,

military industrial producer and said, hey, we need this, you guys give us this. Right. What is the purpose of like this open forum that regular citizens

can like participate in? Like, you've mentioned for corruption, but I feel like there's other ways to mitigate corruption. So why this? Right. So the reason they do this is,

it's designed to get the best price, right? So you would think that the government would just go directly to the manufacturer and they get the best price that way. But that's not necessarily the case, right? Because there's oftentimes, let's say they're buying clothing. Oftentimes there's lots of clothing that the retailers can't sell in the stores

so they sell them for pennies on the dollar to liquidators. And then the liquidators now have a whole bunch of clothing that they can sell cheaper than even the manufacturers can make it. and they can bid that clothing to the government and the government gets a better price than they would have if they had gone directly to the manufacturer. But I'm assuming the government

made specific clothing. They fatigues and things like this. They do. I was just giving the clothing as an example. And they need, they don't necessarily just buy uniforms. Sometimes the government also takes care of refugees. And they have, when they pulled out of Afghanistan, they evacuated thousands of people out of Afghanistan.

and they house those people in Ramstein Air Force Base, right? Actually, so my partners in my latest venture, War Dogs Academy, where we teach people how to do this kind of business, they specialize in laundry services, and they got a call from the head of the Air Force Base when that evacuation happened, and they said, the head of the Air Force Base said, guys, you know, we need laundry services for 3,000 people by tomorrow.

and I understand this is not a normal situation and usually we would put this out for open bid but we don't have time for that. So you guys can give us any price you want just don't fuck us too badly. That's literally what he said. Just don't fuck us too badly and you could put any price you want on it.

And so they made like triple the money that they would have normally made in a contract. I mean they worked their asses off to pull that whole thing together. And they did good work. They got them. And they did great work. And they had to find all the suppliers

for those laundry services in Germany, like overnight. And the Germans aren't exactly, they don't have a hustle culture, you know. So it's like, you know, they'll be like, oh, it is best to work out. I'm sorry, but you'll have to call tomorrow, you know. So, you know, they don't like get on the phone and hustle like Americans do. It's a different culture. Yeah, they seem to have chilled out a little bit. Yeah, a little bit.

Yeah. They're still very, you know, by the rules, you know. But, but, yeah, they, so in situations, like that, sometimes they go around the official like open bidding process when it's an emergency situation. So they might go direct in situations like that. But in normal situations when it's not like an emergency situation, they put it out for open bid. And that allows pretty much anyone who's registered with the government and qualifies for to bid on that contract to bid on the contract. When this is under the philosophy that the open market will give us the most competitive prices.

Correct. That makes a lot of sense. And there are situations where the government doesn't want to buy just one thing. You know, they'll want to buy like 10 different things all at the same time. And there isn't a single company that makes all those things. So that, so what they need is a middleman to put together the entire package and propose the whole thing for them at once. And they can bundle it. And that gives you like a little bit of leverage and it makes your bid more competitive. Yeah.

Well, it's there, because there isn't a single company that makes all those things. things, the only people who could win that are people or middlemen, right? Because only middlemen can get the source of supplies for all the things all at the same time. So that's why the government buys from middlemen all the time. And also it gives the, it allows the market to give them the best price as well. Is this like drop shipping? I wouldn't say it's drop shipping because drop shipping you're just like, well, it's a little bit like drop shipping because you are just shipping it directly from the supplier to the customer generally to the government, right? But the way the government works is they will only pay you 30 days after you deliver.

So you need to finance that, right? You need to, like, if your supplier wants to get paid up front, which most of them do, right, you need to pay them up front, pay the shipping company up front, and then you have to wait 30 days until after you deliver to get that money. There's certain cases where you can convince your suppliers to give you net 30 terms, they call it, where they'll only charge you 30 days afterwards. Like, for example, with service contracts, that's a lot more common, like the laundry services or landscaping services, because it's an ongoing thing.

It's not a one-time delivery. That makes sense. So oftentimes companies like that will bill you 30 days later, in which case you're billing the government at the same time, and then you just transfer the money that the government gives you, you give the supplier their cut. And then you don't need to finance the contract, and that's great. But not all suppliers are going to give you net 30 terms, and especially if it's actual delivery of goods that's a lot more rare. And in international arm sales, it never happens. No international arm supplier is going to give you net 30 terms, zero. Yeah, that makes a lot of sense.

Yeah. Okay. So so far this seems like all green lights, music to my ears. I'm going to become a 10 millionaire pretty soon. Nice. Maybe 100 millionaire. Yeah, maybe. Maybe a billionaire. We'll see. So you and I, as newly formed partners in this business, plus are a disabled female veteran, that's the president of our company. Yeah. We just found a contract on the website for a bunch of ammunition. Yes. And now let's say this is one of these contracts that's a little bit smaller, and it fits within the things that we're allowed to apply for, just as regular citizens.

Sure. What do I do? Right. So now you need to find suppliers, right? So because you don't have that ammunition yourself unless you're a ammunition manufacturer and you think that you have the best price on the market You need to find the best prices on the market in order to be competitive Okay, so some manufacturers are also bidding Oh yeah, yeah, yeah, yeah God, that makes sense, okay, so the manufacturers are also bidding as well as regular people Correct

So in a manufacturer's case, they could just say, hey, we're able to supply these You know, this ammunition at this margin? Correct And then other people can bid and is there ever? any secondary bidding, like, hey, this person came in here, you come in here? Or is it just the lowest offer wins? So they usually, it depends on the contract. So on smaller contracts, like under $250,000, it's usually they go by the lowest price, right? But if it's more than $250,000, then they will do a, then they'll take several things into account and they use a metric that they call the best value to the government. And that's a combination of factors. So price, obviously,

very important one, but it's not the only one. They also want to know past performance. You know, what's your reliability? Have you done this before? How many times have you done this before? At what scale? And they also take into account your proposed delivery timelines and the quality of what you're going to deliver. And depending on the specific contract, a few, possibly other, several other factors. So they score each bid on each of these factors. And then they combine the scores into the total best value. So the person winning isn't necessarily the person with the lowest price. It could be just the person with the total highest value to the government.

Got it. So this is the way they avoid just a race to the bottom. Exactly. And just whoever's doing it for nothing. Right. I mean, they also, they care about other factors other than price. Sometimes like in the laundry contract with in Germany from the Afghan and with the Afghan refugees, they cared a lot more about on-time delivery than price there.

They're like, you can charge us whatever you want. and just deliver tomorrow. We need it tomorrow. You know? So that was much more important because it was an emergency situation there. So there's other cases where they'll be like, you know,

if we want this particular ammunition and this is going to our soldiers, we need to have a very high quality and we're willing to pay more for higher quality, right? That makes sense. You know, if it's the Afghan allies, maybe they don't care so much about the quality and they care a lot more about the price.

I see. So it really depends on the specific situation. Yeah, there's a lot of like intersectionality and obviously like, you know, water in this tent is much less valuable than water in a desert. Exactly. And so if you're in the desert, all of a sudden you have way more leverage,

you can charge more, and maybe the quality of the water isn't as important because you're so desperate. It makes a lot of sense. Exactly. Okay, so I'm not a weapons manufacturer, unfortunately. Like I said, just a comedian. So if I need to get in touch with a manufacturer,

what are my options? What could I do? Right, right. So the first thing you do is you need to find all the manufacturers, right? And the first place you look at, surprisingly, is Google. And you just Google for weapons manufacturers. And you go down the search results. And different weapons manufacturers or ammunition manufacturers make different types of weapons

and ammunition. So you have to find the ones that are making specifically what you're looking for. And there's other places you could find them. Like there's trade directories. Like, for example, Jains is a very famous one. ArmyTechnology.com is a famous one. where they list all the all the manufacturers and suppliers in the industry and they you can search by the by the by the type of ammunition and you can find a long list of companies that make this

type of item and and that they have that for other industries as well it's not just for weapons then you have to get a quote from them so they have to take you seriously right so having a nice website helps. But that's just a basic thing. Yeah. Right. I might have to cut my hair. Imagine that.

That could get in the way, potentially. Or at least take a nice, you know, professional picture. But, yeah, I mean, most of the time you're dealing with them online. It's rare you actually meet people in person. I mean, there are like trade shows that you can go and meet people in person. But most of them, when you're working government contracts, the vast majority of the time, you're just talking to them on the phone or you're doing emails. So you need to find their sales department.

and you send them a request for quote, you tell them exactly what you need, you tell them by what time you need it, you give exactly all the details of what the requirements are. And if you're lucky, they'll actually respond, and they'll give you a quote. And if there are ways of, some of them will just ignore you, right?

But there are ways of convincing them. So if you have any proof that you've done this kind of business in the past, you could send them like a redacted contract that you're like, this is proof that I've done. this kind of business before so take me seriously or the government always a post a notice of award so that's whenever they award a contract they'll post it on the website and they'll have the name of the company that won the contract as well as the price that they came the winning bid and so if you already have any stuff you could send them the link you're like look these are contract we've done in the past so you can

take us seriously we're doing real business and so that's one way of convincing that You could also make contacts at trade shows where you actually meet people in person and shake their hand and give them a business card and And they'll they tend to respond a little bit more Reliably when they've actually met you in person. Yeah, that makes sense. Okay, so now I've gone some trade shows. I've met some manufacturers. They gave me a quote. I was able to convince a couple people. Yeah, and the quote is less than what the you know, basically what I would bid. Yes, you're gonna need to because you want to make money right You want to make that $10 to $100 million, right? Exactly, I got to work on it. So first of all, it's not just the manufacturing quote,

not just the supply quote of the ammunition that you have to worry about. You also have to worry about delivering, right? So you need to deliver that ammunition from where the source is to where they want you to, they have the point of delivery there. They'll give you an address or general location. Now you have to find logistics companies who are willing to transport that ammunition, Not all logistics companies are willing to transport ammunition. Some of them will charge you extra.

Some of them want a lot of money for insurance purposes, especially when they're transferring explosives. Depending on where it's going, some logistics companies won't even service those areas, especially if you're delivering it to some far-flung army base out in Africa or something. You'd be responsible for delivery to wherever it goes. To wherever it is. Exactly.

Oh, wow. Yeah, they put the requirements there. And sometimes they have easy places to deliver to, like Virginia or wherever. But sometimes you have to deliver to Afghanistan. And that's a lot more difficult. So you've got to look into the contract and be like, where is this going? Exactly. Because, you know, even if it's a huge lucrative contract, moving all of this ammunition to Syria or whatever is going to be very expensive.

Yeah. So, I mean, that is part of the cost that you have, right? And then once you figure out what the logistics cost is, then you build a spreadsheet, right? You have, I have these suppliers who are in these locations and it's going to cost me this amount of money to transfer from those locations to where it needs to go. And then sometimes, depending on where it is and the transportation costs, sometimes the cheapest guy is not necessarily the cheapest guy at the end of the day because you may have to pay more in transportation costs for that because he's located in an inconvenient place. So you have to calculate both the cost of the source as well as the cost of transportation. And then you add those together. And now you know your total cost, right?

And of course, if there's insurance required, you have to figure that into it. If you need to borrow the money, you have to figure your financing costs into it. So you have to figure out all your costs. And now once you have your total cost, your best possible cost, right? Now you bid it to the government. And depending on how well you know the industry will usually depend on how much of a profit margin you put on top of it, right? Most contracts range between like 5 and 20 percent profit margins, 5 percent for like the large ones, 20 percent for the small ones. But if you know your industry really well and you know that you have a much better price than your competitors, you could put up a higher profit margin and still win because you know that you're very competitive.

Right. There are ways of searching what the government has paid for these items in the past. So you kind of have a ballpark idea of what kind of prices are expected. You usually want to beat those prices because all your competitors are looking at those prices too. And so they know like what the government is paid for. So as long as I mean, there are situations where things if like if there's a big ammunition shortage, then the price may go above and you just can't deliver under that published price that the government has previously paid for. So you take all those things into account and you decide. what your profit margin that you think is enough that you're comfortable to work this contract for, right? It's you're going to have to do at least enough profit margin that it's worthwhile to do this work, right? But you don't want to do so much profit margin that you might lose. So that's where you have to make that decision. And there's no science to that, right? It's more of an art.

It's more of a like you build a. like kind of like an intuition with experience and you know kind of what situation you're in, how like what potential competitors you may have, and then you kind of make that decision about where you think, because the government doesn't tell you who's competing. You may be the only person competing,

in which case you could put the price as high as you want, you'll still win, or you could be competing against 50 other people, a lot of them with much better prices than you and you're not gonna, and you have to come in at very, very low. So you don't know and they obviously don't tell you because they want you to bid as low as possible. This is the infamous scene in Wardogs where, you know,

there was a $50 million gap where you could have made an additional $50 million. 52. Wow. Yeah, it was 52. That was actually true. It didn't happen in the same way as in that scene in the movie because it's actually illegal for them to tell you. Oh, wow. That, you know, what your competitor is bid.

Because specifically, it's illegal because then next time you're going to bid much higher if you knew you undercut the competition by so much. So the way we actually found out, it was while we were trying, we were having some trouble delivering, we were having some trouble getting the licenses to ship the stuff into Afghanistan. And I was talking to the contracting officer over the phone. And he was telling me, you know, we're happy to help you guys out. We understand you're having some issues. But we're really, you know, we really want to help you guys out because you guys were just so competitive.

You know, we really appreciate that. And I'm like, what do you mean? We're so competitive. And he's like, well, you guys like really undercut the competition. And I'm like, really? By how much? And he goes, well, you know, not really supposed to tell you that. But between you and me, you were $52 million under the next guys.

And I was like, holy crap. Yeah. And then I told Ephraim, and he was furious. He was like, fuck, we could have made another 50 mil. How did you feel in the moment when he told you that? Genuinely. I thought, you know, I mean, amazing that we actually came in so low.

I can't believe we were so competitive. I honestly was surprised. I was kind of like disappointed that we could have made so much more money. But I also realized, hey, we still won a $300 million contract. So what am I complaining about? Right. And just so for numbers, just so everyone was aware. Like if the contract, you know, if the bids were $152 million, you guys said $100 million.

Yeah. And you could have said $120 million. You could have said 150 million. You could have said 150 to minus 1 million. Yes, exactly. And you would have gotten the contract. Yeah. Which is a big, you know, it's a loss.

Right. Well, in theory, we would have gotten the contract, assuming all other factors were equal. Of course. And we didn't know that, right? We didn't know how they scored us on all the other best value factors to the government. Right. I mean, we were competing against general dynamics and ATK systems. These are multi-billion dollar publicly traded companies who have way better past performance than we do,

much more reliable. So we didn't know how the government was scoring us internally. So we did want to be as competitive as possible. Of course, Ephraim was furious in his mind. We were going to win anyway. We just had to come in a tiny bit under. But in reality, maybe not. Maybe they only gave it to us because we were so much lower.

And we got such a higher score on the price aspect that it overcame the past performance aspects. Right. The other things you lacked because it was so competitive, like, give them a shot. Yeah, exactly. We're going to take a break real quick because you have back hair. Yeah. And if you're like any other dude in the world with back hair, you probably have your wife,

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What's stopping them? And you kind of touched on a little bit earlier. But what's stopping them from just looking up the contract themselves as being like, let's just cut out this middleman? Yeah. And then just go straight to. Oftentimes nothing. Nothing stopping them. In fact, some companies will refuse to give you a quote specifically because they are bidding it direct to the government.

Right. So, but there are plenty of companies that don't want to deal with the government, private companies. You know, they, they, the government is, it's a pain in the ass. You know, you have to read their 30, 40 page solicitation document. You have to look up all the rules they reference to make sure you're qualifying, you know, doing everything in the way that they request. You have to fill out the whole proposal. It's, and then you have to like worry about delivering it in the way that they, they want. So oftentimes, times and then the government only pays you 30 days later. And so a lot of companies don't want to deal with the government. They like just selling to other private companies, much simpler, single page purchase order, get paid in advance, one and done, you know. So they're happy to sell to middlemen because the middlemen take on all that extra work of selling to the government. That makes a lot of sense. The logistics, the payment, all that stuff. So there's people that are like,

hey, we just want to make clothes. We just want to make weapons. We just want to. We just want to to do this. We don't deal with going back and forth and bidding and losing it and getting undercut. Exactly. They don't want to spend all their time doing it. It gets seized and custom somewhere and we've got to go loosen up our ammo. Like, screw all that. Exactly. Let's just go give it to this guy. He takes on all the risk. Exactly. We get paid up front. Exactly. That makes a lot of sense. So there's an arbitrage opportunity. Exactly. That makes a lot of sense. Okay. So this seems pretty straightforward. Yeah. So I got the contract. I've got a quote. I did all the logistics. I found where it had to go. I looked at all the different quotes. I lined them all up. I got the contacts. I submitted

the bid, they gave me a good score because I was pretty competitive. Right. And on this first one, you know, let's say it was a small contract and I was really competitive and I didn't really have any prior experience. Maybe I could make like 50K. Is that reasonable? Yeah. I mean, because you can bid up to $250,000 contracts without any past performance. So as a brand new beginner to the industry, you know, your first contract, you could win up to a $250,000 contract and you'll qualify for that. And generally those contracts, it's just about the price, right? So they're not looking at past performance.

They're not looking at any other factor. If you have the most competitive price, you win the contract. And it's not unusual to have between a 5% and 20% profit margin on the contract. So you could win, you could make like $50,000 on your first contract. Nice. Yeah. That's pretty good. And how long did all this take me to do, this process?

Right. So it really depends. You can spend a long time searching for. for sources or you could spend a short time searching for sources. Obviously, the more sources you find in the market, the more competitive you'll be, right? And the more likely you are to win the bid. And certain sources are more pain in the ass to deal with than other ones, like Eastern European former communist countries tend to be very not customer friendly. So like you've kind of, you call them up to get a quote and they're like act as if you're bothering them. You're like,

I'm like, you know, I'm like on lunch break, you know, call me back tomorrow, you know, and they don't like want to deal with you. But you have to be persistent. You have to, you know, keep on bugging them and like follow up and follow up. And so that can take a lot longer than if you're just dealing with some regular, you know, good old American companies who are just jumping all over themselves to give you prices. Yeah, of course. So maybe like three months, six months?

It depends. Like an average time maybe? So it depends on the size of the contract. So just to use my experience as guide, my first contract that I won was for 80,000 gallons of propane, delivered to an Air Force base in Wyoming. And I spent about like a week and a half, two weeks looking for sources and logistics companies, you know, because that's both are important, obviously. And then after we won, it was about like a week, week and a half of dealing with the delivery aspect of it to make sure every, was going on time and that it was received and they signed off on it and then submitting all the documents to the government. So in total it was about like three weeks to a month of work.

And what was your total bid and what did you make? So I don't remember the total bid, but I do remember what I made. I was splitting at 50-50 with Ephraim at the time. And so my 50% was eight grand. Pretty good? Yeah, pretty good. A couple weeks? Yeah. That's not bad. Yeah, not bad at all. And that was my first contract. Wow. And so it was 16 total? Yeah, exactly. Okay. I mean, we made 16K in total, yeah.

Wow. Yeah, first relatively small contract. And that was our first fuel contract ever. We had no, you know, prior, we had no past performance. But now you have past performance, then you've done one, and that's worth a lot. Exactly. And then we could bid on bigger contracts. Depending on how big the contract, they require different levels of past performance.

So, like, if it's like, I don't know the exact numbers, but, and I'm sure it's changed since back when I was doing it. But, you know, it could be like if it's above a minimum, million dollars. They require like five, you know, instances of past performance. If it's above, you know, $20 million, they require $15, something like that. So they have different levels depending on the size of the contract. And I'm assuming it's because they don't want to entertain bunk offers from people that don't have experience doing this. Yeah, yeah, because they're not even, they're not willing to take the risk on such a large contract going to someone who doesn't have

experience in delivering this. So this seems like all green lights, dude. I just got this bid. I just, I submitted a bid. I'm looking like I'm going to make like 50K in a couple months. Yeah. Like I'm stoked. Yeah. But I have a feeling some things can go wrong. I have a feeling that there's probably some potential issues that I'm dealing with, some type of risk that I'm incurring here.

Right. Because there's no way this money's free. Right. So I'm curious, what could go wrong? Right. You know, maybe I'm delivering ammo overseas. And again, right now we're assuming this is all U.S. government. I want to kind of get into like some of the dirtier politics of working with other governments.

But, you know, let's say I'm working with the U.S. government. and I'm shipping ammo to Afghanistan. Yeah. What could go wrong there? A lot can go wrong. Damn it, David. I thought we're going to be rich, well, you could still be rich,

but you just have to manage the risk. There's always an element of risk. Nothing is risk-free. So the first thing that can go wrong is you have to make sure that your supplies are good, right? You have to make sure the stuff that you're promising the government

is actually the stuff you're going to get because they're going to inspect it, and if it's not the stuff that they're contracting you for, they're not going to pay you and then you're screwed. But how do I know if it's good if I'm not looking at it? Well, you may need to look at it. You may need to actually go there and inspect the stuff and make sure that it's good.

It really depends on the reliability of the supplier. So if you're buying the ammo from like some big ammunition manufacturer, like from Remington or whoever, you know, you probably don't need to inspect that. They're very well-known brands who've been around for like 100, 150 years or something. You know, you probably don't need to spend the time. and money to go and inspect that. But my margins with Remington, I don't think are going to be as good. Yeah, probably not.

Dang it. So I went the other route, actually. You don't know this. But I actually, I went an Eastern European route. Okay. I found like a former Yugoslavian weapons producer that had a bunch of Cold War ammo for a... You're gonna make the most money that way. Yeah.

There's an invasion that was supposed to happen that never happens. Right. Right. And I have no idea what it is. There's a rat shit on it probably. I have no idea what I'm getting. But I got a good deal and I'm making a ton of money. Right.

So what happens then? You need to go inspect that. I'm flying over there? You need a flyer. Or someone needs to, you know, like someone you trust who knows what they're looking at because you need to make sure that that ammo conforms to the requirements of the contract, right? So depending on what the contract, so the government has different levels of requirements, right? If they're supplying the ammo to U.S. soldiers, their requirements are massive.

Yeah. You know, they're going to need to have like tests and certifications and it's got to be within a certain age limit, et cetera, et cetera, et cetera, et cetera. In fact, oftentimes, the contract we just looked at, the 39 million rounds, they had a requirement in there that they required, I think it was like 1,700 sample rounds to test themselves, right? So before they allow you to deliver that 39 million rounds, you need to send them 1,700 rounds that they can make sure that it conforms to the requirements. That's after the bid, I send that? Yeah. Okay.

Yeah. Yeah. Yeah. Yeah. Once you win, they're going to be like, okay, now send us the samples. and if it doesn't conform to like we reject it for this and this and this reasons, send us new samples and they'll keep on asking for new samples until you actually deliver samples that conform to the requirements of the bid.

Oh, wow. And if you can't, they'll just rescind the offer. Yes, exactly. Then you'll default. And they'll cancel it for cause as they call, as they call it, and which means it's your fault. And that is a big black market on your record. Yeah, I don't want that. Yeah.

And it makes it a lot less likely you'll win contracts in the future. Okay, so I got to come with heat. I've got to come with good stuff. Yeah, yeah. Okay, so now I'm flying over to Eastern Europe. Yeah. And I'm examining this ammunition. I'm like, all right, it looks pretty good.

Yeah. And now I got to link up with the logistics company that ships ammunition specifically out of Eastern Europe to Afghanistan. Right. And what, like, can something go wrong there? How are they shipping it? Is it going on airplanes? So to Afghanistan, you want to ship it by aircraft because it's surrounded by unstable countries like Pakistan and Kurdistan and Russia to, you know, to the north. And there's a lot of areas of those countries that are controlled by warlords, and they would love to grab a big shipment of ammunition.

Oh, damn it. So you can't really ship it by land or by sea because it's landlocked. So the only reliable shipping method to Afghanistan would be by air. And so you need a contract, a cargo, an air cargo company who's willing to ship ammunition. Luckily, in Eastern Europe, there's quite a few of them. Okay. Yeah. They're all using like the old Soviet airplanes.

The IL-76 is a very common one. That's what we were using. Oh, wow. Yeah, you can transport 45 tons at a time. Now, if I was sending something like Lebanon or something like that, I could go by sea. Yeah, you could go by seeing that. Assuming that there's a route that makes sense. Yes, as long as the aircraft, the ship is willing to take it.

So not all ships will transport munitions. Sure. But there are ships that will, and they may require a lot more a big fee for insurance purposes, but it'll still be way, way cheaper than doing it by air. Wow. Now, what if I'm just like a crazy bastard, all right? And I'm sending something to Afghanistan. Yeah.

And I'm like, look, I got a deal. I can ship it in like a truck. And I'm going to be driving through. I don't even know where I'm driving through, right? I'm going to turn to Turkmenistan or something. Who knows? And I'm just going to drive it right in. Yeah.

I'm risking that I could get a warlord or some militia that's going to just hold us up and then take all of our ship. Yes. And maybe kill you. Yeah. And how often does it? Does that happen? In that area of the world, you know, it's pretty often.

Do you have any stories like that? No, we've never did anything that dumb. Do you know anyone that did anything like that? Have you heard about that? So we were looking into shipping it by over the Trans-Siberian Railroad, but then relations with Russia took like a nose dive, and we realized the Russians wouldn't play ball. We did have a situation where our aircraft, it was actually a 747 cargo air. airplane filled with, I think it was about like five million rounds of AK-47 ammo, that it landed

in Bishkek in Kyrgyzstan because it needed to refuel there before going into Afghanistan. And the local government said that we didn't have the proper licenses to fly it, even though we did. The aircraft wouldn't have taken off in the first place if they didn't have all the licenses. But the locals, local police intelligence services, whoever they were, they said we didn't have the proper licenses. And so they impounded the plane with all our ammo. And we actually had to have, we called up the army and told them what was happening. And they sent Robert Gates, who was the Secretary of Defense, to go to Bishkek and negotiate with them to release our ammo. And they were holding it.

So it turned out the whole lack of license thing was obviously a. just an excuse. They were holding our aircraft because they were trying to negotiate a higher lease for the Air Force Base that the United States leases from Kyrgyzstan. So I think they were paying something like $40 million a year for that air force base. And by the time Robert Gates left, they were paying $80 million a year and then they released the aircraft. And how much money was the ammunition that was on that aircraft?

Not $40 million. It was, the ammo, let's see, it was 5 million rounds, and we were getting paid about 10.5 cents a round. Wow. So, yeah, so about half a million dollars of ammunition. Yeah. And so was your plane and your shipment a part of like more planes that were seized? Oh, yeah.

Well, no. They just seized our plane. It wasn't, it was more of, well, the aircraft itself was worth $100 million. It wasn't our aircraft, but it was the aircraft company, the transportation company's aircraft, and they were obviously furious because they impounded their aircraft for like a few weeks and they were losing money. Every day it's sitting there that they're not using it to, you know, they're losing massive amounts of money.

So the big loser there was the aircraft company, the transportation company. They didn't like the Kyrgyzstanis, they weren't impounding the aircraft because they thought it was worth more than what they were trying to extort the United States. They were just using that as a show of force. They're like, hey, if you don't pay us this extra $40 million, you know, you're not going to be able to use this base here and this refueling stop. And how hard is that going to be for to prosecute your war in Afghanistan if you don't have the space available?

They wanted to kind of like show that. You guys were just a like sort of a diplomatic pawn. Yes, yeah. We were a pawn. Wow. Yeah. That's wild. So it had nothing to do with the ammunition.

or the plane, it just had to do with the airspace and the flight capacity of that region. Exactly. They just wanted to strong arm the United States into paying more for the Air Force Base. Wow. I don't even realize that the United States is paying rent. Oh, yeah. No, the United States has military bases all over the world. Right.

And depending on the country, sometimes they're renting that space. Oh, I had no idea. I assumed that was sort of a diplomatic thing where they come in and they're like, hey, we can have us here. Right. So with our allies it is. Right. You know, I don't think, I could be wrong about this, but I don't think we're paying rent for like our bases in Germany or in Japan. Right.

But Kyrgyzstan is not exactly an ally of the United States. It's still pretty close to Russia. It's kind of, most of the Soviet republics are trying, a former Soviet republics. They're trying to play both sides, right? So they're kind of trying to play Russia off against the United States. Oh, who's going to give me the better deal kind of situation? So they're still very close to Russia But they're trying to take advantage of the situation for their own gain

Yeah, that makes sense And for them if they create some type of like strong public alliance with the United States That can agitate the region, I'm sure And create turmoil with their relationship of Russia Because they have deals with Russia too They're making money with Russia and they have like security arrangements with Russia They're buying weapons from Russia So they've got all sorts of interests with Russia as well

So they don't want to jeopardize that So they're kind of walking a tightrope. They don't want to alienate Russia too much. And they also don't want to alienate the United States too much because that's where the money's coming from. Oh, wow. That's very interesting. So this is the only plane that ever got seized in any of you. Yeah, in our business, yeah.

Oh, wow. But eventually got released. It took like three weeks, I think, but it got released, yeah. Is that stressful or is it just like annoying? Well, it was very stressful at first. We were like, because, you know, we're only making. on that ammo we were only making actually we were making like 15% profit margin

which was not bad but we were going to lose all the money if they didn't release that we're going to lose 100% of the money if they didn't release that aircraft and we also weren't sure about future deliveries into Afghanistan if we weren't able to use the air base right yeah so what else can go wrong you get seized by government trying to use it for political reasons it can be seized by a warlord something else that could happen?

Well, they can block your shipments from even taken off the ground if they don't give you fly over permission. So every time you fly over any country with military cargo, you need to get permission from that country to do that. You need to get like a license. So between Albania,

where we were sourcing a lot of the ammo and Afghanistan, I think there were something like 12-something countries that we had to. get flyover permission from. And most of them, they're friendly with the United States, they gave it to us, but countries like Turkmenistan and Uzbekistan, they were kind of holding out on us. And then I realized, I think it was Turkmenistan was the last country that was holding out on us. It took us like a few months to get all those licenses. But we couldn't ship until we got every single

license, of course, because you have to fly over those countries. All it takes is one country to block you You can't. And so there was a point where we weren't able to ship because Turkmenistan was holding out on us. And then I realized, you know, Turkmenistan has a national airline and they do cargo deliveries. No way. So we got a quote from them and suddenly they issued the flyover permit

as soon as we agreed to use their airline. No way. So you used Turkmenistan air or whatever? Exactly. No way. That's wild. Yeah. And was it more expensive, roughly the same?

It was roughly. They were actually pretty competitive, surprisingly enough. Yeah, they were pretty competitive. They were about the same. Yeah. That is fascinating. Okay, so we get blocked. Yeah.

There's all these other reasons why you can't go over the airspace. Can you reroute or is that just make it more expensive? It makes it more expensive. The more indirect route you take, the more fuel. It's going to cost. And so the more, yeah. That makes sense. Now, hypothetically, I got a bunch of ammo coming from Eastern Block.

It's landing in Afghanistan. It makes touchdown. Let's say in a crazy world, all of something they get attacked. The plane gets attacked. The insurgents or don't want. this ammunition getting delivered to American soldiers. They attack the plane or they attack the, you know, people loading off the weapons or something like that.

Do I still get paid? That's a good question. I actually don't know because the way it works is you get paid when you submit a, like a, it's a form called the DD-250 that the receiving officer, the guy in the army or whatever organization that you're delivering to, whatever government organization you're delivering to, inspects the goods and then signs off on a document that they received it. Then you take that document to the contracting officer, the one who gave you the contract, and you submit that to them, and they arrange payment. Now, if there was an incident like that where it was obvious that you were

delivering and through no fault of your own, the situation, you know, that you weren't able to deliver because there was an attack or something before you could deliver, I think that you can probably make a case to the government that it was their fault, that they should have provided security. Right. And in worst case scenario, take them to court and probably win. But I don't know. We've never been in that situation. There's a whole legal battle.

It's a bit of a gray area, I guess. It is definitely a gray area because technically you're only supposed to get paid once you get that signed document. That makes sense. But if there's a situation where, you know, they know that you were going to deliver and through their own fault or through, through, you know, just the situation you were unable to deliver. I think that that would definitely have to be looked at by the higher-ups and they would have to make a decision based on that. That makes sense.

Okay, I mean, this seems pretty straightforward. So I just shipped all my weapons. It didn't get seized, didn't get blocked. It made it to Afghanistan. I signed, you know, my document, I turned it in and they're like, he looks good. The check clears 30 days later, whatever. I'm feeling pretty good.

I just made $50,000. Yeah. Now, just to backtrack. It would be a lot more if you were shipping to, Afghanistan. Fair. Yeah, okay. That wouldn't be a small contract.

Sick. All right, cool. I'm even richer. That's awesome. Now let's backtrack a little. I need to get money up front to buy this ammo because I got to pay them directly and I'm not getting paid by the U.S. government until a month later.

Right. Is it possible I could just get like a bank loan to finance this? A bank loan would not, they wouldn't give you, the bank wouldn't give you a loan, right? Because that's a high risk situation. They will do things along the lines of factoring agreements, though. So what I mean by that is most large contracts, like our $300 million contract with the Army, it requires many, many aircraft loads. I mean, I think we shipped something like 100-something aircraft before they canceled our contract. Wow.

Yeah. And each time you do a delivery, right, you get that DD-250, that document that you submit to the government and you can get paid on that, right? Now, what you could do is you can make what they call a factoring agreement with the bank, where we had a factoring agreement with Wells Fargo, where we would submit that signed receiving document to the bank, and the bank would give us the money immediately. And then they would wait 30 days to get paid by the government. And, of course, the bank would take a little bit of interest. Yeah, usually it was like a percent a month or one and a half percent a month or something, which is actually relatively high. It's almost like credit card rates But because you get the money immediately

You could roll that money into the next shipment So you don't need to have 300 million dollars You know, to ship it You only need like maybe one or two million And then you just roll the money over and over Into more and more shipments Wow So you can do it like that

So you can get all the quotes Submit the bid, get the bid Without having a dollar Yes Yeah, you don't actually need financing To do this And there are certain contracts That you don't need financing at all

like I mentioned before, like the services contracts, oftentimes the suppliers will give you terms, right? They'll give you credit terms. So they wouldn't even ask to be paid until 30 days later, at which point the government's already paying you and you just transfer the money. So you don't need it. But there are, but most situations where they're buying goods,

there's a few companies in the United States who will give you credit terms for goods as well, but you have to have good credit and you have to be an established company. Like as a brand new guy, it's unlikely. So, yeah, you're not. you will need, like, financing for that. That's actually a big part of Wardogs Academy that we're doing is we have a network of investors to invest in our students' contracts that they win.

Oh, wow. Yeah. So if I signed up, I could be like, yo, hook me up with Ralph or someone. Exactly. And throw me some cash. Exactly. Well, as soon as you win the contract. Yeah, of course, of course.

And we'd have to do due diligence to make sure that you did a good job setting it all up. So that contract is going to actually get paid on it. But if you did your job right, you found a reliable supplier, it actually meets the criteria of the contract, it's actually a very safe investment for an investor because the United States government pays its bills, right? Because they're never going to run out of money. They print the money, right? So it's not like they're going to go bankrupt, and it's not like they're going to try to

screw you because the contracting officer, it's not their money, right? They're just trying to do their job. They just want to make sure they don't get in trouble, right? So there isn't that element of risk like in the private market where someone will be like, you know what? Sue me, right? Yeah, you've got to chase them down. Yeah, it's like a treasury bond.

Exactly. Until, you know, the U.S. Empire crumbles that those checks are going to clear. Exactly. So it's actually a pretty good investment for an investor as far as these things. And the return's going to be pretty good. Wow. Yeah. So, I mean, this seems like pretty straightforward.

Yeah. Right? I just made, you know, maybe 100, $150,000. Yeah. You know, I'm doing pretty good. I've had a couple smaller contracts, 20, 50,000 here and there. Sure, sure. And now I've worked my way up.

I ship to Afghanistan. Like, I'm feeling pretty good. Now, I assume this is all of what you teach within the academy. Yes. Things like this. Yeah. Now, I want to move on into, like, a little more, you know, dirtier business. Okay.

And this is not what you teach, I assume. Right. I'm curious, is there anything else that I'm missing within, like, the legit legal, working with the U.S. government kind of, you know, system. Is there anything that we didn't cover? Well, I mean, there's all sorts of, sorts of complexities in there. I mean, there are certain contracts that you just won't qualify for.

Like they call them sole source contracts, you know, which means they put out a, like when they want to buy F-35 fighter jets, they only give that to Lockheed Martin because they're the only ones who make it, right? That makes sense. So there's, they call it a sole source contract. You just ignore those because you don't qualify. Nobody does except for the company that they're giving it to. Yeah, I haven't figured out of making F-15 yet.

Yeah, yeah, yeah. Not yet. Yeah, yeah, yeah, yeah. But there are certain programs you could apply for where they give you, like, under a certain amount of money, they just order from you. They don't even, once you qualify for certain programs, you don't even need to bid, right? They just give you a purchase order and you just deliver. That's correct. If it's like under a certain amount. And that way it saves them the trouble of having everything go out for open bids. So there are certain situations there that are advantageous to people. But it does take. take quite a bit of work to get into those programs. But once you're in, you can make a lot of money pretty easily. I mean, this is very interesting. Now, I'm sure a lot of people are like, you know, you're an arms dealer, da-da-da, dealing arms. But look, I'm an American citizen. I love America.

If you're dealing with the boys, you know, I can look the other way. I'm like, look, we're protecting, you know, America. We're doing what America does. You can, you know, look at the politics here and there, but ultimately we're a part of this country. I think we all are. Whether or not you're dealing the arms, you're paying your taxes and you're paying for it. That's what I'm saying. You're voting for the politicians who make those decisions. But I feel like the best way to make money in war is to play both sides.

Right. Well, then you're definitely taking a legal risk. Yeah. Talk to me about this. Yeah. So look, what you don't know about me, okay? I've made a couple hundred thousand dollars doing arms deals by this point. Okay. I'm ready to take on some risk. Okay. How do I do that? So, well, the first thing you're going to need to do is you're going to need to make connections for, those kind of deals, right? And you're not going to, generally, you're not going to find those online, right? You know, because what shady guy's going to do, you know, they'll just assume it's like a sting, right?

So the best place to make shady connections, and legitimate and more so legitimate connections, but shady connections as well, is that the defense exhibition trade shows. Really? So, yeah. So there's a lot of these defense exhibition trade shows, the one we went to,

one of the ones we went to was called Eurository in Paris. So in the movie, in the War Dogs movie, they had this show called Vegas X, where we meet Henry Tomei, well, Henry Gerard is his name in the movie. The guy Bradley Cooper. Yeah, Bradley Cooper. Yeah, yeah.

Good casting. I mean, he got a good guy for him. Yeah, he's good. Yeah, he didn't do the Swiss accent very well, but other than that, he was great. You got Miles Teller, you know what I mean? Like of all the people, you got a handsome motherfucker. Great hair, no complaints.

Yeah, that's sick. I got the Hollywood treatment, a full head of hair. That's awesome. So, yeah. So, yeah, I mean, there's several of these defense industries, and there's directories where you can find every single defense industry that's listed. And, but one of the really big ones is in Paris, I think, every year or every other year, called Eurository. And it's a trade show. It's like a legit trade show where all the big defense companies and small defects companies get booth.

and you can go out there and meet them in person. And there's representatives from almost every major and minor militaries in the world. So you see like military guys in full uniform walking around. You see like political like like the Arabs in their, you know, their uniforms, you know, the turban, whatever they call it. The head head scarves, the kaffia. The kaffia, right? The kaffia is, you know, walking around. And you can make, so like I made some really good connections that way.

while I was It wasn't at Euro-Satori It was at a different trade show But I made like I once bumped into a It was a colonel from like the Nigerian army And he was like looking at like he was at the Russian booth Looking at their stuff and I you know I said hi to him We exchanged cards

And that connection turned into a multi-million dollar deal With the Nigerian army It was actually the Nigerian Navy But eventually that unfortunately It didn't go all the way through because by the time I was about to close the deal, the feds raided our office and they shut down my companies. Damn it.

Yeah, so that almost happened. But you can make really good connection. And that was a legit thing. It wasn't like a Nigerian print scan or something. He wasn't a legit. Yeah, I mean, as far as I know, he wasn't a prince. Tell yourself whatever you want. Yeah.

This is an email. Yeah, yeah. I mean, he had all the documents and everything, you know, from the government and everything. So yeah, I was not worried, and he was willing to pay in like a letter or credit, which which means that the bank holds it an escrow and they're not going to, so you're going to get paid. This is wild.

So it's just a giant trade show. Giant trade show. Where it's all different governments from all over the world. Now, what are the politics of these trade shows? Because I'm assuming this is in Paris. Yes. These are allies with the West.

Right. I can't imagine you got now Russian dudes or Chinese guys coming in, you know, trying to buy wares. So, yeah, I mean, it definitely shifts with the politics. Right. So who's welcome? So back then the Russians were welcome.

They actually had one of the biggest booths there. I mean, they have a very big arms industry, and they love to export their arms. And I think they're the second biggest after the United States. Or they were. Now they're an importer because they need everything they can get. But, yeah, back then the Russians were there. I don't think the North Koreans were there. So there are some people who are not invited.

Of course. But these trade shows are pretty, I mean, you see countries that, like people from countries who are very unfriendly to each other, just like in the same room, rubbing shoulders at the same booth, looking at the same brochures. You know, the Israelis are next to the Arabs and the Indians are next to the Pakistanis.

So, yeah, I mean, at these trade shows, it's all about the business, right? They're not, at least not that I know if they're not stabbing each other in the back at the trade show floor. That's wild. It sounds like a science fair or something. Like just literally walking around

Everyone's got their stuff. Oh, yeah. And it's pretty cool because they've got like the exhibitors have, they have like the actual systems they're selling on the trade show floor. So you can see like a tank or like a drone or machine guns like on the trade show floor. And you can like pick it up and like go inside and like check it out. And outside they had by Eurository, they had like live fire drills where they would show like they had like bleachers. And then they had like tanks like jumping these like mounds.

firing at targets and helicopters. Yeah. At the trade show? Yeah, a little bit outside the exhibition. Yeah, I'm sure. They had like a big field. Wow. Yeah.

And is everyone welcome? In terms of like citizens, like the private citizens go? No. So private citizens cannot just attend these trade shows. You do need to show that you are in the industry. But it's not that hard to have. You just more or less need to have a website and a business card. Right.

That makes you look like you're in the industry and you can get a. Do you have to pay it again? Yeah, I do believe that you have to pay. I don't remember what the price is for. Sure. But, yeah. That's crazy. Yeah.

And so you could have two hostile nations. Maybe they're not in like a hot war necessarily. Right, but two hostile nations. And both of these guys are looking at the same tanks being like, oh, we could kill these guys with the, and they're both buying the same tanks to kill each other. Exactly. That's crazy, dude. Yeah. Okay.

So if I go there, I could talk with, you know, militaries of all over the world and sell and kind of do arbitrage. with weapons and different services with different militaries. Yeah. So I'm assuming with America and these American contracts, there's non-Americans that are fulfilling these contracts. Oh, yeah. You could be a citizen for most countries and still fulfill American contracts.

You can have a foreign company, register it with the federal government and bid on American contracts as a foreign company. It makes a lot of sense. Yeah. So how do I get into the dirty business, though? You still don't tell me how I meet someone from the Taliban. Right.

Well, I don't know if the Taliban would be Their booth look like. Probably a bunch of sheep. So if I go, I'm able to kind of like talk with some people. And then maybe I go to dinner with a guy who, you know, he's from Pakistan, but he knows some people that are involved in maybe like, you know, sort of like defected groups. And there's that. Yeah.

And so I'm at dinner with this guy. Yeah. And he's like, look, I represent this company or this, you know, country or whatever. But I know some people doing some shady stuff over here that they also need weapons. Yeah. Yeah, you can meet people like that, sure. And so that's an option for me. That is, though you'll want to be sure that that's not a sting operation, trying to set you up, right? So, yeah. Does that happen? Of course.

So, like, you know, different governments are sending. Well, it's mostly the United States that does that kind of thing, particularly for American citizens. So, like, for example, the way they caught Victor Boot, right? He's the famous Russian warlord. Yeah, the merchant of death. the merchant of death and who a lord of war was based on um very loosely based on him but um yeah they caught him by setting up a sting operation to supply i think it was the FARC in columbia who are designated as a terrorist organization and they uh they they pretended to be suppliers to the FARC and they agreed to buy a whole bunch of like machine guns or whatever it was from him to supply the FARC and he they got

in all in emails that he was willing to supply the FARC and then they set up in meeting and then they arrested him. Yeah. Yeah, that story's crazy. He, like, showed up. Like, he was, like, dodging it for all this time. Like, he was evading it and being, like, very slick. For years and years, yeah.

And he was sending, like, his people that were loosely next to him. He was really operating. It was, like, a mafia boss kind of. Yeah. And then eventually they got him. Eventually they got him. And then he got released because the, I think they traded him for that basketball player. Yeah.

Britney Greiner. Yeah. Fair trade. Yeah. Don't laugh, dude. Come on. She can dunk. What's up, guys?

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sussing out if it's a sting operation. If it's a sting, then I'm fucked. I decide to do a contract with some, you know, foreign militia or a warlord or, you know, a terrorist group. Right. And then the government gets me and I go to jail. Yeah. That would suck. Yeah, that would suck. But I'd say it's not a stick.

Right. And we're at dinner. Right. And we're enjoying a steak freight. Yeah. And I'm like, okay. So I can basically, like, how would I use, you know, my nefarious, you know, contacts here to then loosen up ammo to then send it to them?

Like, how does that work? So I will, before I answer that, I will say, that I've never actually done that kind of people. You know, so... This is not taught in the course. Yeah, yeah. It's not taught in the course. I don't recommend you do this.

No, no. But I'm a risky guy, dude. Yeah, you're a risky guy, dude. Yeah, you're a risky. Look, I'm leaving comedy. Yeah, I'm funding foreign terrorist groups, all right? Right, right, right. Yeah, you're going hardcore, right?

Yes. You know, no more... It's not a laughing matter. No, not at all. Yeah, I would definitely advise people against doing that for both moral and legal and, you know, personal reasons. Fair. No amount of money is worth losing your life over or spending the rest of your life in prison.

Or funding a terrorist group that's going to kill innocent people. And that too, right? It's not the right thing to do for many, many reasons, both for you and for everybody else. I imagine, right, because I've never done this before. So I imagine that if this was going to happen, right, if that the way it would be done would be that you would probably, so it depends who you're buying from, right? because most legitimate sellers, I would say all legitimate sellers, require what they call an end user certificate or an EUC. Where's it going?

Exactly. Who's the end user, right? And the EUC on the document, they have to sign that we are not going to retransfer this to anyone else without the seller's permission, right? That's standard in the arms trade, right? So, and most sellers, all legitimate sellers, won't sell anything without a valid EUC from a internationally recognized national government. That's good.

So, yeah. So now, if your shady Pakistani contact has shady Pakistani contacts within the government of Pakistan, of Pakistan, he can get you that EUC possibly. Right. So I didn't have a cover. That would be your cover, right? So if he gets you that EUC, right, then you could just take that EUC to the supplier, let's say, you know, the Serbians or whoever, you know.

and now it looks like a legitimate deal. And then they'll ship it to, you know, the port of Karachi. And then it's the Pakistani receiving guy's problem of how to get it to the terrorist he wants to arm. Oh, wow. Yeah. So the logistics company technically could be the same because they have the end user. And it's going to a legitimate, you know, purpose within, you know, Pakistan for whatever their purposes that's considered legitimate. Yeah.

And then they deliver it. Yeah. The, you know, the Serbian or the Albanian manufacturing. Right. It looks good to them. Right. And then it gets routed to that dude. Exactly.

And then he pulls it off the truck and then ships it out to a terrorist group. Exactly. And national governments do this all the time. Right. What do you mean? So, for example, I mean, the national governments oftentimes fund groups, fund militias. They're non-state actors in other countries, right?

So for example, Iran is the most famous example. They have the axis of resistance, right? They fund Hezbollah. They fund groups in Iraq, Hamas. They fund groups in Syria. And so, you know, let's say you were an ally of Iran, right? Let's say you're Russia. You sell Iran a whole bunch of weapons, and they signed that end user certificate.

They may transfer those weapons to Hamas or Hezbollah or whoever, even though it goes against the agreement of the end users of the end users certificate right so i mean Pakistan also funds groups in like Afghanistan and and uh I think in a bit in Iran as well so they're all funding Iran funds groups in Pakistan and Pakistan funds groups in Iran so they're all like you know it's like they're chess pieces you know they're all trying to it's it's a way of like exerting control over the other country by funding the people who are rebelling against them I see so you're funding these like proxy wars within different countries to destabilize them for whatever your ultimate political purposes.

Exactly. And now is it possible that some of these like suppliers and some of these logistics guys know that it's a little Fugazi? It's definitely possible they know. The question is how comfortable they are at looking the other way. I see. So let's say like, you know, hypothetically Russia is supplying weapons to Iran who's then going to supply it to Hezbollah.

Right. let's say Russia doesn't they think it's going to Iran for their legitimate you know end user purpose right but they have a pretty strong suspicion that it's not right they might still fulfill the contract and be like yeah it looks good to us we're not going to be sanctioned and we can look the other way yeah i mean it really depends on how bad they think that would be for them right right so if they're if the group that iran is is supplying uh is attacking russian interests then russia might be a lot more upset about it than if they were just attacking non-Russian interests. That makes sense.

Now, are there any global sanctions that can be put on a country for funding a terrorist group, or is that just war? So there are, there are, I mean, there's the Security Council who can sanction countries, but Security Council, like any one of the five members can veto it. There's only five members? Well, there's five permanent members. I think it's the United States, Russia, China, the UK and France, I think. Yeah, those five. And any of those, and they happen to be the five original nuclear powers. Interesting. That was how it was set up. Right. And so any of those five countries can veto any resolution passed by the Security Council, which means that if any of those interests go against, if any one of those countries feel that this particular sanction is an independent.

their interest, they're going to veto it. That makes a lot of sense. Wow, this is very interesting. Now, at these trade shows, hypothetically, just to kind of bounce back, are those, is that all done in American dollars? Most international trade is done in American dollars. But when it's between countries that are being sanctioned, like Russia and Iran, like when Russia is buying a whole bunch of drones from Iran to shoot at Ukraine, they will pay in other currency, usually in like rubles or and then iran will use you know that to buy russian stuff in rubles that makes sense okay so now now i'm going super risky i got you know contracts with some shady dude that's going to supply a terrorist group now i'm just a straight up illegal arms dealer that's funding a terrorist group are my margins

really good on that i'm sure they are is you're taking on crazy risk yeah absolutely and so you can charge like crazy prices insane prices i'm sure you're you're probably making quite a few times over what your cost is and so there's no Yeah, and you're just, you're supplying it, you're just like, okay. And I'm sure there's probably way more risk even in that because the dude that you're dealing with in Karachi might just forget or, you know, he might just disappear. Right.

Because there's no contract. Like you can't follow up with that. You're just doing a legal business. Yeah, I mean, usually they pay, I would imagine they would pay for that in advance. I mean, even legitimate contracts, international weapons transfers are all paid in advance. We never had any of our suppliers offer us terms, you know, credit terms, never. Wow. Yeah, we all had to pay before it got, before it got to, it took off in the plane.

Yeah. Yeah. They wouldn't let it get loaded on the plane until it was paid for. And so like these, you know, international arms dealers like Victor Boot, for example, who's doing illegal arms dealing. Yeah. Now, how familiar are you with like his story and kind of what he did? A little bit.

I don't know that much about him, but I know a bit. So now if you're him, for example, you know, you're getting contracts from, I'm assuming, Russian arms dealers, and then you're just funding whoever's willing to pay. Right. And that might be a cartel in Mexico, a cartel in Colombia. Sure. And they're reaching out to him through whatever contacts because they're like, oh, this is a guy.

This is basically like, you know, like on a micro scale, the way drug dealing works. Yeah. Right. Like, hey, I have a contact and get me a shipment. I'm then going to chop up that shipment, give it to drug dealers, and then they're going to sell it to consumers. And I'm assuming it kind of operates on the same way. It's just a global scale. Yeah.

It would be similar. And I think from what I've read, he would get paid in like gold or diamonds. Oh, really? Yeah. Especially when he was selling to Africa and supplying like warlords who have like diamond mines or gold mines. So that's how they get paid. The Wagner group, who was, you know, almost took over the Russian government there for a little bit. They're all over Africa and they provide security services to the local dictators.

And they get paid in access to the gold. gold mines and diamond mines. Wow. Yeah. I had no idea. Yeah, that's how they get paid. Yeah, so they're not buying it in dollars. They're getting paid just in access to the diamond mines.

In access to the diamond and gold mines, yeah. Wow. Yeah, so like they'll make a deal and they'll say, you know, we'll get rid of all the, you know, the rebels who are rebelling against you. You know, they use their Russian military expertise and weapons. And they'll say, we'll get rid of this rebellion against you, but you give us that diamond mine or that gold. of mine and they make that deal and that's how they get paid.

Is there other things you can get paid in like, you know, like port access or like, are there other things that countries have or that militias have that would be valuable to an illegal arms dealer? Right. Well, I mean, not illegal necessarily, but the Syrians got the Russians to help them out in their little civil war there by because the Russians wanted to keep the port that they have in Syria. So the Russians have a port for their Navy in Syria,

and it's their only port in the Mediterranean. So they knew that if Assad was taken down, then they may lose access to that port. So they brought in their military to help keep him in power. Wow. So they don't care about his politics. I don't care about anything. Just keep this port open.

Yeah, that's exactly. Yeah, I mean, they didn't care who was winning. They already had a deal with the current guy, and they didn't want to jeopardize that. Wow. So now if you're like a real bad actor, You could be potentially supplying legitimate contracts to legitimate governments around the world, then also doing shady deals with illegitimate governments and terrorist groups simultaneously.

Absolutely. Wow. And you're playing both sides of the war. Yeah. I mean, that's what people suspected Henry of doing, and nobody ever proved it. So he Amnesty International wrote a report about him saying that they suspected him of supplying some warlords in Africa. But they were never able to prove it. So he didn't get on the band list, and it was legal for us to do business with him.

Wow. Yeah. That's wild. Yeah. And so now this extends to everything, right? Like, it spends to ammunition, weapons, I'm sure, even like uniforms, like anything that, you know, a militia or, you know, a terrorist group would want. Right. Trucks, I'm sure. Like, you always see them with the Toyota Tacoma.

Right. I mean, like, I'm sure that's coming through. Like, maybe they're seizing it from, like, leftover things, like, in Afghanistan, for example. Sure. But I'm sure you could probably get contracts to get. Tacomas and put them on a ship or on a plane and ship them in and the same exact thing kind of happens. Oh, that's very interesting. Now, how big can you go?

Let's say, now at this point, I'm making millions of dollars. I'm supplying the U.S. government and I'm supplying terrorist groups around the world. Okay. I'm making crazy money. Okay. I'm basically now like a warlord, I guess, in a way. Like I'm this like crazy arms dealer. Right.

Now what if someone comes to me and they're like, hey, we need 10. and we need drones. How high up can I go in terms of like power? Does that make sense? Like could I do like nuclear weapons? No. You won't be able to do nuclear weapons. There's no way.

No, because there's, um, nuclear weapons are a particular case, right? Right. There's the, uh, the atomic, I forgot the international atomic agency. I forgot the exact name of them. But like there, it's a UN organization that is specifically, uh, put in play that was created. to track nuclear technologies, right? So the only, the source of nuclear technologies tend to be states, right?

Because they're the only ones who could afford to have those programs. But there are states that have supplied nuclear technologies to other states that the UN was not happy about. Right. So, for example, Russia supplied Iran with some nuclear technology.

And because they did that, they got put on the blacklist by the United States. And that's actually why our contract existed in the first place. Because in 2006, when the United States wanted to buy all those munitions to arm the Afghan National Army, first they tried to buy it directly from the Russians because they were the only single entity that could supply that level, that quantity of munitions. And then they supplied a nuclear technology to Iran and got placed on the blacklist by the State Department. And suddenly it was illegal for the U.S. Army to buy from the Russians. So then they had to put it out for open bid, and that's how we won the contract.

Wow. That is wild. Yeah. Now, I'm sure there's some countries where it's easier to do illegal activities, right? Where it's like there's a legitimate government that you can use as a cover. Right. But like North Korea, for example. Yeah.

Like, is there any way that, like, how are people trafficking weapons in North Korea? Or do they just, you know, contract like China and be like, hey, send us weapons? Like, are there private illegal arms dealers working within those worlds? I'm sure. I don't know. that much about North Korea per se, but I know that North Korea makes a lot of its own weapons and not particularly high quality, but they do make it cheap. And the Russians are actually buying their mortar shells right now to use in Ukraine. From North Korea. From North Korea.

Wow. Yeah, because they have a little border that they share there and they just have a train going from North Korea, taking the mortar shells to the front at Ukraine, all the way across Asia. That's wild. This is blowing my mind. Like, it seems, once you kind of break it down, it seems very simple. You know, obviously there's a ton of logistical hassle here, but it's, it's remarkable to me how similar it is to just like any, you know, black market covert trade. Oh, yeah. I mean, it is.

And even black markets tend to resemble corporate markets when they get big enough. So, you know, the cartels are actually pretty, the drug cartels, they are a pretty sophisticated corporate structure, right? They have like different areas that they have for different managers, and they have like a whole corporate structure. And they even have like healthcare for some of their people. No way. Yeah. And they have pensions for like fighters that get killed,

that they pay to the families. So it's like they become like kind of semi-governmental organizations. How fascinating. Yeah, because they're so big. I mean, they make literally billions and billions of dollars every year. employ tens of thousands of people. So they need to kind of use corporate structures in order to manage it all. They're using slack and stuff, just messing in each other.

Probably. I mean, they probably not using slack because that's something the government's probably, the U.S. government's probably looking into. If I had to guess, they're probably using Signal because it's a peer-to-peer encrypted. Sure. Yeah. I mean, that's crazy. I wonder who's on the HR department of the cartel.

Yeah. Be like, hey, you're kind of using gendered language right now. Like, you know, this is. Yeah, yeah, yeah. You know, we're a cartel. We're not big. Yeah. I think probably it's, they'd have more of a situation where you're like, you insulted this guy's honor and he's going to kill you unless, you know, you make amends, you know,

that kind of thing. That's crazy. It's probably more of a situation they have to deal with. I mean, this is like blowing my mind. So you can get basically all the way up until nuclear weapons. Fighter jets are also very hard to source because they're very complex systems. Nuclear submarines or any submarine is difficult to source. The cartels are making their own submarines. How crazy is that? Yeah, yeah. Yeah. I mean, they're not super sophisticated. compared to other military submarines, but they're pretty sophisticated. They're like drones now.

They have like GPS and they transfer massive amounts of drugs in those drug subs. Do you think that, and I don't know if you would even know anything about this, but do you think like these, you know, militia groups or even like cartels that are, you know, have these massive budgets, do you think they're like contracting or poaching, like legitimate engineers from like, you know, America or Europe? For sure. Wow. For sure.

I mean, I don't know about from a. I mean, possibly from America or Europe, but definitely from their own countries. They're poaching engineers from the universities. And, you know, you have a guy with a doctorate in mechanical engineering or aerospace engineering, and they'll be like, we'll pay you triple the salary of what you're getting right now if you'd just come in design or drug sub. Someone's, that's kind of hard to turn down. Oh, and if you refuse, we might kill your family. Whoa.

You know. So, yeah, I mean, that's kind of how they run. That's so crazy. Because, like, it must be. Like, there's no way, like, no disrespect to these cartel guys. I'm sure they're great businessmen. But I can't imagine they know how to design a submarine. No, I know.

They definitely didn't design that without professional help. Wow. I mean, those subs are pretty sophisticated. They travel hundreds, if not thousands of miles, autonomously with GPS systems. And they design them so that they're in, they don't go too deep. They're like kind of like the same height as the waves, which makes it very hard to detect with radar.

and with sonar as well because they're in like the wave zone. So they design them to be to like kind of skim the surface. Yeah. That's wild. Yeah. Yeah. They're pretty sophisticated. If you had to estimate, how big do you think the global like weapons black market is in monetary value?

Could you even put a number on it? I'm sure that's Googlable. That would be a better accurate estimate than my, you know, off the cuff guess. guess here. I mean, this is just blowing my mind. I mean, it's definitely in the billions of dollars for sure. For sure. But how many billions I couldn't tell you offhand?

Wow. Now, I'm curious, like, your knowledge of, like, the geopolitical landscape. Like, you know, we've kind of talked about, like, the hypothetical of, like, how these systems sort of operate. But I'm curious as far as, like, specific groups in terms of, like, weapons production. You have, like, Russia, you have America. Yeah. Who are the other big players?

And how do they kind of operate, like, to the best of? your knowledge, like how they, you know, supply the global war machine. Right. So China's up and coming, you know, pretty quickly. South Korea is up and coming pretty quickly. Even Poland is trying to ramp up their industrial base because they're worried about Russia. So they're really trying to crank up their in their defense industry because everyone in Europe is getting worried that the United States may not always have their back, right?

especially if Trump wins because he's talked about, he's specifically said if you don't pay your 2% of GDP into your defense budget, I'm going to let Russia do whatever the hell they want. He said that. So that really scared a lot of our NATO allies saying, you know, maybe the United States isn't always going to have our back. So we really got to crank up our spending. So Poland is kind of on the front lines right after Ukraine.

Poland's on the border of Ukraine. So if Ukraine falls, Poland is next and they know it. And they have been taken over by the Soviets after World War II. So they have a really bad history. So they're very nervous. So they're really cranking up their defense budget. But right now they're mainly doing it for their own domestic production. Not a ton of export.

Yeah, not a lot of export. But the Chinese and the South Koreans do a lot of export, particularly the South Koreans, because they make really good stuff at really cheap prices. They're very good at it. Yeah. Surprisingly, they're one of the biggest shipbuilders in the world after the Chinese. I think the South Koreans are second. Japan is third.

The United States is like fourth or fifth because the United States shipbuilding capacity after World War II just tanked. And why, do you know? It was, I think we were just not that competitive. It was actually, no, it was, I remember now. Yeah, it was the Reagan administration got rid of all the subsidies. for the shipbuilders. And so, but the South Koreans and the Chinese

and the Japanese kept their subsidies, which made them a lot more competitive on the open market, which meant that people started buying all their ships from those countries and not from the United States, and all the shipbuilders in the United States went out of business.

And then when you say ships, you're talking like giant aircraft carriers. I'm talking about it. Well, the United States still builds its own aircraft carriers, and we're very good at that. We've got 11 aircraft carriers. The Chinese only have two.

The Russians, I think, have one. one, but it's always in dry dock getting repaired. So, yeah, the United States kicks ass in aircraft carriers and nuclear submarines. But as far as like commercial vessels and like oil tankers and cargo vessels and things of that nature, the South Koreans and the Chinese and to a lesser extent the Japanese are kicking our asses. Wow. And now that would fall under what you called Seoul, what was it against Seoul contract? Oh, sole source contracts.

Soul source contract. Yeah. So America would just go straight to Korea. and be like, hey, you're the only people that are making ships, really. Yeah. We need X amount of ships. What does it cost? Right.

For certain ships, I mean, the United States manufactures its own military ships. So they're still doing that. Military ships. Yeah, military ships. So we've got our own, you know, the naval shipyards that manufacture our Navy ships. But even those, they're, like, really behind production. And there's a, the Navy's getting pretty nervous about the United States shipbuilding capacity, especially if we get into a war with a major power and our ships start getting sunk,

we have to start replacing them really quickly and we can't do that right now. Wow. But the Chinese can. Because the Chinese have really ramped up. They kept their subsidies. Exactly. Because they have a massive shipbuilding industry that we just don't have anymore. Now, obviously, America is going to be working with our allies and people that were like generally friendly or neutral with.

Yes. So I can't imagine America's buying, you know, commercial ships and weapons from China or anything like that. No, no. In fact, it's illegal because there's an arms embargo against China. And when did that start? 1989, after the Tiananmen Square massacre. So the Chinese, there was a big protest movement in Tiananmen Square in central Beijing. It was thousands and thousands of university students were protesting for democracy,

and the Chinese army rolled tanks into the square and killed massive amounts of people. This is the infamous picture of the man with the briefcase in front of the tanks. Yeah, the tank man, they call him. It's a very famous picture. And that got printed by newspapers all over the world, and it became a massive political scandal. So the United States placed China on an arms embargo. Wow. So ever since then, who can China trade with?

China trades with, so China is selling to, they're kind of dealing with Pakistan. They have like, they kind of like have like a love-hate relationship with Pakistan. So they're supplying Pakistan, but they're kind of ambivalent. Everyone is kind of ambivalent with China, right? Like even countries that are friendly with China, they know that China will stab them in the back the second it makes sense for them. So, yeah, I mean, the Chinese are,

they're very transactional. They don't, like, build, like, large coalitions like the United States does. And they don't have a kind of like a higher political philosophy. other than transactional relationships, like what's good for China is what we're going to do, and that's the end of it. And so they do deal. Like they had this whole like Chinese Silk Road, Silk Belt and Road, I think they called it. And they went into like very poor countries and they made them deals where they would build them like a port or something. But they would only use Chinese labor to build it. And, and then they had like very hefty loans that they had to pay. which most of them can't pay. So it's most countries' international relations with China is kind of like a not that friendly. Yeah.

Even the ones that are somewhat friendly. I would say like the ones who are closest to China is probably the North Koreans. The North Koreans depend on the Chinese. They share that border with China. And the Chinese support the North Koreans as a buffer against the South Korea and the United States. They don't want the United States on their border. So even though the Chinese, they don't actually like the North Koreans. North Koreans are a pain in the ass and they're dangerous, right, because they're a little unstable.

But the Chinese make the calculation that they'd rather have Kim Jong-un in power in North Korea than to have the United States and South Korea on their border. That makes a lot of sense. So, yeah, this is the Belt and Road Initiative, I believe. Yeah, yeah. And they're – yeah, it's wild where they're going to, like, East African-Nation. Yeah. Hey, let's build a port, get a loan.

They default on a loan and be like, well, you can pay us in UN votes. Right. You can pay us in, you know, port access and things like that. Yeah. And they do a lot of that. They try to, they try to, they go to a lot, especially the island nations in the Pacific. They'll be like, oh, we'll build you an airport, but you have to vote our way in the UN. So they're kind of trying to build like a coalition to get a little more power in the UN in that way.

Yeah. Kind of trying to buy the votes. Yeah. Yeah, which is just wild political business. Yeah. Well, they're very machiavellian. Wow. Yeah.

And so now I'm sure this is happening where... McAvelian, I think, is how you pronounce it, yeah. We'll edit that. You've been smart for two hours, okay? I'll give you one slip up. Okay, okay, okay. But it's just so fascinating how these, like, war games are played. It truly blows my mind and all the different players that are sort of in it.

And I'm sure there's probably a legal business happening where, you know, You know, there's Americans funding, you know, Chinese efforts, I'm sure, and, you know, buying Chinese weapons and distributing them to different people, you know, kind of in the illegal way that we talked about. I'm sure that there's... American efforts? I'm sorry, I'm sure that there's probably bad actors that are, like, illegally purchasing Chinese weapons. Oh, for sure. And then distributing them illegally around the world to whomever. Yeah.

I don't know this for sure, but I would imagine that the Chinese are less concerned about arming dictators and... in Africa and things of that nature. Right. That end user contract you were talking about is maybe a little more malleable. Exactly. Or they don't block all those ones. Yeah.

Right. That are going to like Africa. Because the Chinese, so America has this concept that democracy is good and dictatorship is bad. And so they try to support democracies and to thwart dictators.

But the Chinese don't have that philosophy. And the Chinese just believe, believe that that America is a bunch of hypocrites and really powers all that matters, might makes right. And so if you're on our side, we'll supply you. And if you're not, you know, we're not. You know, we're going to fuck you. So, um, so the Chinese don't really care about how countries run their internal affairs, so to speak, uh, because they don't want to get criticized for how they run their internal affairs. I mean, they've got like a veritable, like Holocaust happening in Xinjiang, you know, in, um, in, you know, the Uyghurs. They have like a

million of them incarcerated and in re-education camps and things like that. And they don't want to be criticized for that. Wow. What's up, guys? We're going to take a break really quick because it's 24. And it's time to talk about something important. When you are seriously hurt, your injury could be worth millions. Yes, that's right. The world is a crazy place. And one person's negligence can result in another's settlement. And that's why I got to talk to you about Morgan and Morgan. Morgan and Morgan is America's largest injury law firm. They have over 100 offices nationwide and over a thousand lawyers. Yes, these are the big boys.

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Russian tanks and Russian soldiers. Now, the problem with using drones is that you can block the control of the drone with with jamming, with electronic jamming, right? So now they're trying to build drones that are not being controlled by a human, but by an artificial intelligence program. And so that you can attack that soldier over there and you could set it and forget it. And it doesn't matter if it gets jammed. It's got its own internal systems and it's going to go kill that person. Because the brain is not outboard in a base somewhere.

The brain is internal. Inside. Exactly. So that's going to be the next level of warfare. Wow. And not just single drones. They're building systems to control. drone swarms.

So you're going to have like a thousand drones all with explosives, like attacking a base, you know, like with computer vision, finding people in the base and running right at them and blowing them up. So they're already doing that kind of stuff. And both sides are trying to develop these systems. The Russians are doing it too. And whoever gets there first is going to have a very large advantage. But it is one of those sci-fi dystopian situation.

where you have like all these buzzing, like flying drones, like actually seeking you out and like, you know, finding where you're hiding and blowing you up. That is crazy. Yeah. That, I mean, yeah, like I've seen like those drone shows. Like, you know, sometimes like big festivals or things. Like they'll have all these drones working in unison to create images in the sky. Yeah. And it's amazing how coordinated they are.

I mean, it's like a perfect, perfect system. Yeah. Now imagine all of those have guns. Exactly. Or they're dropping grenades. or whatever. Yeah. That is fascinating.

And they have visual computer vision so they can recognize a soldier on the field and they can see where it understands like where he's running to and it understands like he's hiding behind that little thing and it can like sneak up behind him, you know? It's a real nightmare, a nightmare scenario. And who's creating these drones

and who's creating the AI, do you know? Right. So at first everything was off the shelf, right? They were using DJI drones. which are Chinese. And these are like the little drones people would film. Yeah, yeah. Everyone uses to like film aerial shots.

They're just modifying those drones to like carry grenades and drop grenades on tanks and things like that. But now the Ukrainians have built an entire industrial base for drone manufacturer and design. They're designing their own drones and they're producing their own drones in massive numbers and all sorts of different types of drones. I mean, they have long-range drones

that they're using to attack the Russian energy infrastructure. They're attacking refineries, right? And they're trying to shut down Russia's, because that's how Russia makes their money. Right. And they're trying to shut down the Russian refineries, and also the Russians need fuel to support their army. So the less refineries they have, the less fuel they have to...

Fuck up their whole supply chain. Exactly. It messes up their supply chain. But they need long-range drones for that because they're several hundred miles away from the front line. But then they have short-range drones. which are used on the front line to attack like individual soldiers or tanks or, you know, trucks or whatever.

And they've even got like naval drones that they've used to sink a large part of the Russian's black fleet. So they've got those, you know, just like the drug subs that go like at the level of the waves, the Ukrainians are using those to attack the Russian ships because the Russian ships can't detect them until it's too late because they can't see it on the radar or the sonar because it's hiding in the waves. So the Ukrainians managed to destroy, I think, something like a third of the Russians' Black Sea fleet, which is amazing. Nobody thought that they would be able to do that, but they're really kicking ass because of the drone. Wow. And they're using Starlink terminals to control it.

But I think Elon Musk shut down their ability to use Starlink terminals, I think, around Crimea. I don't know if he's if he turned it back on, but I know there was a little while where he shut it down. So now the Ukrainians are building their own like internal systems where just like using like artificial intelligence and image recognition so that they don't need to have control from base so they could just do it on its own and destroy those ships. That's terrifying.

Yeah. That is crazy. And it's a big question because if Ukraine can destroy the Russian Navy, that means that maybe Iran could destroy the American Navy. right and you have asymmetrical warfare and our beautiful enormous complex very expensive aircraft carriers may be able to be taken out by a few naval drones that might be on that might only cost like a million dollars and it takes out like a 15 billion dollar aircraft carrier and and why are these drones so effective is it because they're able to all work in unison because of the AI capability it's the

combination of things so because they're all networked they can all work they can all attack in a swarm and overwhelm the defenses. They have, because they are drones, they don't need to have like sailors on board in the case of the naval drones. So you can make them much smaller and more compact. And you could have them like just loitering in areas for days or even weeks on end because you don't need to feed the sailors, right? So you can just wait around in an area where you know that the ships are going to be coming by and then attack. them like at night and surprise them, which, you know, something you wouldn't be able to do if you needed sailors on board because you wouldn't be able, you'd need to, like, feed them and all that.

And, of course, sailors don't want to do kamikaze attacks generally. So these drones are just doing suicide attacks and blowing themselves up at the ships. They're very hard to stop because the way they're designed, you know, to evade radar and sonar, and the attack in swarms in kamikaze style attacks. That is crazy. Yeah. I mean, it's like genuinely concerning. Yeah.

I mean, yeah, you don't need soldiers on board. You don't need sailors. These things can just wait down there for months on end. Exactly. As long as you have enough fuel. Yeah. And you're able to, yeah, I mean, and I wonder if there's even ways. Like, I've heard some submarines are able to, like, harness the power from, like, being submerged.

Like, they never really have to come up that frequently. Well, the nuclear subs never have to come up. The, because they can make their own oxygen by using the electricity, you know, to split. the water into oxygen and hydrogen. So they never have to surface. The biggest limitation on a nuclear sub is the food to feed the sailors. But if you mitigate all that. Yeah, then you could, most nuclear subs are underwater for like months at a time.

Wow. So that, and they do that because nuclear subs are used as a nuclear deterrent generally by the United States anyway and Russia and China. And so when you have a nuclear missile launching submarine, you don't want your enemy to know where that nuclear sub is. And so if you stay submerged for like three, four months, your enemies have no idea where your sub is because it could be anywhere at that point.

But now if you take the sailors out of it. Yeah. And you don't need oxygen. Right. You don't need food. You don't need anything. Yeah. Like as long as you have like fuel to maintain the...

Yeah. And if it has nuclear power, then that lasts forever, more or less. Yeah. So it's possible of these nuclear submarines that are unmanned, powered by AI, are able to stay submerged hypothetically forever. Yeah. What the hell?

Yeah, until they have a mechanical breakdown. But yeah, that would be bad. But as long as they don't have like any mechanical breakdown, they can stay down there forever. Yeah. And then who's responsible if something goes wrong, right? Like you're able to look at, you know, some military attack where an innocent, you know,

person is attacked with a drone and say, oh, well, this drone operator. is at fault. They're the one that made the call. Right. But if you have some type of like artificial intelligent operating system, some neural network is doing it. Yeah. It's like it's the government's responsibility.

The government's like, look, we didn't tell it to do that. Right. So that is a very big area of concern right now. And it's something they're trying to build an international agreement that. I think they already signed some sort of international agreement that no AI system could make the decision to fire a nuclear weapon. So at least we have that. That's good. Right.

At least we have that. That's something that all the major nuclear powers agreed to. That's probably a bad idea to give the AI a finger on the button, so to speak. But there are autonomous systems with regular explosives being operated by AI on the front in Ukraine in particular. Wow. I mean, there's that famous story. You can correct me here. I don't know the details, but there's, I think it was a Russian nuclear submariner.

Submarine? Submarine. Submarine, yeah. Oh, like a person? Yeah, there was a person that was on a nuclear submarine. Yeah. That basically was like, I think, I forget. I think it's like Cold War time.

Yeah. They had nuclear power. Yeah. Are you familiar with this story? Yeah, and they tried to launch the missile and they needed three officers, but he refused. Exactly. They said, if we get attacked, you fire this nuclear missile. Right.

And two of them agreed, and one of them was like, I just don't know. And then it turned out to not have been an attack. It was a false alarm. Their radar was picking him a false alarm. Yeah, yeah. And one dude. Yeah, he's averted World War III. Yeah, that happened a few times, which is terrifying.

Oh, really? Yeah, that happened a few times. Are you familiar with other examples? Yeah, yeah. There was a, I think there was one in like a Russian, like nuclear silo on, on, in Russia itself where it was also a similar thing. Their new early warning system had some sort of like bug. And they thought that there were like five missiles coming from the United States. And he just refused.

One guy refused to give the community. man to do a counter strike and it turned out that it was just a bug so yeah he narrowly avoided world war three that it happened a few times um they're also like during the cuban missile crisis we also got really close to launching nukes so yeah i mean i think most people don't realize how close we can we that humanity has come to wiping ourselves out several times over the last few decades wow and in in a weird sort of like bizarre twisted way i sort of like trust AI where I'm like

humans are emotional and we're sort of impulsive and we kind of two of these officers were like ready to start World War III right and part of me was like this is what I tell myself

so I can sleep is like okay I hope that these you know that an AI could somehow look at this and have an like an unemotional discernment and be like nope this is not triggering our system and we're not going to launch

these missiles right but in that particular case the I would have launched the missiles because as far as the AI is concerned, that is an actual legitimate launch, and that's what it was programmed to do. So it was actually the human's emotional decision that prevented the counter-strike. So in that case, it was a good thing that the humans had an emotional decision against starting nuclear war. Wow. And then the AI programming is all coming internally, like in Ukraine's example. Like there's actual like internal programmers that are creating the neural network.

Yeah. So they're building AI, well, for different systems, right? So there's drone swarm controls, and for that you need to have some sort of network, right? But there are internal systems that they're building into the drones so that the drone could operate independently of external control, which, as I said, they need to deal with the jamming that's occurring. Something that I've been curious about with specifically the conflict in Ukraine and Russia. I don't know if you know the answer to it. This is kind of fringe, but I'm curious what you think. I've seen so much footage, and it seems like this is the first time

where we've had, like, really high quality and, like, immediate access to insane drone footage. Yeah. Where it's, like, you know, a Russian soldier with his leg blown off, like, begging for mercy. Yeah. And then a drone, like, drops a grenade on them. Like, there's a ton of this footage. Yeah. It's brutal.

Do you know how the footage gets out? Yeah. So there's a lot of these groups post, both sides are posting footage that they think is going to be beneficial for them, right? And they're suppressing footage that they think is going to hurt them. So the Ukrainians like to post their, both sides like to post their successes, right? So when the Ukrainians have a successful drone strike, they publish that, right? Because it boost the morale of the Ukrainians. When the Russians have a successful drone strike, they publish that because it boosts the morale of the Russians.

And of course, each side denies the others' accomplishments. It's an informational war. They're trying to boost their side and demoralize the other side. And not to get too political, but I've seen some footage from the conflict in the Middle East in Israel and Palestine. And there's been some footage where it just looks crazy, where it's like, you know, it seems like two people walking down the street. just a drone just blasts them and it's like just brutal and just like the carnage war is just so fucked it's horrible yeah but I'm curious like that would make one side look way worse yeah and it seems like the side that has access to the footage would look way

worse yeah well I mean yeah I mean they so would they publish that outright or would there be an information leak or something like yeah I don't think that that I don't like if if Israel did a a drone strike on the, you know, civilians and obviously there have been a lot of civilians killed in that conflict. They're not going to publish stuff that makes them look bad, right? But we've seen footage. Right. There may be people within the organization who leak it.

And if it does get leaked, I'm sure there's an internal investigation and the people who leaked it if they're caught get charged and put in prison. Wow. Yeah. Now, and if I can give you like a non-political example, that would be kind of like flesh out this idea. Like let's say there's a superpower that's trying to hit an insurgent in some place and accidentally misses and hits a bunch of innocent people. They have it on footage. And that superpower be like, okay, we don't want to publish that because we look terrible. And there's someone internally that could leak it. Maybe they have a political motive where they say, hey, this is fucked up.

I'm going to be like a secret whistleblower, a silent whistleblower maybe. Edwards note in style. Sure. And just like and put it out to the press and be like, look what the fuck we're doing. Yeah. Is it possible that people can be bribed? Like, is there an information war where there's people trying to flip agents within like the file detecting departments to say like, hey, you're getting paid, you know, $100,000 a year?

What if we give you a million dollars for this footage and your daughter that's sick can go get treatment? Right. And all you have to do is just hand over the footage that shows you guys committing atrocities. Oh, yeah. I mean, there's, that's, that is part of intelligence operations, both for drone footage and for everything else. I mean, there's always, every intelligence,

that's like half of all intelligence work is trying to get assets in your enemy's territory. And the United States is probably the most effective at using money for that. The Russians are probably better at using coercion and threats. But each country has its own style of developing their human assets, as they call it. It's kind of common knowledge

that the American economy in some way is propped up through weapons manufacturing and that I've heard war is helpful for the American economy because we produce a lot of weapons and so if there's a war happening anywhere in the world oftentimes they'll buy weapons from America and that's able to prop up our domestic manufacturing and I understand

that NATO countries have to buy weapons from American manufacturers so when there's a war happening they have to buy from America. And furthermore, when you hear about some of these packages where like, oh, America's giving, you know, 50 billion to this country or giving 10 billion to this country, they're kind of giving them 10 billion, but they're actually getting domestic weapons made. So we're actually giving ourselves a certain amount of money. That's correct. As a kickback.

The defense industry doesn't prop up the American economy, right, as a whole. The American economy is one of the most diverse. It is the most diverse, largest economy in the history of the world. I mean, we create technology. We're a net oil exporter. We make some of the most food in the world. We are a massive powerhouse of a nation economically. And we are the richest country to have ever existed in the world.

Now, that being said, it is important for the United States as the global superpower to have a healthy defense industry because that's how we maintain world order. right um and uh i mean all the shipping lanes are open because the u.s navy is patrolling them right uh so we maintain uh we provide security for all these countries who can't afford to have their own navy and they all benefit now we benefit more i'm not saying that it's we're doing it for altruistic reasons the united states economy benefits tremendously from uh from having open trade and that's why we police the world's waterways and keep the trade open And that's why we're attacking the Houthis in Yemen now. Because they're attacking ships going through the Strait of Hormuz.

The Strait of Hormuz is the, or might be confusing the strait, but the entrance to the Red Sea, right? So the United States Navy is doing that. In order for us to have a healthy defense industry, the companies that make up the defense industry need to be producing on a regular basis. and selling. So our arms exports do help our defense industry to stay alive and healthy, right? Now, we have realized after World War II happened, we kind of went from like a war footing, right, where we pretty much converted our entire economy to support the war, to a Cold War footing, which was we made just enough weapons and ammo just in case, right? But the, Ukraine war has shown us that that that is not sufficient, right? Because Ukraine is eating up more shells

than the United States can produce and that all the allies can produce. Now they're trying to ramp up production, but that takes a lot of time because you need to have new manufacturing lines built up. And that takes like a year or two or three, sometimes depending on what you're trying to build. And that's just Ukraine fighting Russia, right? I mean, if we got into a shooting ground war with any major power, we would be in a lot of trouble, right? We don't have the shipbuilding capacity. We don't have the shell manufacturing capacity. It would take us a few years to ramp up. So currently, even with all our arms, we are the number one arms sellers in the entire world. And yet still, we don't have the industrial capacity for an intense large-scale war.

I see. And this is what I guess people would describe as the military industrial complex. is that sort of movement of money. Yeah. Where the Americans are sending weapons, ammunition, services, et cetera. Yeah. And then those things are getting replenished domestically. Exactly. And that is obviously growing the economy.

It's contributing to GDP in some significant way, at least. Yeah. Interesting. One of the reasons NATO countries have to buy weapons from us is that we make some weapons that nobody else makes, right? Like the F-35 fighter jet. Nobody else makes that. It's one of the most advanced fighter jets, not the most advanced fighter jet in the world.

And we only give that to our very close allies. So when they want to have, when NATO wants to have the most advanced fighter jets, they'll buy the F-35 and, you know, they'll have to buy that from us because nobody else makes it. There are countries, there are other countries that make other weapon systems that NATO buys. So it's not like they're required to buy American weapons. we just tend to make the best ones, or at least in the advanced levels. Not the cheapest ones, not by far.

The South Koreans make way cheaper stuff, but we make the most advanced weapons. So they don't have to, but we just supply something that no one else can supply. Exactly. And so if they want the most advanced fighter jet in the world, they have to buy the F-35

because that is the most advanced fighter jet in the world. Okay, that makes a lot of sense. And so I guess that clears up a lot of headlines when people see like, oh, America's sending X billions of dollars to Ukraine and right you know people are all pissed off about it right it's like well they are but it's in the form of weapons it's not just like a check right and these weapons are already made yeah and they're doing it for political reasons right they're trying to like hold this this i think very justified political reasons in my opinion right and and could you expand on that well the

ukraine is a democracy and russia's trying to take it over and so i think that uh as a as the world leader uh and a proponent of democracy and freedom that we should defend the weak against the strong who are trying to take it over. And I think that that's good for everybody, for the world order, because if we let Ukraine fall, right, Russia's going to keep on going. They're not just going to stop with Ukraine. They're going to go to Moldova next. And then maybe they'll attack some of the Baltic states like Latvia or, you know, or Estonia, right, because they want access to the sea there. and then eventually they'll go into Poland, and then we're in real trouble because Poland is part of NATO, and that would trigger Article 5, assuming the president at the time actually honors it,

and then we're in a World War III situation. So it's much safer for us to help Ukraine win than for us to let Ukraine lose. Because if Ukraine loses, then we're in a situation where the Russians can actually trigger World War III. but if Ukraine wins, the Russians are going to think twice about attacking anybody else. And why do you and people with the information that you have believe that Russia wouldn't stop after they invade Ukraine? Because Putin said so. Yeah, he said that, well, first of all, in Moldova, they're already doing the same playbook

as they did in Ukraine. They have a little separatist region that is begging Russia for help, right? And Russia's like, we're going to protect ethnic Russians. So it's the exact same thing that they, said in eastern Ukraine when they invaded Ukraine in the first place. So they're using the same exact playbook in Moldova. So everyone is assuming that Moldova is going to be next after Ukraine. And there's even some thought that they may even go for a Moldova while they're doing Ukraine. So that might even be a second front. Moldova is a very poor country and they're not

part of NATO. So they're the next victim in line, right? Because they have very little defense against Russia and not many allies. Wow. But Putin has said multiple times that the breakup of the Soviet Union was one of the greatest tragedies of history, right? And what does that mean? That means that he wants to put it back together. And the Soviet Union had part of its satellite of countries are controlled, including

Poland and Eastern Germany and Czechoslovakia and all of Eastern Europe pretty much. and Eastern Europe doesn't want to get under the thumb of the Russians again. I mean, who would, right? They'd much rather be European and live a chill, you know, healthy and wealthy life than be under Putin's thumb and have to worry about arbitrary imprisonment and torture and all that stuff that's going on in Russia. Nobody wants that. Now, there's probably someone in my family's group chat right now.

That's probably saying, like, this guy does not know what he's talking about. Why are we sending 50 billion to, you know, Ukraine when we got people in America that are suffering? Right. And we have a crisis at the southern border. We should be sending money to those people. Yeah. What would be your response to that? I think we have to do all of it.

I don't think it's in either or, right? I don't think people understand how enormous the federal budget is, right? 50 billion dollars is actually not that much. We spend $6.7 trillion every year. The military budget is $800 billion, right? So sending Ukraine $60 billion, which is less than 10% of our annual military budget, is a great investment from the military's perspective because it's not American soldiers who are dying, right? It's Ukrainians. I mean, yeah, they're using our weapons, but we would much rather them use our weapons than have to put boots on the ground and have 100,000 Americans die.

We have, unfortunately, 100,000 Ukrainians dying right now. and it's an and 100,000 or more Russians dying. And that's an enormous tragedy. But it's much better for us that it's other people fighting and not us fighting. You're funding a smaller proxy war to prevent a bigger direct war. Exactly. That makes a lot of sense. And now if, yeah, that makes a lot of sense.

Okay. Now, you've explained to me how I can become an arms dealer. Yeah. You explained to me the whole game of how this whole geopolitical chess board moves. How do you know so much about this? Not because I did all those things. Not those things. I've done other things, which is all public information.

There was a book written about it. There was a movie made about it. So it's not something that I'm hiding. But I'm interested in these things. I read a lot. I, you know, pay attention to international relations. And, of course, I've had some personal experience in the industry. Yeah, can you take me through how you got started in the arms business and what your kind of path was?

And, you know, obviously, as we know, some of the mistakes made along the way with business partners and things like that. Sure. And I'm curious, I would actually love to know as we're going, if you can even highlight the mistakes that you made and what you would have done differently in those. situations in like a multiverse situation. Right. So how did you get started? What was the initial contact? And then how did it progress?

Right. So originally I was, I never really intended to become an arms dealer. I was actually just a musician. I play guitar. I'm a singer-songwriter. And I was like 23 when I first got into it. Yeah, I was 23. And I was in college studying.

chemistry. I had a few side businesses. I was selling SD cards on eBay. I was selling bed sheets and towels, brokering it with nursing homes and hospitals. Not like they show in the movie. I didn't like take a huge delivery in my apartment that I couldn't get rid of. I was just brokering. I never even like took delivery on it. But I was doing all right. I was making decent amount of money. And then I bumped into my friend Ephraim at the time. He was my friend. Not anymore. My friend Eferm. who had worked, he had got kicked out of high school when he was like 16 because he smoked weed. We were both like went to religious Jewish high schools. And he got sent to work for his uncle in L.A.

His uncle owned this big pawn shop and would sell guns and ammunition to the local cops. The local cops told his uncle, hey, you know, you want to sell this on a bigger scale. You got to go through the procurement process, right? You got to submit a bid on to sell to the department or maybe the whole state. And so his uncle got into selling to bidding contracts and got Ephraim to help him because he was, his parents sent him to work for his uncle because they, they said, oh, if you're not going to take school seriously, you're going to join the workforce, you know, you're going to learn what real life is about.

And so he got obsessed with guns because he was a 16 year old boy. And, you know, 16, teenage boys, they either get obsessed with, um, with guns, guitars, cars, or sports. That's like the things that. You can add women in there. Well, that goes without saying. That goes without saying. And they get obsessed with those things because of women.

Right. That's the source of all of it. Why do you think I learned how to play guitar? It's to impress women, of course. Why do guys learn how to play sports? Because they want to be in the NBA. All the NBA players, you know, they get all the ladies. So it's always the source of everything, it's women, right?

And so, yeah, so they sent him off to work for his uncle, and he learned how to do the government contracting from his uncle, learned all about guns, got really obsessed with it. Then after two years, they had a falling out. They each claim the other screwed the other, you know, like out of like $70,000. And they're both scumbags, so I believe them both. And then he moved back to Miami, started his own company, AEY, Inc, started bidding on contracts, federal contracts through that company. this was 2004, so right after the invasion of Iraq, and there were a lot of contracts going out there. This was like right after there was a big scandal where Halliburton, which was the big defense company, that the vice president of the United States at the time, Dick Cheney, he was the CEO of Halliburton

before he ran for vice president. And then all these, after the invasion of Iraq, Burton started getting all these multi-billion dollar contracts without any competition, right? And that became a very big scandal, obviously, because they're supposed to compete for these things. Yeah. And because of that, they drastically increased the amount of money that was set aside for small businesses.

So Ephraim really took advantage of this and started, he knew the gun industry pretty well. So he was bidding on all these contracts, started winning a bunch of contracts. After about a year of him working on his own, we bumped into each other at a, a mutual friend's house. And we were there to smoke weed. And he asked me what I was doing these days. And I told him about the SD card business and the bed sheet business. And he's like, oh, you know, a lot of the stuff you're doing is kind of similar to the stuff I'm doing.

You know, like looking for suppliers overseas, arranging logistics, figuring out, you know, the financing and all that stuff. And he's like, but I bet I'm making way more money than you. So I could use a partner. I bet, you know, I bet, you know, we could make a lot more money together. You should forget about that bed sheet, you know, business. Come work with me. And I told him, like, well, how much money have you made, right? And he goes to me, he's like, I'll tell you, but only to inspire you, right?

Because I'm not bragging, okay? So he opens up his laptop and he logs into his Bank of America account, and he shows me he has $1.8 million in his bank account. And he was 18 years old at the time. And it, like, blew my mind. I'm like, holy crap, this guy's been working. working on his own for one year and he's made almost two million dollars he knows something i don't that's for sure uh so i said you know teach me what you know i'm i'm in and so at first i worked on

some like fuel contracts and uh eventually we uh he got me working on some of his arms contracts and some the ammunition contracts and um and we after about nine months of working together um we we bit on this enormous contract, this contract that turned into the $300 million Afghan contract. And we beat like the general dynamics and ATK systems, which are massive multibillion dollar corporations. And it was just us too. And then do you want, I don't know how many detail. How much? Yeah, no. This is great. Okay. Yeah. Okay. Yeah. Because I know that we did a whole, pretty, you know, long podcast up to this point. So I don't know how much detail you want me to go. Okay.

And then we, but what turned out that some of the ammunition that we were sourcing under this contract from Albania turned out to be originally from China. And our contract specifically said that you can't deliver Chinese ammunition under this contract because of the Tiananmen Square Massacre and the embargo against the Chinese. But our contract didn't actually say you can't deliver ammunition that violates the embargo.

They just said you can't deliver Chinese ammunition period, either directly or indirectly. And the ammunition in Albania did not violate the embargo because it was given to the Albanians in the 70s before the embargo existed. So we thought, well, it doesn't violate the embargo.

They just wrote the contract badly. They should have specified. They just said no Chinese ammo period. And so we thought, well, maybe we can just ask for a waiver from the government and say, hey, you know, You wrote the contract badly. Could you just give us a waiver to deliver this Chinese ammo?

But we thought, well, maybe they would say something along the lines of like, well, you know, it's not really fair that we allow you to deliver this ammo because all your competitors bid the contract responsibly. And they didn't bid this Chinese ammo. So maybe we should cancel your contract and put it out for open bid. And you guys can bid on it again. And maybe good luck. You know, maybe you can win it again. That's what we thought might happen.

And we didn't want to risk losing a $300 million contract. Up into this point, the biggest contract, either of you had done? Like times 20. Yeah, yeah, yeah. So we decided to repackage the ammunition and just not tell the government about it because there were Chinese markings all over the boxes. And so... Could you examine the shells themselves and say, oh, these are Chinese?

An expert would have to do that. There's no actual Chinese markings on the shelves. There's like some numbers, but an ammunition expert would know that those numbers are referring to certain factories in China. So there is a way to tell, but nobody's looking that closely. So when you say repackage, you mean literally taking the bullets out of the case or the package and then putting into a new package. Exactly. So they were packaged in these like metal sealed metal tins to prevent corrosion. and then those metal tins were put in these wooden crates.

And we were going to repackage it anyway because oil prices were skyrocketing at the time and we were going to lose money on it because the air freight got a lot more expensive. And that's what we thought at first we were just going to repackage, get rid of the wooden crates because they were super heavy. But then when we went to inspect it,

we realized that there was Chinese markings all over the metal tins and there were Chinese documents inside with the bullet, So we decided to repackage the ammunition, put it in, like, sealed plastic bags to prevent corrosion and inside corrugated boxes, cardboard boxes, which would save on the weight. And we did that, and then everything was going great. And you paid a company to repackage it? Yeah, we paid, we hired a local Albanian box manufacturer to supply the boxes and to supply the labor. and we started delivering to Afghanistan.

The army was thrilled. They were happy with the equality and everything. But Ephraim, you know, my partner, he always had to, when things went well, he always tried to like squeeze more money out of the deal, right? He just couldn't stop. So he decided to find out, we were buying it, we were buying the Albanian ammo through a Swiss arms dealer named Henry Tomey in the movie he's played by Bradley Cooper. and he wanted to find out what the Albanian Ministry of Defense was getting paid for the ammunition,

so he would know how much margin, how much profit Henry was making. And so he found out through the box guy who had a cousin or something who worked in the Ministry of Defense that the Ministry of Defense was getting paid like two cents around, and we were paying Henry four cents around. So Henry was doubling his money, and that really pissed off Ephraim. I mean, we were also making like a cent and a half around, so it wasn't like he was making that much more than us. But Ephraim was like, oh, he's screwing us. You know, he's doubling his money. And he decided to go to Albania and try to cut Henry out of the deal, to do a deal directly with the Albanians.

And the Albanians told him, look, we know that you're doing the guy that. the guys in charge of the ammunition deal, they told them, look, we know that you're hiring this other guy, this other Albanian guy, do the repackaging, right? Give us that contract to do the repackaging. And we then we'll make money on that.

And then because we're making money on that, we can give you a little discount on the ammo. And Ephraim said, great. And cut Henry out. Well, no, no, it was still going to go through Henry. They didn't want to cut Henry out. And I think the reason they didn't want to cut Henry out was because Henry was, I assume,

was paying off all the politicians out of his end of the deal. So he had set that deal up because he was really good friends with the Albanian prime minister's son. So they, so probably the reason he had such a large margin is because he was sharing that

with the politicians. Yeah. And these guys knew that, or presumptively they knew that. And so they're like, we can't cut this guy out. Exactly, because that's how he's, that's how the bribes are getting paid.

But they said, you know, if we get the contract to do the repackaging, we'll give you a little discount. Still go through Henry, but we'll give you a little discount. And so Ephraim said, great, that guy's fired. You're hired. Let's do this. And the guy who was doing the repackaging, originally a guy named Costa Tribischka,

he got a little upset, right, because he got stuck with like $20,000 worth of boxes that Ephraim eventually, refused to pay him for and he screwed him over for that $20,000 worth and that guy got really upset and he called up the New York Times and told them what we were doing and he called up the FBI and he told him what we were doing and his biggest mistake is he called up the Albanian press and told them that kickbacks were being paid from this contract to the local politicians and then about a week later after that Albanian article was published he ended up dead like he in a very suspicious car accident

a car accident where he was the only person, it was like a dirt road in the middle of a field and he had been thrown like 30 feet from his car and somehow his car'd like run him over, his own car. So yeah, very suspicious, very suspicious circumstances. Yeah, car accident was a gunshot wound in the head. Yeah, exactly, he stabbed himself in the back five times, yeah. Yeah, yeah, it was, yeah, so he ended up dead.

So potentially, we don't know necessarily what happened, but the politicians that were getting paid off would probably have a motive and they probably had goons or hit men type dudes that could have taken care of this. Yes, absolutely. I don't think that happened.

I think it was a car accident. Oh, no, I think that happened. No, no, no, it was a car accident, okay? If there's any Albanians listening, it was a car accident and this guy unfortunately passed away, suspiciously.

Yeah, well, the guys who, I think the guy, the leader of like the mob in Albania who Ephraim actually met with to do this negotiation. We only found out he was like the leader of the mob later. But Ephra met with him to do this negotiation. Him and Alex, they met with him.

And he ended up, I think, going to prison for a little bit. So they kind of clamped down on that whole thing eventually. And why was this the mob guy involved in the negotiation? I don't know how he got himself involved in that, but the prime minister's son was at that meeting too with the mob. mob guy. So they had some sort of connection. Got it. And he had some business being there. Yeah, he had some business being there. And so I guess the politicians were getting paid

through the prime minister's son and the mafia were, you know, somehow. Somehow like in the prime minister's camp. Wow. Yeah. So after the, so after that whole thing happened, the feds raid AEY's office, right? But before that, that Ephraim decided to tell me that he didn't feel like I, I deserved the money that we had agreed that he would pay me. So I quit. And I was getting ready to sue him and everything. And then like a month and a half later, I get a call from like one of the secretaries at the office. And she tells me, oh, the feds just raided the office.

So they were like boxing up all the documents and taking all the computers. and the the the then like they they interviewed um so what happened so i told alex about what happened and i'm sorry Alex again okay sorry yeah i'm like no you're good uh so Alex is the guy that we sent over to albania to manage the repackaging operation got it yeah and he was like one of my best friends and i told him you know the feds just raided the office and he calls up Danny, who's the guy that Ephraim replaced me with after I left. And he tells Danny, hey, I need these documents, you know, because I've got an aircraft landing for the export permit. I need the documents. And he knew that the feds had made everyone leave the office so they

couldn't get those documents. He wanted to see what they were going to say. And Danny, he hears Danny like cover the mouthpiece on his phone and whispered Ephraim, hey, it's Alex. He needs these documents. What should I tell him? And Ephraim says, oh, we can't get those documents, man, because they're in the office. But tell them that there was a bomb threat. Yeah, tell them there was a bomb threat in the office so that we can't get the documents for him now, but we'll get them later. And Danny gets back on, oh, there was a bomb threat. So we can't get these documents. And Alex is thinking, like, why are these guys lying to me? Maybe they're going to try to make me take the fall for this. Oh, wow. So Alex leaves. He comes back to Miami. We both contact a defense attorney. And the

defense attorney tells us, well, first thing you got to do is go through your emails and see what kind of evidence the government might have against you. And we do a search for Chinese ammunition and repackaging. And it turned out that there were a lot of emails that were sent. You know, Ephraim had insisted Alex send him pictures of the Chinese crates with the Chinese lettering. There was a email from Ralph, who was our investor, with instructions on how to get rid of Chinese lettering off of wooden crates with the sander. Yeah, like literally step-by-step instructions. He had emailed this to us. So just sloppy. Yeah, just very sloppy, very sloppy. And so we knew that we were screwed. I mean, there was no way that we could deny. And you delete it.

You're tampering with evidence. Like, you just got to accept it. Our lawyer told us, do not delete anything because that's a second crime. They'll get you on that. So don't delete anything. And so we knew we were screwed. And so our lawyers told us, look, they have such strong evidence against you, your best situation here is just to cooperate. You know, just tell them what you know and hope they don't fuck you too hard. Wow. That's all your, that's all your, your only option here. And so from the day that you linked up with him to start to when you got rated, that

time span was, how long? It was about, it was a little under two years. And at that point, how much had you been paid? Zero. The whole time. Yeah, because when I won the first contracts, So by the time we got paid on the first contract that I won, we were already working on like the second contract.

And he told me, well, you know, it's not really fair that I finance this whole contract because, you know, you just made a whole bunch of money. So why don't we just roll that money that you just made to finance the next contract? And then the same thing for the third contract. And then he rolled that eventually into the Afghan contract. So I was just living off my savings the entire time. And, you know, these days I feel like an idiot for agreeing to all that. But, you know, it is what it is.

Was he pulling money out or was he actually rolling everything over? I mean, the truth is that he did not really spend that much money on himself. Yeah, he wasn't like living a lavish lifestyle or anything. He was a very cheap guy. Like he hated spending money. You know, he really hated it. I once saw him get on the phone with AT&T and like yell and scream and argue for 45 minutes because he felt like he was overcharged five bucks.

You know? And I told him, like, Ephraim, why are you, like, spending so much time, you know, over five bucks? Just let it go. You know, we can make more money working on, like, government contracts. And he's like, it's the principle of the matter. And nobody fucks me. No. Yeah.

Yeah, he had problems. I mean, you're perpetuating stereotypes here, okay? You're being anti-Semitic, David. You're being anti-Semitic. I'm not going to stand for. Listen, I'm Jewish, too, okay? I could be anti-Semitic against him. I mean, he was, he was not a normal Jew, right?

He was not a normal person in general. He obviously had some serious issues. Yeah. So, yeah, but he was super cheap. He didn't like spending money on anything. And it was all about like, it was a way for him to win, right? And he would negotiate. He was a very good negotiator.

He was a very, it was a very good negotiator. Yeah, it wasn't about the money. It was about winning. It was about winning. And he would keep on negotiating. Like, his philosophy was if you're happy, then there's still money on the table. Right. And that's how he did his negotiations.

He saw it, like, football. Like, it doesn't matter if he scored 21 points. The other team scored 22, he lost. Right. It doesn't matter how many points he has. Right. He just has to win. Right, right.

I mean, with football, I mean, one wins and one loses. But in his, like, you can have business deals where everybody wins, right? Not to him. He didn't see it that way. It was all, either you win or you lose. And that's, and if you're crying, then he feels like he won. Wow. You know, but if you're happy, you know, then he feels, oh, well, you know, I'm not winning as much as I should be here.

So in that two-year span, how, what would you? compensation have looked like had everything gone fair you mean including the Afghan contract including uh he owed me at the end about five million dollars wow yeah five million two years yeah it's not bad not bad at all and if we hadn't had the contract canceled because the whole you know new york times publishing an article about us and um i would have made about 15 million 50 million from 1 5 15 From what? From the Afghan contract. Oh, wow.

Yeah. I mean, that's significant. Yeah. And this New York Times article comes out. Yeah. So about like six months after the raid happens. And, you know, after the, you know, the agents interview us, they tell you, you know, you better tell us everything. Otherwise, you know, we're going to throw the book at you.

Yeah. And we have everything already. Yeah. Exactly. So, you know, you better not lie and you better not omit anything. And at the end of the interview, they're taking notes the whole time, of course. And at the end of the interview, they tell me, you know, we know you're probably wondering what we know. So what we knew before this raid and before this interview.

And just so you know, when we did the raid on the office, we found on Ephraim's desk a to-do list in his handwriting. And one of the items on the to-do list was repackaged Chinese ammo. Oh, Ephraim. Yeah. Come on, bro. Yeah, I know, right? So, yeah, it's very sloppy, to say the least. Like a week later, the Justice Department said, oh, you know, we're going to charge you guys with fraud, right?

Because they said that when you guys deliver this Chinese ammunition, with every aircraft delivery, you supplied a document called a Certificate of Conformance. And on the Certificate of Conformance, it lists the type of ammunition, the quantity of ammunition, the year it was manufactured, and most crucially, the place of origin. And you put place of origin Albania,

and you knew that the true place of origin was China. And not only did you know, you had a repackaging operation to hide it from us. So every document, every certificate of conformance that you submitted to the government is an act of fraud. And you delivered 71 aircraft loads of this stuff. So that's 71 acts of fraud,

each with up to five years in prison. So you can get up to 355 years in prison if you fight us. Oh, and also you'd like to hire a good lawyer, right? That's going to cost you around 300 grand. Do you have that money? No. Maybe a good lawyer can cut in half. Only 150 years.

Yeah, exactly. Yeah. And so they're like, but if you plead guilty, we'll combine all those 71 counts into one. So the most you'll get is five years. That's if the judge is having a really bad day. but because you plead guilty we're going to sign this plea agreement that we will commit to telling the judge

to go easy on you to give you the low end of the guidelines so maybe you'll get a year maybe you'll get just probation right so what do you want to do right you want to you want to fight us in court maybe get 355 years or maybe just get probation so of course it wasn't really much of a choice Alex and I pled guilty eventually Ephraim pled guilty too took him a few months he fought him for a few more months but eventually you realize the evidence was overwhelming.

Ralph, our investor, decided to take it all the way to trial. And so that, and his first trial was a mistrial. One juror refused to convict him. So they did the whole trial again, and the second time they convicted them. And so that entire process took like three years. And so they didn't sentence us until after his trial because they wanted to have leverage on us to force us to testify at his trial. And so we were waiting around, you know, for three years.

And I was scared shitless, obviously. And I got, they told me you can't be in the arms business, right? So I had to shut down my government contracting business. And I got like a job at a, to working at a food kitchen, you know, to provide food for, you know, for poor people. Because my lawyer told me that's going to make you look good. Get a job like that, nonprofit. of it. I went back to school when I started studying mechanical engineering. I even went back to doing massages because I had no way to make money. So, and I had a kid to support. I had a baby

at the time. So, but Ephraim, of course, doesn't roll like that. So what he did is he used his latest lackey. I think it might have been the third of the fourth guy after, you know, he kept them fucking over his new partners. And so his current guy, he had that guy start a company under his own name under the guy's name and he started doing business under that guy's company's name and so he he was trying to work this deal to to import high capacity magazines from Korea and to have a company that's well known in the United States called night industries to stamp their brand on it so that he could sell it at a much higher price than a Korean made magazine and he's such a control freak.

He couldn't let his frontman be a front man and do the negotiations. He had to do the negotiations himself. So eventually the guys he was trying to do this deal with figured out who he was and kind of got a little nervous and they called up the ATF and they told them, told them, you know, I got this convicted arms dealer who's trying to do this deal with me.

What should I do? Because they probably figured he's trying to entrap them to get his sentence reduced. And so the ATF told, this guy, the Knight Industries guy, well, why don't you introduce one of our undercover agents as your business partner? And so he does that. Undercover agent tells Ephraim, you know, I'm the kind of guy who needs to shake your hand and look you in the eye before we do this kind of deal. So why don't you come up to Central Florida and we can close this deal? And he knew, of course, that Ephraim was not

allowed to leave South Florida because that was the terms of his bond. And so Ephraim goes up to Central Florida and the undercover ATF agent, you know, meets him and he says, hey, check this out. I just got the latest HK handgun on the market. It's so cool, right? And Ephraim's who's a gun nut, right? He's like, oh, that's so cool. Let me see that thing. I've always wanted to. I've heard about that. He picks it up. He's like, let's go to the range. Let's fire off a few rounds. I mean, what can I say? Once a gun runner, always a gun runner, am I right? And then the agent slaps cuffs on him and he's like you're a felon in possession of a firearm you're under arrest and and of course he violated the terms of his bond so they didn't give him a new one so he had to stay in county jail for like a

year while awaiting sentencing while ralph's trial you know was underway and um he could have gotten five years for the fraud charge and another 10 years for the gun charge he could have gotten 15 years in total but he hired the best law firm in miami and spent literally like two million dollars on them and they negotiated it down to four and he got out in like three and a half because he did like a drug program or something wow so yeah i mean that's crazy yeah so when that new york times article drops yeah and your face is plastered all over the world yeah how does that feel it felt like the world was crumbling in i mean i had every journalist ringing my phone off the hook my dad called me up he's like how my all my friends are calling me asking me if um you know

this guy David Packhouse is related to me because we have a very unique last name. And he's like, oh, I'm telling them you're my son. And they're all very, very, you know, he was like crestfallen. He was a rabbi, you know, highly regarded in the community. And then he has one of his sons is on the front page of the New York Times in this scandal. So it was pretty rough to say the least. And I thought I might be looking at decades in prison. So like I'm thinking, man, I'm going to like miss my life is over.

I'm going to miss my kid growing up. it was it was really crushing it really was crushing wow yeah yeah and especially because you're looking at the article and you're like look maybe we did some fucked up shit right but what you're putting in here is not yeah true holy right right right no it wasn't they they definitely implied things that we didn't do yeah and so I think that they was kind of like almost like a character assassination thing I'm not saying that we were perfect or that you know we didn't do anything wrong but the New York Times said that we did stuff that we did into.

Which is frustrating, I can imagine. Extremely. And the thing that's most frustrating is that any follow-up articles that are written about it, they all refer to the New York Times article. Because it's reputable. Yeah, because it's reputable. They just assumed that the New York Times did their job correctly. They don't go and check the New York Times work. So they're like, yeah, and then, hey, why,

these are people who the New York Times has reported have done this, this, this, and this. And then that's just the truth forever. Right? You can never, like, get rid of that. except when you're talking on podcasts, right? Yeah, right. You know, to counteract all the misinformation. Right.

But so one of the, so I had a lot of journalists calling me, ringing my phone off the hook, and I got a voicemail from a journalist from the New York Times, not from the New York Times, from Rolling Stone, a guy named Guy Lawson. And he's like, hey, Rolling Stone loves this story. We'd love to write a story about you. And so I called him back up.

My lawyer told me don't talk to any journalist, but I was like, oh, it's Rolling Stone. And so I told him, look, I'd love to talk to you. I'm a musician. I've always dreamed about being written in Rolling Stone. I don't know. But just not for this, you know, I didn't want to be written about for this. And Guy is like, well, you know, I mean, I'll put it in there that you're a musician and people can check out your music. So, you know, I mean, I'm happy to talk to you.

And I'm like, well, my lawyer told me I can't talk to any journalist. So he's like, well, let me talk to your lawyer. And so Gie Lawson used to be a lawyer himself. before he quit and went into journalism. And so he made a deal with my lawyer that he wouldn't publish the article until all legal jeopardy had passed. And so my lawyer said,

well, if he's agreed to that, then I think it's okay. You could talk to him. So I gave him a series of interviews, and he also interviewed Alex. He even interviewed Ephraim a few times before Ephraim cut him off and decided he wanted to do his own thing.

And he, to his credit, to Gie Lawson's credit, he didn't publish that Rolling Stone article until all our legal jeopardy was passed, and that took three years. So he sat on the story for three years, and he kept on digging the whole time. So he interviewed people on the government side, and Ralph's trial brought a whole bunch of documents out, you know, through the discovery process. So we found out through Gie Lawson's digging and through the trial

that the Justice Department had emailed the Army and told them after they did the raid that the stuff was, that the ammunition was Chinese and they may want to stop taking delivery on it. And the Army responded by email, well, this ammunition is critical to the mission. So if you want us to stop taking delivery on it, we need to get a letter from the Attorney General of the United States. And that letter never came.

So they kept on taking delivery on it. And Ephraim kept on delivering that Chinese ammo after the raid for another six months. Wow. So the army knew about it the whole time. So when the New York Times... After the raid? the raid. And he kept on getting paid for it. He kept on delivering. And so when the Army put

out that statement, we had no idea. They knew the whole time. Wow. So, yeah. So when the Rolling Stone article was published, that got the attention of Todd Phillips, who was the director of the hangover movies. And he was like, oh, this is an amazing story. I could make a movie out of this. And that's how war dogs happened. Wow. Yeah. Now, just so I'm clear, is what you an Ephraim did illegal. So, well, the government definitely charged us with fraud, and they convicted Ralph Merrill, so I guess the court has decided that it was illegal. Right.

Yeah. At the time that you guys were doing it, it was sort of gray. It was gray, because we thought the issue was the embargo, right? Mm-hmm. You know, because that's what the limitation on Chinese ammunition was about. But it turned out that just that what they charged us wasn't violating the embargo. They charged us with just lying on the documents. Now, I thought that you had said that you were going to submit some type of waiver to suggest, like, oh, this is going to be repackaged?

Is that okay? Right. So we did request permission to repackage the ammunition from the receiving officer in Kabul, but we didn't tell him the real reason. We told him, we're going to repackage this ammo because, you know, it's a little bit old. so we want to make sure that we inspect it and we want to make sure it's not corroded. So we're taking it out of the metal tins and we're going to package it in like, you know,

sealed plastic bags to prevent corrosion and cardboard boxes. Is that okay? And the receiving officer said, oh, we're so happy that, you know, you're going the extra mile to inspect this ammo. We really appreciate that approved. I see.

So we got permission to do the repackaging, but not for that reason, not for the true reasons. It wasn't like, yeah, we didn't get a free, pass for that. That makes sense, which I can see that as being fraudulent. Yes. Yeah. And so now if you could go back and do it again, is there a more above board in the legal way that you could have done it? We could have actually told the army what was going on and requested a waiver. And in retrospect,

they probably would have granted it because they were desperate for the ammunition and it wasn't violating the embargo. So if they had given us a waiver, none of it would have been illegal because the lying about it was the illegal part that we wouldn't be lying. That makes sense. So it would have been completely illegal and we probably would have delivered on the entire contract. And we would have made in total probably about $60 million in profit. Wow. Yeah.

Of which I was supposed to get 25%. So I was going to make $15 million on that. Right. Not that he was planning on paying me that. Right. But now in this multiverse where this happens, potentially you stay linked up with that from. and maybe the stakes get bigger and you guys do things that, you know,

maybe are more explicitly illegal and maybe he kind of pressures things to happen. Yeah. And it turns out to be way worse. Or you get, you get deeper into the situation and make zero dollars for 10 years or something. It could have been a lot worse.

It could have been a lot worse. I feel very, very lucky that I got sentenced to seven months of house arrest and seven months of probation, which is nothing. So on sentencing day, did you think it could have been longer? So legally, I could have gotten up to five years in prison.

That sucks. Yeah. And it's up to the judge to decide what your sentence is. It's not up to the prosecutors or up to the agents. Right. You took a plea deal. Exactly. I took a plea deal.

And so the way it works is they tell you, you know, that if you take this plea deal and you admit your guilt and you plead guilty, then they will go to bat for you with the judge. But the judge doesn't have to listen to them, right? The judge usually listen. to them but is not required to listen to them. I know. So there was a good possibility I could have gotten up. You know, the judge could say, no, I don't think that's reasonable.

I think he deserves more and could have given me five years in prison. So I was scared to lose. So when you're walking in that courtroom that day to get sentenced, terrified? I was terrified. Your family's there? Yeah. And they're both terrified and sad. Everyone's terrified.

Yeah. And you have all these siblings. I'm sure they're kind of like, what are you doing? Yeah. Was there a sense of like shame? Did you feel guilty about it? I definitely felt guilty that I had messed up so badly and that I got myself into so much trouble and by extension my family, you know, and caused a hardship to my dad and to my mom.

It was very traumatic for them as well, you know, to have a son who might be going to prison for a long time. It's very traumatic. And then the judge is seven months. Yeah, and it was just like, hallelujah. Praise the Lord. Yeah. That's wild. So I guess a series of mistakes.

Yeah. When Ephraim shows you the bank accounts, like, hey, here's what we're doing. At that point, did you know his character was shaky? I didn't know how shady he was. You know, I didn't know what a scumbaggy was at that time. Because I hadn't really interacted with him since he had been like 14 to 16 years old. Sure. And he was like a kid back then.

And he hadn't really like come into his own as far as like business and all that. He did all that in L.A. you know, with his uncle. So had you been a little older, a little more discerning. Yeah, no, I would have never done business

with this idiot. Like, you would have seen these red flags and been like, yeah, he's fucking everyone over. He's fucking everyone over. He's doing crazy, dangerous,

immoral things and most likely illegal things as well. And I should not come within like 100 feet of this guy. Wow. I mean, I would never do any business with someone like that these days.

Wow. Yeah. Yeah. So, yeah. I mean, I should have seen the red flags, but, you know,

I told myself, look, just I'll do everything the right way. I'll just work on my fuel contracts. I'll make my own money just like he made his money, you know, in the last year. And then I'm out, right? I'm going to make a few million dollars, just a few million dollars. And then I'll be good. Exactly. That's always how it starts. Yeah. So now can you just tie up all the loose ends of all the characters? So Ralph, who was the initial investor, that gave the two of you money, which, why didn't Ephraim's use his own money at that point? Or was he already rolling out? Well, so

Ralph, originally Effram didn't have. any money. So Ralph. He was the original guy at the very beginning. At the very beginning. When Ephraim first started doing government contracting on his own when he left his uncle, Ralph was his first investor. He met Ralph through his

dad. And Ralph just kept on funding his contracts because he was, he actually was paying Ralph at a much lower percent than what Ralph thought, right? He would tell Ralph he was making way less money than he actually was making. Which is also fraud. Yes.

It's literal theft. Yeah. Fraud, yeah. And of course, Ralph had no idea. And so Ralph funded, I think, the Afghan contract with about a million and a half dollars of his own money, which was all the money he had. And Ephraim fucked him out of all of it. So he pours in a million and a half thinking that he's getting returns and he's rolling all the returns in. So he's thinking like, oh, I have three million or something maybe.

Yeah. Yeah, he's thinking he's going to have, like, he got like 50% of the contract. That was like their deal. So he's going to make crazy money on this, but everything evaporates. Everyone takes anything that's left. Yeah. And then Ralph ends up fighting all this in court. And losing even more money because he had to pay all those lawyers for that.

So Ralph ended up going bankrupt. And how did they convict them? Like what did he do wrong? Well, he sent an email with very specific instructions on how to get rid of Chinese markings off of wooden crates. So he was not just an angel investor. He was involved. He was involved in the whole operation. Like he was, you know, he was involved in the, he was copied on the email chains.

He was, he was part of the conversation and part of like the problem solving team, so to speak. And how long did he get? He ended up getting four years. Wow. Yeah. I mean, that could have been you. It could have been, yeah, easily. Wow.

Yeah. And so he gets four years. Yeah. Ephraim gets four years? Yeah, Ephraim also gets four years. Yeah, I got seven months of house arrest. Alex gets five months of house arrest. Did any part you feel guilty getting Alex involved?

Absolutely. I felt terrible. Because he was your friend. He was my, yeah, he was my best friend. And, I mean, none of us knew that it would end like that. Yeah, of course, in your mind, you're like, oh, I'm putting my boy on a great opportunity. Yeah, I thought I was hooking him up, you know, because he was looking for a job. And Affirm paid him a decent salary. He's actually paying him pretty well, you know, a salary, not a commission.

I mean, he made more money than you, though. He did. Yeah. Yeah, he did make more money than me. But, yeah, but, you know, he had to spend all that money. on lawyers and so he didn't end up making anything and I had to spend whatever money I had remaining on lawyers so I was totally dead broke so yeah I mean I felt terrible I mean Alex also prior to that was doing like political activist work like for camp for political campaigns and he was actually

really good at it he was like hired by political campaigns to do their their political operations during elections and as soon as that story came out nobody would touch him because you know arms dealer or gun around or whatever politicians are super super super serious. sensitive to that kind of stuff. So his entire career in that sphere collapsed. What about Henry? Henry gets away with everything. Wow.

Yeah. Henry's still out there doing business, I'm sure. Yeah. Same deal? Like, I'm sure you're in the industry. Do you ever run into him? No, no, no. I'm not in the industry. I mean, are you still involved with like weapons deals now?

No. Oh, no. Oh, okay. Yeah, I am not involved in weapons deals. I am a convicted felon. And if I pick up a gun, I could get 10 years just like, you know, Ephraim got in trouble. Oh, my apologies. I thought you picked it back up.

No, so I am legally allowed to do government contracting again. I misunderstood that. Yeah, yeah. I just can't be in possession of weapons and I can't do weapons deals. Got it. But you can do clothing, things like that. I can do other government contracting. Got it.

And that's what you're currently doing. Yeah. Well, we're starting, we just started Ward Dogs Academy. Right. Right. To teach other people how to do it. Mm-hmm. And so that's going really well.

really excited about it. We actually have quite a lot of students now and some of them, you know, have already submitted like five or six bids on different contracts and we literally launched like last week. Wow. And people got a taste of it today. Yeah, like what's going on?

And I'm sure it goes much deeper in the academy. Yeah. So we have, I'm really excited about it because we have like a forum also where people can, you know, socialize and ask questions and create business connections. And the thing I'm most excited about is that

we have a network of investors to fund the contracts. And so we expect once our students start winning contracts, which we think is going to be pretty soon, we're going to end up making more money on funding government contracts than on the course itself. Because one contract, as a beginner, you could win up to $250,000 contract. You could make like $50,000 on that contract.

The financing is going to take a bit of that, and it's going to be a lot more than the thousand bucks. You know, we're charging for the course. Right. So we're going to make, we expect to make a lot more money on the financing. And we like it that way because that way our success is aligned with our student's success. Because we only make the major money when our students start making major money. Right.

So we're really motivated to help our students. Yeah. It's beyond a course. It's like a mentorship in a way. It's like an incubator. Yeah. We're building like a government contracting incubator. Wow, that's really interesting.

Yeah. And so was there anyone else that was involved with the case that ended up getting jammed up or any other periphery figures that, like the dude that that, that snitched for the 20,000 that had Ephraim just paid him. Oh, he was the box guy. That's the guy who got killed. Oh, that's right. He got killed. Was there anyone else that? I mean, Danny was involved, but he never got charged, even though he probably should have.

And anyone else at AEY? Yeah, there were other people at AEY who worked on the case. and knew about it, but they only charged us. I think they only needed to charge us for, you know, me, Ralph, Alex, and Ephraim. Wow. Yeah. And then as far as everyone today, Ralph went to prison, he got out. So, yeah, Ralph got out, tried suing Ephraim for the money.

I don't know if he succeeded or not. I don't think he did. I think he ran out of money, so he couldn't, like, continue the lawsuit. Ephraim is out and about screwing people left and right still. I know that because every once in a while I get a phone call from somebody who's like, I've made the big mistake of going into business with him. Now I have to sue him. Do you have any advice with how to deal with him?

I've gotten several of these phone calls over the years. Called Todd Phillips too. Get to move. Yeah. Do something. Yeah, yeah, exactly. I mean, so yeah, he's still doing the same exact things he's been doing. I heard that he had was involved in a few shady deals during COVID.

for like the the PPE stuff. You know, for like face masks and gloves and stuff that he was involved. So, yeah, I mean, he's, I'm sure he's making a lot of money, screwing people left and right. I heard that he's getting into the business of funding lawsuits, actually, because so many people have sued him and he's sued frivolously, so many people that he knows lawsuits really well now. And so he's funding like lawsuits.

And I'm sure he's screwing over everyone. funds. I'm sure he's making deals like, oh, I'm going to get 90% of the profit, and then he figures out a way to take the last 10%. That's his style. So, yeah. Yeah, I mean, that's, that's what Ephraim's doing. I hope I never bump into him again unless he has a $5 million check for me. Yeah. In which case, my mind will be blown. I will have a renewed faith in humanity if that happens. But you got to go shake that valet guy's hand and be like, hey, dude, you did what I always wanted to do. Congrats. Oh, man. Yeah. I really wanted to to punch him in the face when he told me he was going to screw me over.

But I knew that if I did that, that he would use that against me. He'd probably sue me. Of course. I'm like, I'm not going to give him that leverage. Wow. Yeah. But the house arrest actually turned into my next business, which was an amazing, fortunate turn of events.

While I was under house arrest, I was, as I mentioned, I play guitar. And while I was under house arrest, I was playing a lot of guitar because I was bored as hell, right? It's miles better than prison. I'll be the first to say it. I feel very lucky. But I was, you know, bored. And so I'd have my musician friends come over and we jam.

But of course, I really missed playing with the drummer. So I bought a drum machine. No drummer's going to bring his whole drum set over my house. Pain in the ass. So I bought a drum machine, which is this electronic device. you can make beats on it and play it in a loop and you can play your guitar along. But every time you want the drums to change,

you have to stop playing your guitar, press a button on the machine, go back to playing your guitar, and interrupted the flow of the music. So I thought I needed a drum machine in the form of a guitar pedal so I could operate it with my foot. Oh, cool.

And nobody made it. And all my musician friends thought it was an awesome idea and they all wanted to buy one too. So I ended up making it. It took me like three years to make it. Wow. It's called the beat buddy,

like your buddy that plays the beat, beat buddy. Check it out everybody. Google Beat Buddy. And it went really, really well. I was totally broke, but I did a crowdfunding campaign and raised 350 grand in one month for the crowdfunding campaign. Yeah, musicians buying it in advance. And so that went really well.

And that was the launch of Singular Sound, my current company. We came out with a few other music-related products. Like we made the Aeroslooper, which is the world's most advanced looping pedal, made the mini maestro. which is a middy foot controller. For musicians who know, people who aren't musicians aren't going to know what I'm talking about. But we made a bunch of really cool music tech. And then, but the problem, and that went really well,

and it's a multimillion dollar business now, so it's done very, very well. But my brother, who helped me build the business, always complained to me that the music industry is very small. The musician-related industry is very, very small because only 10% max are musicians. And so there's only so far you could take any music-related companies. Sure.

And so we were always brainstorming about, you know, we need a product that would appeal to everybody, not just musicians. And so one day about, I think it was about five years ago, we were hanging out at my house. We were smoking weed. And we got the munchies. And we ate some mango, right?

because, you know, mango is juicy and delicious and sweet and great for when you have the munchies. But the problem with mango, of course, is it gets, like, all those fibers, like, stuck in your teeth, right? And so my brother asked me for some floss, and we go to my bathroom. We're both flossing in the mirror. And I complain to him, I'm like, man, this is such a pain in the ass. I hate fucking flossing. If we could invent a machine that could floss your teeth for you, everyone would buy that. Everyone loves, everyone hates to floss, but everyone, you know, needs to floss, except for you.

I know you love to floss right right right you're one of the few Flossomber so yeah so we started brainstorming ideas we came up with a whole bunch of hairbrained schemes of like you know robotic hands that floss your teeth you know but like stuff that would have never worked eventually we landed on a an advanced water jet design and we called it Insta floss like Instagram but flossing insta floss Instafloss.com check it out it uses 12 water jets and you just bite into this thing and you slide it across your teeth and in 10 seconds it gives you a full floss. Wow. And we just launched it. It actually was the hardest product we ever built because

it was a lot of water pressure issues and mechanical issues that we had to overcome. So it took us a while to build it but we just launched it just two months ago. It hit the market. Wow. And it's doing really well. In the time that you were arms dealing, did you ever feel like what you were doing was immoral? I definitely felt that just working with Ephraim made me uneasy just because he was just such a scumbag and I knew he was willing to do anything. So I definitely felt uneasy and I felt kind of like tainted just working with him. I mean, I gave myself excuses, oh, I'm not doing what he's doing, you know, he can do his own shit and I'll, you know, I'll do my shit, you know. So I think I just kind of lied to myself as far as that goes.

But as far as the actual stuff that we were doing, like the Afghan contracts supplying, I didn't feel guilty about that at all. You know, people say, oh, you know, you're supplying methods of killing people. How can you're such a terrible person, right? Well, I mean, yes, a gun could kill somebody, but could also stop someone else from killing you, right? A knife could chop vegetables. It could chop your neighbor's throat, right? I mean, it's all in how you use the tools of whether it makes it good or bad.

And we were supplying munitions to the people fighting the Taliban. Can you disclose any of the biggest deals that you have done even up until now? Oh, well, I mean, by far the contract that I worked on, that was the biggest was the $300 million contract. Yeah. There wasn't anything even close to that. I mean, even Ephraim's biggest contract that he did until that point was, I think, $12 or $13 million. in total. Lastly, did you meet Miles Teller and how did it feel watching the movie, a fictionalized version of your life?

I did meet Miles Teller. I met him a few times. The first time I met him was, so I actually have a cameo in the movie. I'm on screen for about three seconds. In the beginning of the movie where Miles is trying to sell bed sheets to the nursing home owner, there's a guy there entertaining the residents, the old people from the nursing. home with singing and playing guitar, that guy is me. So yeah. So I got to do a little cameo on screen. And so I met Miles during that time because I was on set with him. And I met

him a few other times when they were filming in Miami. They invited me to go on set. So that was pretty cool. He was a nice guy. He's a drummer. I mean, he got very famous for doing whiplash. So I gave him a beat buddy, you know, and I was a little upset. He never even tweeted about it. Yeah, I know. at least he can give me as a tweet. At least give me a tweet, Miles. But not even tweeted. But, I mean, he said it was cool, so I'm glad he liked it.

Wow. Yeah. And then watching this fictionalized version of your life. Yeah, that was amazing. I mean, I got invited to go to the premiere. I went with Alex to the premiere. And Ephraim was not invited. And, you know, to be in the Chinese theater, you know,

where all the famous Hollywood premieres are done. and to have, you know, to be sitting with like all the Hollywood insiders in the theater and have Miles Teller on screen say, my name is David Packhouse and I'm an international arms dealer. I was like, what the fuck? That is the weirdest fucking thing ever. Yeah, surreal, man. Really surreal.

Wow. Yeah. David, thank you so much, brother. I really appreciate you taking the time to share your story with me. And also teaching me how to become a multimillionaire doing governmental content. tracks. Now all you got to do is work your ass off. Yeah. That's all it is. Deal. Okay. I'll let you know in three to five years when I get my 10 million. And I'll give you a small cut. Okay. I'll hold you to that. Yeah. Yeah. I might even buy a beat buddy. We'll see. Okay. Now we're, now we're getting

crazy. Now we're talking, right? Thank you so much, brother. I really appreciate this. Thank you so much, pleasure.