Julian Dorey Podcast - [VIDEO] - “War Dogs” Gun Lord: Israeli Origins, Chinese Weapons & Losing $300M | David Packouz • 213

Starting point is 00:00:00 They came to the office, they just asked us a few questions, they looked around, and he charmed them, he made them laugh, and they gave us very high marks. And then, like a few weeks after that, he got an email, because he was the listed contact with the award notice, and he calls me up and he says to me, he's like, David, I've got good news and bad news. And I say, well, what's the bad news? And he says, our first task order is only 600K. I'm like, we won the contract. And he's like, yeah, mother. I'm picking you up. We're going to celebrate. And he picks me up.

Starting point is 00:00:36 We go to this like Italian restaurant and he's like ordering champagne. And he's like, he has this like little plastic bullet in his pocket filled with. He's like snorting like the nap the napkin you know like pretending to blow his nose in the restaurant and he's and he like passes it under under the table i'm like no no no thanks he's like you're doing it you're doing it you know there's a special moment we're doing something you know so yeah and he and he like gives me this whole speech he's like he's like david this is this is a very big moment for us know, those fat cats in their boardrooms worrying about their stock prices at General Dynamics. They're not going to know what's going to hit them right now.

Starting point is 00:01:11 They're going to be so pissed. You know, what I'm telling you, AY, we're going to be a multi-billion dollar company. We're going to, we're going to be flying around in private jets. You know,

Starting point is 00:01:19 you and me, buddy, you got to stick with me. We're going to ride this out. You're like, can I get an A? Yeah. Yeah, exactly. You got to stick with me. We're going to ride this out. You're like, sir, can I get paid? Yeah. Yeah, exactly.

Starting point is 00:01:28 Well, now that we won this big contract, we needed every penny we could get. What's up, guys? If you're on Spotify right now, please follow the show so that you don't miss any future episodes and leave a five-star review. Thank you. All right. Be honest with me, David. How good was being an arms dealer? There were good times and there were bad times.

Starting point is 00:01:52 Did you feel like a badass? That's the honest answer. So at parties, I definitely felt like a badass. When girls would ask, hey, what you do? I'm an international arms dealer. They'd be like, no no they didn't believe it but yeah but uh you know then you pull out some pictures of you holding a machine gun and uh they believe it again it's it's crazy because it happened so fast too this wasn't like some 10 15 year odyssey but right you went you know we overuse this phrase

Starting point is 00:02:26 but you literally went zero to a hundred yeah overnight with this thing yeah and we'll break it all down today but you know the movie that ended up getting made that was we'll say based upon yeah what you guys did war dogs is something that's been discussed on this podcast a lot oh my good friend danny jones's podcast which you've also been on because our buddy matt cox is the one who wrote once a gun runner with your former estranged partner right that's what you will yeah really yeah but the the backstory it's almost like what they changed for the movie they didn't need to because the backstory is insane on its own yeah they actually they i think they they could have made a much better movie. I mean I thought the movie was great.

Starting point is 00:03:09 I did enjoy it. I thought it was a great movie. But the truth is that there were some parts in real life that were crazier than the movie. Like Ephraim's character, they toned him down. Yeah. He was actually more of a nut job in real life than he, than they showed in the movie. Yeah. Did he really laugh like that? He didn't laugh. Yeah, no, he didn't laugh like that. He laughed more like, like he was like more of like a, you know, you know, but yeah, no,

Starting point is 00:03:41 he didn't laugh like that. That was, Jonah Hill invention to give him a little character. It's a good invention. Yeah, yeah. Stuff like that's okay. I'm cool with that part. Yeah, yeah. I mean, Jonah's a great actor. Yeah.

Starting point is 00:03:53 Yeah. And you had Miles Teller play you. Yeah, yeah. Good guy. Seems like it. Big Philly fan. Yeah, yeah. Great hair.

Starting point is 00:03:59 No complaints. Well, you didn't have the hair back then? No, I didn't. I've been bald since I was like 18. You rock it well, though. Thank you. It's a full vibe with the suit and everything. Well, I don't really have a choice, so I've got to, you know?

Starting point is 00:04:12 Yeah. Who's that one dude in all the memes, the fucking bald porn star? Oh, Johnny Sims. I get that. I get that all the time. I literally half the comments on my YouTube videos are like, I didn't know Johnny Sins is doing podcasts now. My classic, my standard response is,

Starting point is 00:04:31 yeah, I know I look like Johnny Sins, but I have a way bigger dick. That's good. That's good. We're not going to test that out today, but that's good. I hope not. I believe you. Yeah, just take my word for it. Yeah, that's good enough.

Starting point is 00:04:44 No problem there but how did so you your whole story though is kind of crazy because you weren't even here when you were a kid at first that you were in israel right like you were pretty much born and raised there how'd you end up there yeah i mean i was born in st louis so you know i could be president in theory uh but um uh yeah moved to israel when i was a baby my parents are both american they they were born in my family's been in the united states for about 100 years originally like from eastern europe and poland russia latvia eastern european ashkenazi jews that's that's why i'm white but um uh but yeah but but my dad was a rabbi. And so we moved to Israel when I was a baby for his work. And then we moved to Miami when I was eight years old.

Starting point is 00:05:33 Do you remember Israel at all? Yeah, yeah. Where'd you live? I lived in a place called Sanhedrin, which is on the outskirts of Jerusalem. Okay. All right. And so your dad was pretty much just doing rabbi duties. Yeah, he was doing rabbi stuff. Yeah. And then why did he come back to Miami? Well, so the organization, he worked for like a Jewish educational organization, and they had branches all over the world. So it's like an international organization. And their

Starting point is 00:05:58 headquarters is in Jerusalem. And so he came to Miami to take care of the Miami branch. And he also was having, he wasn't, he didn't have a good cultural fit with Israel. My dad grew up in Portland, Oregon. So, you know, he's like a very, yeah, very kind of like chill, very polite, that kind of like culture. And Israel is very like, you know, aggressive and not polite. And he didn't like that. He didn't get along well with the other Israelis. And also for some reason he had like really bad allergies in Israel and Miami. Really? Yeah, yeah. And Miami, he didn't have bad allergies.

Starting point is 00:06:36 So he was, I mean, he still lived there for, you know, a good eight years, you know, when we moved back. So, and he had lived there before I was born as well. So he managed to put up with it. But I guess as he got older, he just got tired of it. Did you did you have siblings too? Or? Yeah, I have eight siblings. Eight? Yeah. Oh, wow. That's a crowd. What are you young, old?

Starting point is 00:06:59 I am number three from the top. Okay. So so what was that? Like, did you have, so you still had, I guess you had a couple older siblings. Did you aspire to do anything with them or some of the ones below you aspire to do stuff with you? Or did you all kind of go your own way? Well, my older siblings both remained religious. My dad is an Orthodox Jewish rabbi. So, yeah. So that's why the large family.

Starting point is 00:07:26 Actually, in Orthodox circles, it's somewhat of an average family size. Yeah, you're right at home in Brooklyn right now. Yeah, yeah, yeah, exactly. Walk outside, go like this, you're good. Yeah, yeah. I actually have two uncles who live in New York, and I think one of them has 10 kids and the other has 11. God bless them. Yeah, yeah. Making the world a bigger place. Yeah, definitely a more crowded place. So the older siblings stayed with that. So they stayed with the religion.

Starting point is 00:07:53 And so I never did anything like business-wise with them. But of my younger siblings, four of my brothers work in my company now. Oh, wow. That's so cool. So it's a real family business. Yeah, you have a few things. We'll get to that. Like you're a successful guy now.. Oh, wow. That's so cool. So it's a real family business. Yeah, you have a few things. We'll get to that. Like, you're a successful guy now.

Starting point is 00:08:07 Yeah, thank you. Which is really cool. Like, after all the stuff you went through and all this. But did you, as a kid, obviously you didn't go in the direction of religion. Are you agnostic? Or what was your relationship with it there? These days, I would consider myself to be a proud atheist. Okay.

Starting point is 00:08:26 Yeah. So very different from the family. Yeah, yeah. It was quite the drama. Wait, how so? Well, I was the first one to go off the path, as they call it, right? And they realized that, or they thought, whether they were correct, that I might be a bad influence on my younger siblings. And so they really tried to keep me in the fold very, very hard.

Starting point is 00:08:53 And it was they fought. They fought my freedom for a long time. At what age? Well, I kind of I started doubting the religion about when I was 13, started reading a lot of sci fi and science fiction authors tend to be scientists and very skeptical of religion. And so I started asking questions. And it kind of went back and forth throughout my teen years. But the final nail in the coffin, so to speak, was when I went to university and I took a general anthropology course. And then I studied about how fossils are dated and how linguistics are, the evolution of linguistics and how genetics populations are studied. And there was just so many different realms of science that contradicted what I'd been told growing up that I thought there's either all of science is wrong or the five books of Moses wasn't written by God word for word. And it can't all be true because the story of Noah did not happen the way they say it in the Bible. It just

Starting point is 00:09:59 didn't. But that's the entire basis of Orthodox Judaism is that it did, right? Meaning it's like exact. That whatever's in the five books of Moses, God told Moses word for word, letter for letter, that is what God told Moses. And because God said it, it's 100% true. And that's why they base the entire thing on it. So if that's not the case, it's a very fundamental aspect of the religion is it doesn't hold up. Do you think that that put because there was then that tension of like, no, they're telling you it's all real. And you're like, well, what about this? And they're saying they're shutting

Starting point is 00:10:36 that down. Do you think that pushed you to be atheist versus maybe having an answer? I don't know, somewhere in between, like, oh, there there could be something but it's not like that so definitely extremism breeds extremism and I know lots of Jewish people who grew up in more liberal households as far as the religion goes and they mean they're much more Jewish Lee oriented uh uh jewishly oriented than i am uh because they didn't have all those um unpleasant experiences and extremist ideology uh in my opinion extremist ideology um that kind of forced them into it so because orthodox judaism is so intense and they try to fight to keep you in that culture so hard if you're gonna, you have to go all the way out. You can't like stay half, right? And you can't just be a little bit. These days, they're trying to kind of adapt with the times and there's certain circles

Starting point is 00:11:35 within the community that they're trying to be a little bit more chill. And I think that that's probably working a little bit better for them. But definitely when I was growing up, it's like all or nothing. You're either going to synagogue three times a day and keeping kosher and doing the whole thing, or you're going to end up in hell. That's a lot of pressure, especially like you talked about it starting to waver at 13. You're a young kid. You're trying to learn the world. That's a lot of pressure to put on a young kid. Like, this is how you're going to live your life because this

Starting point is 00:12:09 is just the way it is. That's how it says it, you know? Yeah. In particular, when they tell you that, you know, masturbation is one of the worst things you can do and you're a 13-year-old boy. I mean, it's like, you know, you can't tell a 13-year-old boy he can't masturbate. He's definitely going to be looking for alternatives. That is true. That is true. I didn't grow up in an Orthodox household, so I guess I never had to have that conversation. Yeah. But do you have a relationship with your family today at all?

Starting point is 00:12:36 Oh, yeah. No, I have a great relationship with my family. Eventually, it took a few years, but eventually they realized they'd rather have me as a family member than even if I wasn't religious. And so we've, you know, mended our relationship. And we're very close now. That's great. You're like their token atheist. Yeah.

Starting point is 00:12:54 Well, so out of the nine children that my parents had, six of them became nonreligious, including me. So, yeah. Look at that. I was the first. So I led the rest out to freedom. What was that line though? Extremism, extremism breeds extremism. Exactly. Like a psychological standpoint. I think I'm going to use that. That's good.

Starting point is 00:13:12 Yeah, absolutely. So you were in college, you took this anthropology class that kind of set the deal for you. Did that change how you thought about like what you wanted to do with your life and your career at that point too? At the time, I wasn't really sure what I wanted to do. I was studying chemistry because I'd always been good at math and science. And everyone said, oh, if you do get a scientific degree, then you have a pretty good job prospects. So that was, I didn't really have a solid idea of what I was going to do with it. But my dream was always to be a rock star because I'd been like a musician since I started playing guitar when I was like 15.

Starting point is 00:13:49 And also part of the another big point of contention, I would say in the Orthodox community is that I grew up going to an all boys school, right? So I didn't talk to a girl who wasn't related to me like until I was 17. Yeah, it was very traumatic. Yeah, that's hard. Yeah. And so, of course, in the culture, rock stars are always considered the gods amongst women, you know, or amongst men for women. And so I think every boy who learns to play guitar, it's mainly to impress girls.

Starting point is 00:14:24 And so I would say more than 90% of it, more than 90% of guys who learn how to play guitar are doing it because the girls like it. And so, of course, my ultimate dream was to become a rock star. What kind of music did you love? So I grew up playing grunge era, you know, rock. Oh, like Kurt Cobain, what kind of music did you love so i grew up playing uh uh grunge era you know actually so it smells like teen spirit inspired me to play a guitar yeah yeah good song to do that yeah yeah that like opening guitar riff is just like as a 15 year old kid i was like so rock and roll yeah such a that whole era was such a bridge era too in a way because it was an awkward time it's like where rock

Starting point is 00:15:06 wasn't going to be the thing but then you know nirvana hits but they have this new style right you know they don't give a about anything right very very cool stuff before my time but like the music is is timeless in so many ways yeah so you were doing it to impress girls but that became that's still you still play guitar today? I still play guitar. Yeah. Yeah. Still doing it to impress girls. You're a rock star for your kids, right? For my kids? Yeah. Your kids got to think dad's a rock star playing the guitar. It's a, so, well, I have one kid, but yeah, I have a, I have a daughter. She's 17 now.

Starting point is 00:15:37 And she doesn't think I'm that good. Yeah. All right. So you get out of college. And this part, I think, in the movie they had correct. You became like a massage therapist? Yeah. What made you want to do that? So again, you know. Hot women in Miami?

Starting point is 00:15:55 Again, the girls, man, you know. So I actually first got inspired to be a massage therapist when I was in Israel. So after I graduated high school, my parents sent me to Israel for two years because they wanted me to study Judaism. They wanted to, like, get me back on the path. Don't be an atheist. Yeah, exactly. Pretty much, you know, because they saw I was, like, wavering and they're like, oh, we got to save him, you know. And so they sent me to Israel to study and I had a bunch of my friends were going. So I thought it would be a good time. And so I spent the first year pretty much partying, had a great time. Second year,

Starting point is 00:16:28 I actually studied the religion and got really into it. And then of course, I realized it was not, it didn't hold up to scientific scrutiny when I got to college. But while I was in Israel, I went to a music festival. And I was with a group of friends. And there was this really beautiful blonde girl that I was really into. And of course, I had zero skills with women. So- Yeah, you're what?

Starting point is 00:17:00 Like one year into talking to women? Exactly. That's tough. Yeah, pretty much, yeah. And we went to this music festival and the local massage school had set up this big tent and they were giving out like free massages to the festival goers for like 10 minute massages. And everyone got a massage and it was the first professional massage I'd ever gotten. And it was amazing.

Starting point is 00:17:21 And she also got one. And afterwards, like we were walking away and she goes oh man that was so amazing any guy i'm with has to learn how to give good massages and i thought to myself i am going to learn how to give good massages and so when i got to college and i was i realized i needed needed to get a job because I had to support myself. My friends were all working like as a, like as waiters and, you know, flipping burgers, making a more or less minimum wage. And I realized, you know, massage therapists can make like 75, a hundred bucks an hour if they're doing it privately. So I can make more money in one hour

Starting point is 00:18:00 giving a massage than my friends were making in an entire day of work and had the nice bonus that girls seem to like it. So I went to massage school, got my massage license. Some people don't know this, but you actually have to get licensed by the state to practice. Some people don't. But yeah, so I got my massage license. And then I realized I was at first in University of Florida, which is in Gainesville, which is like central North Florida, tiny little college town. I realized that there's probably not going to be many massage clients up there. So I transferred to university in Miami and stayed there. So I could do the massage thing while I was going to university. And so, yeah, so that's how I got into the massage thing.

Starting point is 00:18:48 And then how long were you doing that? Well, actually, step back for a second. How did you know Ephraim, who is Jonah Hill? Right, right, right. So we, Ephraim also grew up in an Orthodox Jewish family. We didn't go to the same school, but he went to a similar school, another yeshiva in Miami Beach. But our families went to the same synagogue.

Starting point is 00:19:11 So Beth Israel in Miami Beach. I feel like they're all called Beth Israel. They really are. I think that's like, they really are. It literally means the house of Israel. So I guess it's a generic name for a synagogue. But the kids in the synagogue, myself and Ephraim included, most of us didn't really like to pray because praying is boring. I mean, it's not like Christian style prayer where you close your eyes and you just talk to God in your head. You have to like read the book out loud and you have to read,

Starting point is 00:19:44 you know, like, you know, you read this part and you stand up for God in your head. You have to like read the book out loud and you have to read, you know, like, you know, you read this part and you stand up for that part, you bow down for that part. And then the leader of the prayer says this and you say that, and it's a whole like big ritual. And it's the same thing every day, except for the Sabbath, in which case it's longer.

Starting point is 00:19:56 Right. But you have to go to synagogue three times a day. Every day. Every day. Guys, if you're still watching this video and you haven't yet hit that subscribe button, please take two seconds and go hit it right now. Thank you.

Starting point is 00:20:09 Every day. Three times a day. Usually they combine the second and third into one because you're supposed to have prayers like morning, like afternoon and night. So they usually have the, they combine the second two like right before and after sunset because that's like the dividing line of like afternoon and night. So yeah. Jewish people are so successful though. How do they have time? My God. Three times a day, every day, just like that? They cut out all the fun parts of their lives. I guess so. So you knew him from that. So I knew him from synagogue. And of course,

Starting point is 00:20:41 neither of us liked to pray. So we'd sneak out of the synagogue and like hang out on the basketball courts. And that's kind of how I got to know him. He's actually four years younger than me. So I had friends who were two years younger than me that I was hanging out with and they thought he was funny. And so they kind of befriended him. And that's kind of how he joined my circle of friends. And so you weren't but when you were a teenager, you're just hanging out, you're not like doing business with him or anything. Oh, no, no. I mean, he wasn't, we weren't doing any business at that time. But he was, he got up to some shit, I think, when he was still a teenager, right? Like he did something with his dad's company. Like was it AUI originally, like a shell company his dad had?

Starting point is 00:21:16 It was, it was. But that he did that when he was like 18. Okay. He got into business with his uncle when he was 16. But that was, I was already in Israel at that point. And what was he doing there with his uncle when he was 16, but I was already in Israel at that point. And what was he doing there with his uncle? With his uncle. So the way he got into the business was when he was 16 years old, he got kicked out of his yeshiva, his Jewish private school, for smoking weed.

Starting point is 00:21:39 Good for him. Yeah. And his parents said, well, if you're not going to take the rules of the school seriously, you're going to find out what real life is about. You're going to join the workforce. And so they sent him off to work for his uncle. His uncle owned this big pawn shop and warehouse in South Central LA. His uncle put him to work in the warehouse for a bit. Then he started putting him to work as sales inside the pawn shop.

Starting point is 00:21:59 And he got obsessed with guns. You know, like teenage guys, usually they're obsessed with like cars, guitars, sports, or guns. That's like the main things that guys get obsessed with. I think that's accurate. Yeah. And so I was a guitar guy. He was a gun guy. And he got obsessed with guns and started selling that to the local cops would come in.

Starting point is 00:22:21 And, you know, his uncle loved to schmooze with the local cops. And he'd give them special deals. And the local cops, you know, told his uncle, well, you know, if you want to sell to the department on a larger scale, you'll have to like go through the procurement process. So you have to bid on these contracts. The way the government buys things, everything from like local to federal, is they have to put what they want on their website and then people, companies can bid so it's kind of like a reverse ebay so that that way the government gets the best deal so his uncle started bidding on contracts and he started helping his uncle with that and that's how he learned how to bid on contracts and sell to the government and how he got um uh how he uh uh got educated in the uh arms industry you know like he was started out

Starting point is 00:23:08 with like uh like handguns and ammo and started doing bulletproof vests and then he got into like uh larger guns and that's how he got into the industry so if i'm doing math right here based on his age this is like maybe 010203 ish something like that yeah so he came back to miami when he was 18 in 2004 okay so he's learning that stuff yeah at the dawn of like the internet being a resource where you could do some of those things at scale right right and so then by the time he gets back to you you guys ended up doing some things for the internet but i don't want to skip ahead so he comes back to miami in. At this point, you are a licensed massage therapist, right? Yeah.

Starting point is 00:23:49 So how'd you reconnect with him? Right. So at that point, I wasn't just working at doing massage. I had started two businesses. So the way I got into those businesses was at the time, digital cameras were becoming a big thing. It was the transition from film to digital. And so I bought myself a digital camera. And I realized that the SD cards, you need an SD card for the digital camera. And the SD cards at the time were super expensive. So I kept on trying to find a better price for an SD card.

Starting point is 00:24:23 And eventually, I realized to get a good price for an SD card. And eventually, I realized to get a good price, I needed to buy them in bulk. And I found the source in China that was selling them in bulk. If I bought like 100 of them, I'd get it for like half the price. And so I bought 100 of them, and I sold the rest of them on eBay. And I sold them really quickly. And they're very easy to ship because they're tiny, you know, like in an envelope. And so I bought bought another hundred started selling them on a consistent basis started making decent money then a friend of mine who um who i'd known from israel uh told you know like we reconnected he had started he had started a um a bed sheet and towels and um like a uh a supply company for hospitals and nursing homes. And he told me, he's like, you know, I'm buying all my supplies from distributors in the United States. I know you

Starting point is 00:25:14 found these SD cards overseas. If you can find me a supplier that's cheaper than my current distributors, I'll buy from you. So I, you know, searched for suppliers. Eventually, I found a really good one in Pakistan that was that supplied bedsheets and towels, and started doing this deal with him, where I, you know, shipped from Pakistan to him, and I got a few other customers. So I was doing distribution of bedsheets and towels. It wasn't like in the movie where I took delivery of like a whole bunch of boxes that filled my apartment up and I couldn't sell it. I never even like took possession of the goods. I would just do a transferable letter of credit from the buyer, transfer it to the seller, just collect my commission and just ship it directly. It wasn't a, so it was just a

Starting point is 00:26:00 brokering thing. But you're entrepreneurial. Yeah. Yeah. You're at this point, you already know, like, yeah, I want to do things where I control my destiny. Yeah. Yeah. I've always been entrepreneurial. Actually, my my first business was when I was six years old. When you were six? Yeah, when I was six. Doing what? Selling lemonade? No, actually, I was a garbage man. You were at six. At six. I'll tell you. You got to tell this story. All right. I'll back up and tell that story. So when I was six years old, we were living in Israel. We were living in Israel. And we lived in this old apartment building that didn't have an elevator and it didn't

Starting point is 00:26:35 have a garbage chute. So you'd have to take your trash down the stairs to the lobby and go out to the big dumpster on the corner and throw the trash in the dumpster. And my mom asked my older sisters, like a year and a half older than me, and me to take out the trash. And we were like busy playing Legos. And we're like, oh, we don't want to take the trash. We're playing Legos. And she's like, take the trash out. And we're like, no, we don't want to do it. And so our dad like heard the commotion and he came by and he he's like he's like hey guys you know you guys are looking at this all wrong you know you think that this is a big chore and a big hassle but

Starting point is 00:27:10 really this is a big opportunity for you and we're like what are you talking about and he says well you know think about it you know all of our neighbors they don't want to take the trash out either right so why don't you go to all the neighbors and uh you know offer them a service you'll take their trash out you know people don't take the trash all the neighbors and offer them a service? You'll take their trash out. People don't take the trash out every day. So every other day, you take their trash out and charge them, I don't know, maybe a shekel a week, which is about a quarter. And we're like, oh, that's a great idea.

Starting point is 00:27:37 And he's like, yeah, yeah. Now, why don't you practice and take your mother's trash out? So you started taking the neighbors? So yeah, so we went to all the neighbors we signed up eight different neighbors and um after about a week we we told our dad this is way too much work because we we used our mother's like um uh she had like this wire cart with wheels that we put the trash in and you have to go down the stairs and because we couldn't like drag it. We were small. And we told our dad, this is way too much work. And he says, well, you know, we said, we don't want to do this anymore. And he says, well, what if you were making twice as much money? Would you want to do it then?

Starting point is 00:28:16 And we're like, well, twice as much money. Maybe that's worth it twice as much. But you know, he's like, well, then just raise the price. And we told him we can't raise the price. Literally a week ago, we said it's one shekel a week. Son, here's a baseball bat. You'll raise it. Yeah. And he's like, well, but you know, if you don't raise the price, you're going to quit. So why don't you give them the opportunity to pay the price that you're willing to do it for? And we're like, okay, fine. So we go to all the neighbors and they all said, yeah, it's like 50 cents a week, you know, sure, no problem. And except for one neighbor who quit. And from then on, we saw their daughter take out the trash,

Starting point is 00:28:56 which we'd never seen before. So yeah, she didn't complain. She was a good kid. But I don't think she even realized that it was our fault. But I think they realized, you know, why are we paying the neighbor's kids when we've got a perfectly healthy kid of our own to take the trash out? And we had one neighbor who he complained. He was like, he's like, you can't just double the price. This is crazy. Maybe this week you put up five cents. Next week you put up 10 cents. Double.

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Starting point is 00:30:19 If you have questions or concerns about gambling or someone close to you, please contact Connex Ontario at 1-866-531-2600 to speak to an advisor free of charge. Ben MGM operates pursuant to an operating agreement with iGaming Ontario. And we're like, but we stuck to our guns. We're like, this is it. You know, we're, you know, two shekels a week or nothing. And he's like, fine, fine, fine, fine, fine.

Starting point is 00:30:37 Okay, okay, okay. You know, and he very grudgingly gave us the 50 cents per week. But we stuck with it. And how long did this last? So we, so after about like a month, my sister told me, she's like, I don't care about this. You know, like, this is too much work. And I thought to myself, man, I'm going to make double again because, you know, now I get all the money.

Starting point is 00:30:57 So I kept on going, built up a nice bunch of shekels, kept it all in like a big Ziploc bag. And every day, the ice cream truck would come around with its little ice cream song. And I would think to myself, I've got money, I could buy myself an ice cream. And so, you know, I pretty much started eating ice cream every day, which was great. To the point where one of my aun uh aunts came to visit from like from the united states and she like looked at me she's like well you've been gaining a little bit of weight so yeah exactly exactly it's uh and um and so uh then on my seventh birthday my uh my dad bought me a uh birthday present it was this like styrofoam airplane that had this propeller

Starting point is 00:31:47 that with like a rubber band connecting, you could wind up the propeller so it would spin and, you know, throw the airplane. And my older brother, who's three years older than me, he wanted to play with the airplane. And I told him, you could play with the airplane, but if you break it, you're responsible for it. You have to pay me back. And he said, I agree with that. I'll be responsible for it. And my dad was right there and said, my dad, our dad's the witness. First throw, he breaks it, breaks into pieces.

Starting point is 00:32:17 And of course, he had no way to pay me back. So my dad suggested that he take over my trash business so he could earn the money to pay me back. And it took him like a good month and a half. But then you're not getting paid. Well, he was, so he gave me the money and I had the option to buy a new airplane. I decided to spend it on ice cream instead. But after like a month and a half, I was used to not doing the work and I was used to getting the money anyway, because he was doing the work. And so when he paid his debt in full and he didn't want to continue doing it, I just decided I had already had a whole bunch of money saved up. So I was like, I don't want to get back into this.

Starting point is 00:32:55 I'm retiring from the trash business. Exactly, I retired. And that money, that ice cream money lasted me for like a good like maybe like five, six months of ice creams. So that's young, man. Yeah, seven years old. So then fast forward, you're doing it again. Yeah, these businesses out of college. Right. So yeah, so I was doing the SD card business and the the bedsheets and towels business. And that's when I was doing that for about a year. And that's when I bumped into Ephraim.

Starting point is 00:33:26 We met at a mutual friend's house, a guy named Alex in Miami Beach. I'd been like I'd known Alex since like third grade. We went to school together. Is that your Coke dealer? No, no. Alex ended up. There's a little pause right there. There's a little pause.

Starting point is 00:33:43 I've never actually been into Coke. Miami's big on Coke, but Ephraim loved Coke. I have no doubt. Yeah, he was doing Coke all day. He would insist I would do Coke with him sometimes, but I just don't like it because I don't like the thing that does to the back of the throat and it burns your nose. Good for you.

Starting point is 00:34:02 I don't know. It's just not something I like. But I feel fortunate not to like it. just not something i like um but uh i feel fortunate not to like it yeah it looks like an expensive habit it's a very expensive looks pretty fucking awesome yeah yeah it's not particularly healthy either yeah yeah yeah even worse than ice cream but you you bump into him at alex's house yeah so we bump into him at alex's house um alex actually ends up getting involved in the story later on. But so we were smoking weed at Alex's house and Ephraim asked me, hey, what are you doing these days? And I told him about

Starting point is 00:34:33 the bed sheet business, about the SD card business. He's like, oh, that's really cool. That's really cool. You know, that's actually a lot of the stuff you're doing is very similar. A lot of the skill set is very similar to what I'm doing with government contracting, you know, finding suppliers overseas, arranging logistics, arranging the financing, you know, etc, etc. And he's like, but I bet I'm making way more money than you. So why don't you come work with me? I need a I need a smart guy, motivated guy, you know, a guy I can trust, you know, I'm looking for a partner. So why a partner. So why don't you get into my business and we can work together? And I ask him, well, how much money have you made? And he says to me, well, I'm going to tell you, but not because I'm bragging, OK?

Starting point is 00:35:17 Because I just want to inspire you. And he opens up his laptop. And he goes into his Bank of America account. And he shows his account and he has $1.8 million in the bank. And he's 18 years old at this time. This is like 04? Yeah, this is 04, 05. He's 18 years old at this time. And he had been doing business on his own for one year.

Starting point is 00:35:39 So, yeah. So he made almost $2 million in one year on his own. And that blew my mind. You know, I was like, holy crap. I mean, I, at that time I wasn't doing so badly. Like I had saved up about like a hundred grand, you know, which for a 22 year old is pretty good. Legitimately. And so, yeah, it's important.

Starting point is 00:35:59 So, so I thought I was hot shit. I was like, you know, so I had way more money than all my friends. But, but then he's like, oh yeah, I've got like $1.8 million. And he's four years younger than me. And I'm like, whoa, holy crap. Like he knows something I don't, you know? This is like right out of reverse character role here, like the scene in Wolf of Wall Street, but Jonah Hill's on the other side of it. Right.

Starting point is 00:36:22 Where he's like, you show me a check for $75,000, I'll quit my job right fucking now right where he's like you show me a check for 75 000 i quit my job right fucking now he's like there you go yeah pretty much yeah pretty much and so yeah so i told him i'm like uh i'm in you know let's let's do this and um did you know like the extent of it like what spit like he was saying government contracts in this conversation but what is he saying like i'm buying bullets and ak's and shit like i knew he was saying government contracts in this conversation, but what is he saying? Like I'm buying bullets and AKs and shit? Like I knew he was dealing with like guns and ammunition, but like – but he was also dealing with other things. He wasn't just doing weapons and ammunition. He was selling – the government buys everything, right? And –

Starting point is 00:36:58 Biggest organization on earth. Exactly. Exactly. Spends like six to seven trillion dollars every year. The military budget alone is almost a trillion dollars. So which is more than like the next five to ten countries combined. It's insane. So, yeah, but he was selling all sorts of things, not just weapons and ammunition,

Starting point is 00:37:17 but that was his specialty, the weapons and ammo, because he was a gun guy. So he knew the business. He knew the industry really well. And so, yeah, when we first started getting into it, he knew the business he knew the industry really well um and so yeah when we first started getting into it uh he told me he's like you know you um you know i'm like i specialize in the gun and ammo stuff but uh why don't you try to do a different industry so we could expand the business so so i started out just working on fuel because I realized fuel is an enormous expense. It's something that they have to constantly buy because they can keep on using it up. So they have to buy more of it.

Starting point is 00:37:52 It's not like a one-time thing. And it's a fungible good. So it's most fuel. If you buy propane here, it's the same as propane there. So it's easy to deal with. And it's large quantities. So the first contract I won, it took me about like three weeks to win. How did you, but if you don't mind, like at the beginning of

Starting point is 00:38:11 that, all right, you decide, all right, I'm going to get into fuel. It makes sense for the logic. Yeah. How's it work back then? Right. So the way it works is they have, and it still works the same way today. They have a website these days. They changed the website now, but it's called sam.gov, S-A-M.gov, like Uncle Sam. And over there, they list, the federal government lists everything they want to buy, right? They put out about 30,000 contracts every single day. 30,000. 30,000. 30,000. Yeah. Every single day. To this day.

Starting point is 00:38:43 Yeah, they're doing it. There it is, sam. 30,000. Yeah. Every single day. To this day. Yeah, they're doing it. There it is, sam.gov. Wow. So if you want to search for something, you can put in the... Exactly. So do Contra...

Starting point is 00:38:53 Get learning, Alessi. I know. Get learning. Let's go. Exactly. So you could search for ammunition and you'll see all the ammunition they're looking to buy. You can search for propane or oil or gasoline and you can find everything.

Starting point is 00:39:07 So yours looks similar to this. Yes, exactly. Yeah. They've changed it a bit since when I was doing it, but it's more or less the same. And so, yeah. So when you, they put out 30,000 contracts a day, you can't even look at all that. So you have to specialize in something. You have to search. And so I started searching for different types of fuel. And that's how I found the first contract that I won. It was for 80,000 gallons of propane. And it went to the US Air Force in Wyoming to an Air Force base. And we were splitting the profits 50-50 with me and Ephraim. And my end of the deal was eight grand. So just made eight grand in like three weeks. And that was the first contract I won. So I thought, you know, this,

Starting point is 00:39:51 I could do something here. Now, was there a way to look at this? I'm going to try to compare it to something. So like on YouTube, you, I wish I was better at this, but you could search like keywords, right? And some keywords might have a million searches in the last month and others might have 2000. But you want to find the sweet spot of like, maybe a term that has 20,000, but then it'll say like low competition, meaning like not a lot of people are actually creating content on that. Right? Was there a way to funnel these types of contracts to know which ones were going to have a lot of bids or were in high demand based on location or type like fuel or something like that versus others?

Starting point is 00:40:31 Or was it just a guessing man's game? So the government does not tell you purposefully, they do not tell you who you're competing against or how much competition there is, because they want you to think that there's a lot of competition so that you submit the absolute lowest price. Now, once you specialize in a particular field like fuel or ammo or whatever, you start getting a feel for the industry, right? And you start getting an idea of who's bidding on these contracts because they are required to post an award notice, right? That's who won the contract and they have the list of the company that won it and the price that they paid. So and there's ways of researching to see what the

Starting point is 00:41:10 government has paid for particular items in the past. So you can see kind of like the general ballpark of where the where the what the government is paying. And when you get to know the industry, you kind of get to know who the players are, right? Because, you know, one of the process of doing this is you have to go and find suppliers, right? Because as a middleman, I'm not actually making that propane, right? Yeah. You know, I have to find suppliers of the propane. Unless you learn that real fast. Right, right, right. Well, maybe need a billion dollars for a refinery, you know? If I've got a

Starting point is 00:41:40 billion dollars to make a refinery, I could start making that propane. Should have called up Dick Cheney, man. He knew all the people back then. He really did. And he knew how to work the government contracting system too. Yes, he did. So yeah, he was the right man in the right position to benefit from that situation. But... You're just a middleman. Yeah, I was just a middleman, as most government contractors are. So one thing people always ask, like, why doesn't the government just go to the source? You know, why don't they just go to the manufacturer? Why are they buying from a middleman? Right? And the reason they do that is they put it out for open and fair competition. Right? So and the reason they do that is to get the lowest price because sometimes... Excuse me.

Starting point is 00:42:27 Sometimes... Hold on. You're good. Take your time. And the reason they do that is to get the lowest price because sometimes – Excuse me. Sometimes – Hold on. You're good. Take your time. Got a little coffee and water there for you too if you need some more water? Yeah. Give me one second. Yeah, more water would be great.

Starting point is 00:42:36 All right. I'll go get that as soon as you do that. Gucci? I'm good. I'm good. All right. Let's roll. Let's roll.

Starting point is 00:42:45 So, when they put it out for open competition, sometimes the manufacturer doesn't actually have the best price, right? And the reason for that is because, like, let's say clothing, for example. Government buys everything, right? Let's say they want to buy, you know, a bunch of clothes. It's often the case that there'll be a whole bunch of clothing that is uh maybe slightly out of fashion or it's like last season's collection or something the retailers can't move it so they sell it to uh wholesalers or to liquidators right and they sell

Starting point is 00:43:18 it at rock bottom prices now those liquidators can bid an even lower price than the original manufacturer can bid because they managed to buy this from like a desperate seller, so to speak, who were just happy to make any money back on it by liquidating it. Who doesn't necessarily have the connections to know where – Right. Right. And there's also a lot of companies, a lot of private companies, even big ones, they don't even want to deal with the hassle of selling to the government. So the government has a lot of paperwork that they require. They have a lot of rules about various, you know, how you submit the bid and what things qualified. It's separate depending

Starting point is 00:44:00 on what they're looking to buy. Like Like for example, clothing, they sometimes have rules that a certain percentage of the cotton in the clothing needs to be grown in the United States for particular products, a certain percentage of the assembly or the components need to be made in the US, transportation rules. So you take the onus as the middleman. Exactly, exactly. And the big private companies or public companies, they don't necessarily want to spend the time to deal with all that paperwork. So there is that opportunity for a middleman to do that kind of work, which another company would not be willing to do. Another situation would be oftentimes the government doesn't want to have like a separate contract for each item. So they'll be like, here's 10 different items we want to buy. And there isn't a single company that makes those 10 items,

Starting point is 00:44:48 right? So the only people who could deliver on that contract are middlemen. So you need to go and find the manufacturers, the suppliers of those 10 items and, and figure out what's who's the best person to buy from as a combination of the sale price and the transportation cost, depending on where those items are located and where it needs to get to. And you build your spreadsheet and figure out what's the best deal and what's the best situation. And then you offer that to the government with your markup. And that way the government gets the best possible price for what they're looking to buy. We're living in this world now where so many people are talking about cutting out the middlemen for things. And yeah, there are a lot of things where you don't really

Starting point is 00:45:27 need it anymore. We're going to see, we don't need it. But when people, I think, tend to get ahead of themselves and say like, oh, we're not going to have any middlemen for anything in a decade. I'm like, I don't think so. Because what you're talking about, I'm going to invent a not good way to put this, but you're talking about like a complication mode. Yes. Right? So if people have to spend all their time making something all day and worrying about being good at that, and then there's this other thing that has high stakes in this case because you're dealing with the government.

Starting point is 00:45:56 If they don't like you, they'll fuck you. Right. Right? Right. Someone in the middle says, oh, all those steps we got to go through, we're going to take care of that. Why wouldn't you? And the government's happy because that's all this person does. It's like having a specialist for things.

Starting point is 00:46:09 Exactly. They're not going away for stuff like that. Yeah, exactly. Everyone does the things that they're good at, and they like to concentrate the things that they're good at. And that's the best value for everybody. You know, manufacturer is good at manufacturing. They concentrate on that.

Starting point is 00:46:24 Logistics person is good at logistics, they can concentrate on that. Now, different organizations may try to vertically integrate, and they'll be like, oh, we'll get a government contracting department, and they'll hire someone who specializes on that. But that requires investment, it requires time. So oftentimes, they're totally fine with, you know what, you know, here, the companies will give all the middlemen who ask them for prices, they'll be, they know that they're they're totally fine with you know what you know here i'll the companies will give all the middlemen who ask them for prices they'll they'll be they know that they're bidding on the government contracts they just they don't want to deal with it so they're happy to let the middlemen do that part how long do you think it took before you were in that zone with the fuel

Starting point is 00:46:57 stuff where you're like okay i know the players i know the game i feel like even if it's smaller contracts i can pick off these contracts pretty good. Was it like three months, six months? So I never got to that point with the fuel because eventually Ephraim got me working on his weapons and ammo stuff. And he was doing really well with that. So it wasn't actually that long before we started working on the big Afghan contract that, you know, we got famous for infamous for as the case may be. Famous is all right. It works now.

Starting point is 00:47:31 Yeah. I guess so. But yeah, so I didn't, that was actually the only fuel contract that I delivered on. Oh shit. So he brought you into Diversify, but then was like, yeah. And then he was like, I need you to work on these other contracts bigger money exactly and it was like already ready to go so the way i got into the into the um uh the arms side of the business was after i was done with the fuel contract he he told me he's like hey i just won this contract for rare gun parts right and it was to the special forces because special forces, they need to train in all these historical weapon systems because sometimes they go to weird places in the world that have really old weapons lying around and they need to use the weapons that are available in the

Starting point is 00:48:15 field just in case something happens to the stuff they came in or sometimes they sneak in and they can't bring stuff with them. So it was a pretty big contract that had like, I think it was like 150 different items. And they were all like rare components. And so very hard to source. But he knew the industry well enough that he knew that other people wouldn't want to bid on this because it was such a pain in the butt to deliver on. So he bid it at a pretty high price. So there was a really good margin. But he didn't want to actually fulfill the contract himself because calling up pretty much every gun dealer in America,

Starting point is 00:48:51 seeing if they have that particular rare Luger from World War II is just a huge pain in the butt. So he's, he told me, he's like, why don't you, you know, handle this contract for me? There's a lot of money in it. And so that's how I got into like the arms thing and is this i just want to make sure i heard that right this is the contract that became that afghan no no no no that was yeah that that's a different one the the this was like the prelude yeah that was my the first uh weapons related contract that i worked okay yeah because my understanding and like you know there's a lot of people listening right now who are fans of the movie so they've seen it so there's going to be stuff that juxtaposed differently than what the movie really was a good time to be in the weapons business were they had to do with the fact that the u.s government maybe like a little bit with a little bit of shadiness wanted to fund like the afghan militias or whatever with their weaponry and the

Starting point is 00:49:58 weaponry that they wanted to do that with was old cold war leftover weaponry which was like sketchy and off the books so they wanted contractors to take care of it is that fair that that is partially true uh okay it's it's um they so that that that led into the afghan contract um there was after the united states invaded afghanistan i think in 2001 after uh september 11th. The idea was that Al Qaeda, who attacked us on September 11th, had bases in Afghanistan, and the Taliban who were running Afghanistan were protecting them, and they refused to give them up. So the United States went in there and attacked the Al Qaeda bases and attacked the Taliban and pretty much took over. And they put in a democratically elected government eventually.

Starting point is 00:50:49 Yes, as the case may be. The president of Afghanistan was Hamid Karzai. And this was in like late to mid-2006. The Bush administration was super unpopular. And they realized that the next administration was probably going to be a Democrat because that's how politics goes, right? If one president is unpopular, then the next one is usually the opposite party. And they were right about that. Obama was the next president.

Starting point is 00:51:21 But they also thought that because the Democrats were all talking anti-war, that they would pull out of Afghanistan immediately. And they were wrong about that. It took until Biden to pull out of Afghanistan. But they thought if they pull out of Afghanistan, then Hamid Karzai's government is going to fail, right? So what they wanted to do is they wanted to arm the government of Afghanistan with as much munitions as they could, so that they could weather the coming political shifts. Because the government of Afghanistan was fighting the Taliban, and the Taliban, you know, who were allied with Al Qaeda. So they wanted to continue supporting the government of Afghanistan. And that's, they, the, the, the Afghanis,

Starting point is 00:52:07 they're used to using Warsaw Pact weapons, right? That's weapons. Yeah. So there's in, in, in the world, there's two major different class, spheres of like influence and weapon production. There's NATO, which is the West, you know, the United States, Europe, etc. And there's the Warsaw Pact countries, which is the former Soviet Union. Like the bloc. Yeah, exactly. So the Soviet Union and their allies, the Soviet Union created the AK-47, for example, and that's like the standard weapon for infantry soldier. The United States created the M16. That's the standard weapon for the West. And of course, they use different, they're different calibers. So they use different bullets. So you can't

Starting point is 00:52:49 use one bullet from one gun in a different gun. In the 80s, when the Soviet Union invaded Afghanistan, the CIA was supporting the Afghanis fighting the Soviet Union. Right. Those, and so they, what they did was they supplied them with Soviet weapons. The Mujahideen. Yeah, exactly, the Mujahideen, right, and who eventually became the Taliban, ironically enough. Right. And so the CIA was supporting them by supplying them with Soviet weapons for a few different reasons. One, whenever they would capture Soviet weapons by attacking the Soviets, they would get those weapons and that's what they were trained on.

Starting point is 00:53:32 So they knew how to use Soviet weapons much more than Western weapons. It also happened to be a nice bonus that Warsaw Pact weapons are much cheaper than Western ones and the United States wanted to spend less money. We need the weapon. It's so cheap. Exactly, exactly. So because the Afghanis were used to using Soviet weapons, and it was also much cheaper, the United States decided to supply the Afghan army with Soviet-style weapons like AK-47s, et cetera. Now, did that create a conflict of interest of some sort where it's like they don't want

Starting point is 00:54:10 to disclose that they're doing that? So no, it was public information. I mean, it was definitely posted on sam.gov. So it's not a secret that they're doing that. However, the sources of... So the United States doesn't really manufacture a lot of this stuff. So they knew that they were going to have to buy it from former Soviet countries, like in Eastern Europe. And a lot of those countries have a lot of shady situations

Starting point is 00:54:35 going on, a lot of corruption, and the United States doesn't want to get involved with that. So that's why they didn't want to buy directly from, you know, from all these. And they also didn't want to deal with the logistics issues of buying. So actually, originally, they were going to buy everything from the Russians directly. And yeah, and because the Russians were the... Oh, yeah, it's 12 years. Yeah. The Russians were, this is before, you know, that we were still on somewhat friendly relations with the Russians at the time. The Russians were the only single entity that could supply everything because they wanted a massive amount of stuff. They wanted enough munitions to keep the Afghans going for like the next 20 to 30 years because they didn't know how long, you know, the Democrats would be in power and who would be the next president, etc.

Starting point is 00:55:23 So they wanted to set them up so that they would be good for the next, like, few decades. Load them up, boys. Yeah, exactly. So they – I just fucking lost my train of thought. So the Bush government wanted to make sure if the Democrats got in, these guys were all set up to protect themselves with enough weapons. We were talking about the Russians, right? Yep, yep.

Starting point is 00:55:44 So they go to the Russians who had all this stuff and were in okay relationship with them. Yeah. So they, so the Russians were the only ones who could supply everything, right? But at first I was reading an article about this. When they first sent the request to the Russians, the Russians thought it was a joke because they didn't realize, they didn't take it seriously because it was such a massive amount. They thought they maybe made a typo and added one or two zeros to the numbers. And the State Department had to actually call them up and say, no, no, no, we're actually serious. Those numbers are actually accurate.

Starting point is 00:56:17 And then the Russians gave them a quote. But then the Russians supplied the Iranians with some nuclear technology. And that landed them on the blacklist. So we were not friends with them anymore. What year are we in? This is 04? No, this is 06. This is 06.

Starting point is 00:56:40 So after the Russians landed themselves on the blacklist for supplying the Iranians with nuclear technology, it was illegal for the U.S. Army, who was supporting the Afghan army, to buy the ammo from the Russians. That's also, that's also, I think that's also the year they like killed Litvinenko in London. So they were getting international sanctions. Yeah, right. Yeah, that makes sense. Yeah, there was a, the relations were going down. Right, right. So now they can't fill it. So now they can't go, they can't ask the Russians to fill it. And so they realized they're the only other suppliers are spread out all over Eastern Europe from the former Soviet republics. And there isn't a single country that could supply everything. So you're going to need to deal with a whole bunch of different suppliers and they didn't want to deal with it. So they put

Starting point is 00:57:20 it out for open bid for middlemen to come in and give them a single package exactly so that they would only have to deal with a single supplier instead of like 50 of them and who knows you know half of those 50 are probably corrupt and taking bribes and etc and they didn't want to have their hands dirty so how long have you been working for aui when this one comes across uh about nine months so you so at this point you've now done some weapons deals with with that from with that from and what so if you don't mind going back for one sec the early deal the first deal he had you on you talked about but the ones after that did you like take the lead on it what was he dividing and conquering or was it always the two of you going in together so uh i worked on that

Starting point is 00:58:01 weapons contract um and you know made a decent amount of money on that. But then I started working on a few other things. I worked on a bunch of stuff that I lost, which is very common in government contracting. Because you're bidding against other people. There's usually more than two people, two companies bidding on any contract, which means that most people are losing. So it's very common to bid on a whole bunch of contracts and lose. That's just part of the business. So I bid on a whole bunch of different contracts,

Starting point is 00:58:31 and I kept on losing, kept on losing. And then we saw this. And he lost a bunch of contracts too. I mean, it's just part of the business. Then we saw I worked on contracts for vehicles, for um vehicles for food for clothing oh so you did start going to other stuff yeah i was i was branching out i was i was just kind of trying to hit you know like trying to see what i could see what i could hit and where would those contracts be like regular contracts in america or on bases overseas all over the world all over the

Starting point is 00:59:00 world the united states is a global spanning uh organization And so we have bases, I don't know how many countries, but something like 30, 40 countries around the world. So if you had a clothing contract, it might be for like, filling out the uniforms on this base. you where the delivery point is and that would have a big effect on where where you look for suppliers because you know you obviously want the cheapest logistics so that combination of of cost and logistics of uh cost from the manufacturer supplier and logistics is what uh you know decides how competitive you are it's not easy that like i'm just thinking about it you know if you're talking about like on a base in another country and stuff then you got to figure out the people in that country right who can do it at the lowest cost you don't know if you're gonna win this thing like you said because everyone else is trying it yeah it's a hard job yeah it's not an easy job uh and it can

Starting point is 00:59:58 be very discouraging at times because you know you can do a lot a lot of work and then you just lose and then you do a lot a lot of work, and then you just lose. And then you do a lot, a lot of work again, and you lose again, and you lose again, and you lose again. And it's very common to lose like five, ten solicitations in a row. But then you hit one, and you just made enough money that made all that losing worth it. So that's kind of how the business goes. But the good thing is that because the government spends so much money, there's never ending opportunities. So and once you get like a niche, and you kind of know the industry, like Ephraim knew the arms industry, your rate of winning goes much higher, because then you already know all the and the rate of work you have to do on it goes lower, because you already have know all the suppliers you know the the details

Starting point is 01:00:45 of like the logistics of you know what what are the what logistics companies will deal with this particular item at the most reasonable price what are the potential pitfall pitfalls what do you need to like prepare um so you know all the details and then so the more you specialize in a particular field the less work it becomes and the more likely you are to win. Hey, guys. If you have a second, please be sure to share this episode around on social media and with your friends, whether it's Reddit, Instagram, Facebook, Twitter. It doesn't matter. It's all a huge help. It gets new eyeballs on the show, and it allows us to grow and survive.

Starting point is 01:01:19 So thank you to all of you who have already been doing that, and thank you to all of you who are going to do so now. Right. But when you're just starting out and you don't know what to go for, you can just like kind of like throw everything at the wall and see what sticks. And that's kind of the mode I was in at that time. So yeah, I was going for all sorts of different types of contracts and losing a lot. And then we saw the solicitation for the Afghan contract. And Ephraim told me, I remember this. So I was driving on the way to have dinner with my girlfriend at the time,

Starting point is 01:01:52 who's played by Anna de Armas in the movie. Good actress. Yeah, she is. My girlfriend didn't look anything like her. You're supposed to say yes, she did. I'm sorry to disappoint you. But, I mean, she was very beautiful. But she actually looked a lot more like Hailey Berry than Anna de Armas but I mean she was very beautiful but she she actually looked

Starting point is 01:02:05 a lot more like Hailey Berry than Anna Dermis I mean Hailey Berry is one of the hottest women I've ever seen

Starting point is 01:02:10 in my life so yeah no I was she was very beautiful you know Prime Prime

Starting point is 01:02:17 well I always said Halle Berry but Prime Halle Berry was that might have been the most beautiful woman I've ever seen oh my god

Starting point is 01:02:24 I don't disagree. All right. So you're on your way to dinner. So I'm on my way. Yeah, I'm on, exactly. I'm on my way to dinner with Haley Berry. And, and Ephraim calls me up and he's like, he's like, David, you got to get to the office right now. And I'm like, what are you talking about? He's like, I just saw this contract, this solicitation. It's huge. It's huge. We got to work on this. We got to get to the office right now. There's an emergency. It's an emergency.

Starting point is 01:02:46 And I'm like, dude, I'm about to have dinner with my girlfriend. He's like, fuck that. Cancel dinner. Get to the office right now. You want to make some fucking money? And I'm like, when's the solicitation deadline? He's like, in like a month and a half. And I'm like, so we can work on this tomorrow.

Starting point is 01:03:03 Oh, my God. He didn't like that yeah he's like he's like listen listen your girlfriend is gonna be sucking your dick when you're making millions of dollars you know you you gotta you gotta you know teach her what's important in life you know do you want to get you want to eat dinner you want to make millions you know and so i mean that's just kind of how he talked and like his his general i mean he was a very stressful person to work with because he's constantly yelling. Like he'd call me at three in the morning, you know, and start yelling about how it was some emergency, you know. Everything was an emergency with him.

Starting point is 01:03:33 Like he was never like nothing was ever. One of those. Exactly. Like he was just like, he's railing coke all day. Yeah. It's like just like that. Yeah, yeah. David!

Starting point is 01:03:41 David! Pretty much. Fuck! Yeah. You're not very far off actually the worst part is though i know he changed it but i keep picturing jonah hill like fat little guy running around and screaming doing this and i know that's not quite what it was yeah yeah kind of ruins it but yeah ephraim was actually skinny at this time uh he uh yeah yeah he because he was doing so much coke probably uh but but uh he he did get

Starting point is 01:04:08 much fatter later like but after the story the the movie uh during the time the movie portrays him he was actually skinny but when he was awaiting sentencing he got really fat yeah because he like nothing else yeah yeah exactly he was just you know spending a lot of money on food and drugs and prostitutes and all that because he was just living it up. The normal stuff. Yeah, I mean, he had millions of dollars and he knew he was going to go to prison. So, you know, he was living it up. But yeah, that's when he really gained a lot of weight. Yeah, so he, but just to step back off this phone call for a second, we'll come back to that. But at this point, if it's been like nine months working with him, something like that, what is, you had reconnected with him at the beginning of this immediately go working with him yeah two questions number one did you leave behind like the other businesses for the time being uh no i was still doing it i was still yeah yeah i was doing um

Starting point is 01:04:54 so the uh the sd card business eventually failed because the suppliers in china started making like uh like uh counterfeit stuff and like yeah yeah yeah, yeah, yeah. So that they, so like, it would say like, you know, four gigabytes, but it was really one, you know, so like, and I started getting really bad ratings on eBay, because, you know, customers were really pissed. And so eventually, and eventually, I got screwed over by one of the suppliers, you know, they sent me a whole bunch of bad cards. And, you know, and so I stopped doing the SD card business. I was still doing the bed sheet business, but it was kind of like a bit on the decline. It was kind of like going down.

Starting point is 01:05:36 So I wasn't making as much money as I was before. And you're not focusing on it as much. Yeah, and I wasn't. Exactly. I wasn't focusing on it. I was mainly living off my savings at the time. So that 100K was dwindling. But you're working hard.

Starting point is 01:05:49 Yeah, but I was – exactly. I was working on making money in the government contracting business. And unfortunately for me, Ephraim never really paid me for the contracts because the way he put it was he was like, after we won the first contract, you know, he's like, you know, I was already working on the other ones. And he says to me, he's like, well, you know, I'm financing these contracts with my money. So it's only fair that you finance it with whatever money you have too. So, you know, instead of paying you on that contract, why don't we just roll it into the next contract? And, you know, so you could finance that and it kept on rolling and

Starting point is 01:06:25 rolling and eventually he decided not to pay me at all so i ended up making nothing from the whole thing from the whole yeah from the whole thing yeah so but in the nine months again leading up to this phone call while you guys are at least working together for no money but yeah working on your way this stuff to think you're gonna get a big payday what's your he's obviously a little crazy but what's your relationship like? Are you in your head like, okay, this guy's fucking crazy, but I can make a lot of money, whatever, ha-ha? Or are you like actually friends with him,

Starting point is 01:06:53 but he's also a little crazy? So I was, I mean, I've always been like friendly with him, but I didn't realize what a nut job he had turned into until like I started working with him. And like working with him uh and like working with him i really realized that he was there was definitely something off um you know like the first time i realized that his brain was built a little different uh was we were uh driving uh we went to like a some gun show in orlando and we were driving down to Miami. It's a bad start. Yeah. What? What's a bad start? Gun show in Orlando.

Starting point is 01:07:26 Why, why, why Orlando? Oof. Disney World gun show right there. I don't know. Yeah. I mean, Orlando, they, they have a very big convention center. So they have a lot of like, like exhibitions and shows that come through there. Right next to the kids.

Starting point is 01:07:39 There you go. Yeah, yeah, exactly. So actually, so that particular gun show, it's called the Shot Show, which is more focused on like commercial shooting sports. And they tend to alternate between Vegas and Orlando. So yeah. on on like one of these highways where it's like very straight highway but it's like just one lane going in each direction with like without any just a lot like a you know paint line dividing it so there's no like real median or anything and there's no street lights either so it's like out in the middle of like the country and um i'm like like we're driving he's driving and and he uh and he has his brights on and uh there's cars

Starting point is 01:08:26 coming the other way and i tell him ephraim you know you should like turn your brights down you know when when uh when there's cars coming this way and he's like uh why you know and i say well because you know you're gonna blind the driver and he's like who gives a shit i gotta see the road you know and i said yeah but like they could crash if you blind them he's like yeah that's their problem yeah like i gotta see the road you know let's worry about us huh and i'm like you fucking idiot they can crash into us and and he's like oh oh now you got it oh good point no that's a good point yeah yeah, yeah, you're right. You're right. You're right.

Starting point is 01:09:05 And then he turns down the lights. You know, I was like, holy, like he didn't even like, it didn't even occur to him that he should even care about causing someone to crash. It was only when it affected him that he was able to care at all. And at that point, I was like, there is definitely something different about this guy you know i don't want to like i'm not like a you know a psychotherapist or anything but that's that's sounds like the the definition of sociopath that i've heard maniacal exactly all that you know like he just doesn't have the capacity for empathy for other people and so that was like my first hint i'm like okay i'm dealing with kind of like a nut job. And then what really set off my alarm bells was while I was actually working on the fuel contract, he got a call from one of his

Starting point is 01:09:56 contacts in the industry that they wanted to supply the King of Nepal. The King of Nepal with, with the King of Nepal at the time was, had a bunch of pro-democracy protests that he was trying to put down. And he was looking to buy attack helicopters and riot gear and tear gas. And I was like, let's fucking go. So, so he got super excited. He actually got super excited. And he's,

Starting point is 01:10:20 and he's, he's like, he got off the phone. He's like, I'm going to put together a save the King package. And, and's like, he got off the phone. He's like, I'm going to put together a save the king package. And I like, he was super excited and, you know, like ready to go. And I told him like, Ephraim, that's kind of messed up. You know, like you're going to supply the king who's like, you know, trying to put down a pro-democracy protest.

Starting point is 01:10:40 I'm like, are you sure that's legal? First of all. And if it is, I mean, even if it is legal, which I don't think it is, I don't think the State Department is going to approve you supplying the king. You know, I don't think that that's really messed up. And he goes to me, he's like, bro, just work on your fuel contract. You leave this stuff to me, okay? You know, and so I thought to myself, holy crap, this guy's literally willing to do anything. And- And that's a few months in.

Starting point is 01:11:05 Yeah, that was, yeah, that was like a, like a month and a half in. All right. Yeah. Did you, I'm just curious, because that's a good example. This is where, you know, we're talking about arms deals here, right? You can kind of get lost in the fact that, oh, you're just selling product, you're not there, you don't see it. Yeah. But when you hear a visual example, at least where you're not seeing it but like he comes to you and says a king of a country so immediately thinking despot right has pro-democracy protesters meaning like citizens who want freedom right coming in and we're gonna sell arms to the king so that he can shoot these people and kill them and stay the king

Starting point is 01:11:42 is there a moral question that comes in? Like you just said, that sounds wrong. But then on an overall basis after that, that deal aside, is there a moral question to the entire industry that then comes into your head? Like, wait, there might be money in this, but this is some shady shit. Absolutely. I mean, I think that you always have to think about, you know, what does, what affect your business and your actions in general in life have on the world, right? So – but I mean I think that supplying the king with other things is also just as wrong. And yes, I mean supplying him with heavy machine guns is obviously wrong, right?

Starting point is 01:12:20 But his soldiers also need to eat and they need to have uniforms and they need to have all sorts of – they need to have fuel, right? Without all those other things, his army can't operate either. So I don't – I mean I don't see a very big difference of supplying weapons versus supplying fuel for the tank or fuel for the jeep that the soldiers are riding around in or or food for the soldiers so if you're supporting a despot and you're supporting them right you know with guns or other stuff it's still support that's an even bigger point than i made but yeah so you're answering my question yeah well it's even beyond the weapons for you yeah absolutely people tend to focus on the weapons because it's the most visible aspect of the bad things that people are doing but but armies need everything so if you're supplying a dictator with food i think you're just as

Starting point is 01:13:13 culpable as the arms dealer i think there's i think there's an argument there yeah for sure those soldiers aren't going to fire those weapons if they're hungry but it but it didn't even though you because again like obviously you do have empathy. So you are thinking about this. You're like, I don't know about that. Yeah. But you still stay in. Yeah. Is it, is that really just like, Hey, we can make a lot of money here. This is a little crazy. I'll just stay away from doing that kind of thing. So that's what I told myself. I told myself this guy's messed up and he's doing things that I definitely don't agree with, but I'm not going to do that, right? I'm going to work on my fuel contracts. I'm only going to sell to the US government, who I hope is doing

Starting point is 01:13:49 the right thing, you know? At that time, eh. I mean, you know, there's a lot of complicated situations the government gets into. I definitely don't agree with everything the US government does, but I think by and large, the United States is a force for good. I do believe that. I think it's better than, and I'm a little biased, but I think it's better than pretty much anything else around the world. But sometimes it's the best piece of shit on top of a steaming pile of shit. That is true.

Starting point is 01:14:20 That is true. That is true. I mean, look, as bad as the U.S. can be sometimes, I think if China or Russia ran the world, it'd be a lot worse. I agree 100%. So yeah. So yeah. I mean, that's not... And the good thing is, is that we have democracy, so we could vote people out if they do the wrong thing. And yeah, so I didn't feel bad about supplying the United States. Particularly in Afghanistan, we were supplying the people fighting the Taliban, right? And the Taliban are, you know, not great guys, right? So I didn't feel

Starting point is 01:14:53 guilty about that at all. Like, I was very happy to supply the people fighting the Taliban. Yeah, I don't think that the thing that ended up like getting you in trouble here, I don't think that was, I think it was a decent cause yeah you know like like that's not the issue we'll get into what ended up happening with all the details but that's that's not the issue at at play here that like you were fun and victor boot or some shit right there's nothing like that right so anyway back to this phone call that we started this tangent on so nine months in you get a phone call you're taking hallie berry out to dinner that's right and then he's like you gotta get in the right now, but it's not due for a

Starting point is 01:15:28 month and a half. And it's some big contract that had to do with the fact that the Russians couldn't fulfill it. So what happens next? So the next day we met up and he tells me, he's like, look, this contract is massive. It's like 20, 30 times bigger than anything I've ever won. So I'm going to need a lot of, I'm going to need your help for this. I already have five solid suppliers in the arms business and I'll get quotes from them. But, and he gave me the list of who he was getting quotes from. He's like, I want you to go on the internet and get quotes from everybody else, right? Just find every supplier that's out there because the only way we're going to win this thing

Starting point is 01:16:09 is if we're the most competitive. And we're only going to be the most competitive if we literally find every supplier on the planet who has access to the stuff that they want to buy, these munitions. And he tells me, you know, I know that we've been working on a 50-50 deal here, but this is my bread and butter. This is something that I already – I'm bringing these five suppliers to the table. So why don't we do 75-25 for this one? And I said, this thing is going to be millions of dollars. I'm not greedy.

Starting point is 01:16:37 I'm fine with it. I'm okay with 75-25. And he's like, great. And so I start working at it. And it took me like a few months to really get prices on everything. I mean, because it was a real pain in the butt because a lot of the suppliers are Eastern European countries. And they still have kind of like a cultural holdover from the Soviet era where, you know, someone doing their job is they're just trying to do the minimum. And like if you call them up, you're bothering them, you know. It's not like they're excited to talk to you.

Starting point is 01:17:14 You call it five. Yeah, exactly. And so I'd have to like get them on the phone and then get someone who speaks a little bit of English. And, of course, they don't use email. So you had to fax them the paperwork and half the time the fax would not go through. Yeah, right. So they, you know, the fax would fail half the time because they had bad phone connections and then have to confirm they got the fax and, and then they would like, you know, ignore me for a week or two and, you know, it didn't have to constantly bother them it was a big big hassle but of yes yeah it's okay bad example yeah yeah it's okay it's your podcast yeah man yeah so uh eventually i got uh really solid prices on pretty much everything and how long did that take it took about about a month

Starting point is 01:18:06 and a half to two months okay so how do you remember exactly like how big the contract was again like what you had to specifically what you had to supply oh you mean the actual items yeah so there were about 30 different items and it was everything from like small arms uh uh stuff like uh for like bullets for like um uh ammunition for uh like small uh like like handguns all the way up to tank rounds and anti-aircraft rockets and yeah so it was just munitions it wasn't weapons it was just the stuff that goes in the weapons and um yeah and it was just the entire gamut it It was like the entire range of munitions that the entire army and police force would need for like the next 30 years. So the numbers were enormous. I think they wanted something like 150 million rounds of like AK-47 ammo, the 7.62x39.

Starting point is 01:18:57 They wanted 1.1 million grenades. How many people live in Afghanistan? Can we Google that? Yeah. What the population of Afghanistan is? Let's check that because it was smaller back then, I'm sure. Yeah, yeah. Let's check it now.

Starting point is 01:19:11 Yeah. Real quick and see what that is. What was that? 1.1 million grenades? Yeah, that's what they wanted. 40. All right. So three for every person. Yeah.

Starting point is 01:19:20 There we go. Oh, no. My math's off. It's one for every 40 people. Yeah. One for every. Yeah yeah that's enough yeah yeah and then what was the bullets uh that was like 150 million rounds all right that's the one where it's like four for every person yeah exactly god damn yeah yeah it was uh it was enormous um yeah we'd never even seen anything like this before and um and so we we didn't actually think we were

Starting point is 01:19:44 gonna win we thought that i mean definitely they're gonna give this to like uh general dynamics And so we didn't actually think we were going to win. We thought that, I mean, definitely they're going to give this to like General Dynamics or ATK Systems because they're like multi-billion dollar corporations with decades and decades of history. So they're not going to give this massive contract to a couple of schmucks in their living room, you know um and so uh we but we we realized that we technically qualified to bid on it because the way the government works is if a contract these days it's if a contract is above 250 000 back then it was 100 000 but nowadays if it's above 250 000 they require past performance which means that you need to prove that you've done this kind of business before, right? You have delivered these kinds of items. And – Would his previous work, Ephraim's work on government contracts because he did do some munitions stuff eventually qualify? Exactly.

Starting point is 01:20:34 Or it wasn't big enough? No, they did. They did. Yeah. It wasn't about the size. It was about the – I mean the size – if it was bigger contracts would help, but the fact that he had delivered very similar, actually the same type of ammunition, not all of it, but like a lot of it, uh, to, um, because there are 30 different items. So he did, had delivered several of the items, uh, to the Iraqi national army in the past. So we technically had the, the past performance to bid on this contract.

Starting point is 01:21:03 So we qualified and we figured if we qualify, we might as well submit a bid because who knows, right? We didn't actually really think we were going to win, but we felt we had to go for it. And yeah, and so we submitted the bid. It was, I remember Ephraim does everything in the last second. So it was the day of the deadline to submit the bid. And this particular bid, they wanted deadline to submit the bid and this particular bid they wanted us to submit it all in like print out paperwork usually it's just online you just submit it maybe because it was so big i don't know but they required us to like print out all the paperwork and and mail it to them what do you mean like the pentagon uh yeah to rock island arsenal in

Starting point is 01:21:40 illinois yeah okay yeah yeah so yeah that's where they do a lot of the logistics out of. So the, it was, it was like, I think it was like 4pm. And like the post office was going to close at five. And Ephraim still hadn't decided what profit margin to put on the contract. He was like, you know, everyone's probably bidding 10% on this. So maybe we should bid nine, you know, but like, what if someone else is thinking that, this. So maybe we should bid nine, you know, but like, what if someone else is thinking that, you know, maybe we should bid eight just in case someone else is bidding nine. He's like, but nobody's going to think that. Right. So if we, even 1% is, it's like a $3 million difference. So every, every percentage is a, is an enormous difference. And eventually I told him, listen, Ephraim, if you don't make a decision soon, we're going to get zero because the post office is going to close and we need to submit this in

Starting point is 01:22:29 paper. And today's the deadline. Finally, he decides on 9% profit margin that we put on top of it. We print out all the paperwork, we get in his car. It's only like 10 minutes before the post office closed. He's like driving like 70 miles an hour down like residential roads, like a maniac. And we're running up to the post to the post office the guy the post office uh guy was about to lock the door and he like pushes him like just barrels right by him he's like i'm sorry this is very important government u.s government business and the guy's like what the fuck and he's like he's like you have to mail this you have to mail this is an issue of mail this. This is an issue of national security.

Starting point is 01:23:09 You're like, I don't even know him. I met him five minutes ago for real. And they're like, fine, fine, here. And they took it. They just like barely took it. And they mailed it in. And then we didn't like hear anything from them for like three months. And we're like, like okay we definitely lost um and then they come back to us and they're like um you guys uh you know we've been looking at your bid and are you sure about this price because it was to a two-year contract

Starting point is 01:23:37 right and they're like are you sure about this price for the 82 millimeter mortar shells for the second year because it was a very large amount. And the truth is, is that Ephraim had knowingly kept the price the same, even though he did not have enough supply to fulfill that. Because what do you mean? So okay, so the way it works here, I'll tell you how how it works. So the way these enormous contracts work is that they don't give you like a, a, a, like an order for $300 million, even if you win the contract, right? They give it to you in pieces, right? They call them task orders, right? So they'll give you maybe like a million dollars here, you know, $10 million there,

Starting point is 01:24:15 $50 million, they give it in pieces, right? And when you deliver, you get paid 30 days later, right? Um, now they, they split when they asked us to submit the bid, they split the prices into year one and year two. And you had the option to give different prices for year one and year two. Year two was actually a much larger quantity than year one. Okay. And Ephraim knew that he only had enough mortar shells to supply year one at the price that he was quoting the government. But he said that he was going to be able to supply year two as well, knowing that was not true, because in reality, he would have to find the only shells available were at much higher prices. So he knew all his competitors were bidding at higher prices. So he falsely put in this lower price for the year two to keep the

Starting point is 01:25:14 overall price of the contract down so he has a better chance of winning the contract. But then if you win the contract, I'm just playing a hypothetical here, if you get it and you get one year in and then you can't do it right you go to them and say i gotta raise it so then he will def that's true and then he would they would usually say no and then he may default on the contract but at that point he already made a lot he's already delivered like 100 150 million dollars worth of stuff so does that you in the future absolutely yeah but he only did think did things for the short term. That's how he worked. Yeah, we're gonna talk about it more. Keep going. Yeah. So, but they, but the government, they were getting all these bids,

Starting point is 01:25:51 and they realized there's something fishy here. What are these two kids in Miami doing? But they, to their credit, or not to their credit, depending on how you look at it, they thought that we just made a mistake. And so they came back to us and they're like, do you want the chance to modify your bid? Because are you sure about that price that you gave us for year two on these 82 millimeter mortar shells?

Starting point is 01:26:15 And Ephraim was like, oh shit, they know. So he quickly changed. He's like, yeah, you're right, it was a mistake. And he quickly- But this is three months later. This is three months later, yeah. So he modified the, so the government does that sometimes. They'll kind of come... They'll have like a little bit of a back and forth. As long as you submit the

Starting point is 01:26:32 original bid by the deadline, then you qualify to do all... To get into all the follow-up that they do. But if they're calling you to give you that chance and it's three months later, you guys got to be looking at each other like, oh, we're in the running here. That's exactly what we thought. We're holy crap they're still we're still in the running we didn't know you know we didn't know how many other competitors we had and what the chance of winning right uh but we knew that we were still that they hadn't rejected us outright so effort modifies the price on the second year of mortar shells and we resubmit the bid and then

Starting point is 01:27:03 like another like few weeks later they tell us uh okay we're gonna need to do a few audits of your company and uh and now the audits they do what they mean by that is they it's like a little in mini investigation right so he's like cleaning dusting off all the coke bins and everything like get that out of here you know actually yes yeah pretty much um so when they told us oh they're gonna do uh they're gonna do a few audits of our company we're like holy crap we're we might be in the lead for this thing because they don't do the audits because it takes them time and money they don't do the audits unless they're very seriously considering awarding this contract. Like they only audit like maybe the top one to three companies at most.

Starting point is 01:27:53 So they told us we had to do like a few different audits. We had to do a supplier audit where we had to list all our suppliers and what we were going to buy from them. Who were the suppliers? So we had- Boris and fucking Albania? Pretty much, yes. I mean, it was, we had a whole wide range ofbania like pretty much yes i mean it was uh we had we had a whole wide range of suppliers some of them private companies some of them government-owned companies

Starting point is 01:28:11 um so we had to list all our suppliers and what we were going to buy from all the suppliers and and of course only the government could make you do this no private enterprise would have the chutzpah you know to say tell me all your sources you know but the government i mean but the government, I mean, they're not going to, yeah, they can, they're like, and you know, they're not going to circumvent you because it's not their money. You know, they're not looking to fuck you over. They're just looking to, not in that way, anyway, not for money. They're just looking to make sure that you don't mess up on the contract, that they're going to give a contract to a company that can handle this. That's what they want to see. So they want to know who all our suppliers were. They wanted to know our detailed transportation plan, how we were

Starting point is 01:28:47 going to transport it from the source to the, to the destination. They wanted to know that we had the finances to support the contract. Oh, you wait, hold on back up a second. You have to, because you're moving dangerous shit. Yeah. So there's also like like you know how like the banks have like bricks trucks and stuff or whatever you kind of got to organize the whole security system yes probably pretty similar no yeah yeah it's uh transporting military hardware is a big pain in the ass particularly explosives so what would you do i want to take the sidebar for a sec just to get the image so there are some some transportation companies who specialize in this. And there's plenty of transportation companies who won't touch it.

Starting point is 01:29:29 So you need to find those transportation companies who are willing to do it. They will charge more money. In the right countries too. Yes, exactly. You know, from the right countries. So from Eastern Europe, we were mostly hiring Eastern European transportation companies. And they were using like Soviet era cargo planes, the IL-76 to transport this stuff. Okay. Yeah. All right. So you were going through the whole

Starting point is 01:29:51 list of things that they were auditing, including that. Yeah, exactly. So you need to have the finances to support it because you need to pay the supplier in advance, and the government doesn't pay you until 30 days after you deliver. So we had to have a certain amount of money in order to float that. And this was a very large contract. So we needed to have a lot of money. Did you have it? So we didn't have enough money. But Ephraim, along with Ralph, who was our investor, they used some sort like one of

Starting point is 01:30:23 Ralph's like properties that he had gotten appraised at a very high value even though he knew it was really worth a lot less but it was appraised you know the real estate game he got it appraised at a high value and said oh we're going to use this as collateral so that was one thing they they did um that's the guy he was like the laundromat guy in the movie so they made him like a jewish guy in a laundromat, but he was a Mormon? Yeah, he was a Mormon and he owned a machine gun factory in Utah. A Mormon who owned a machine gun factory in Utah? In Utah.

Starting point is 01:30:52 And he lived out there? Yeah, he lived out there. He wasn't in Miami. He was not a Miami guy. He was not Jewish. Yeah. I've never heard of a Mormon in Miami, I was going to say. But his name really was Ralph.

Starting point is 01:31:01 All right, they kept that. They kept the first name. That's cool. Yeah, they changed his last name. But yeah, his name was Ralph. So he, they kept that. They kept the first name. That's cool. Yeah, they changed his last name. But yeah, his name was Ralph. So he's using some of his places as collateral and they accepted that? They accepted it. They also wanted a past performance audit.

Starting point is 01:31:17 They want to really dig into what kind of... I mean, we had submitted a lot of that stuff previously with the bid, but they wanted to get more details of what kind of business we'd done in the past. And so Ephraim wanted to give us the best possible chance of winning this contract. So he was going to do a deal with Ralph as well to import a very large, like around 20 million rounds of AK-47 ammo into the United States to sell in the commercial market. And he had applied for an ATF license to import it. And that license was issued, but the deal ended up falling apart.

Starting point is 01:31:56 So that deal never happened. But he still submitted that ATF license as proof that he had done this deal. So that- Can't they check that very easily? You know, they could. And I guess he took the risks that they wouldn't and they didn't so yeah he was just a very high appetite for risk to put it don't say the george bush years weren't good for business come on now they were business friendly yeah i guess so um they were definitely business abuse friendly. Yes, for sure.

Starting point is 01:32:26 Particularly Dick Cheney's businesses. Yes. Yeah, nobody holds a candle to that. There's what I'll say, at least in the context of my show, one of the more famous clips is when I had my friend Sean Ryan in here. He's got a huge channel. He's a former Navy SEAL. And he talks about when he went to Iraq.

Starting point is 01:32:44 And he just gets like the most serious face and he's like everywhere you went halliburton halliburton guns oh there's a halliburton property yeah halliburton army yeah halliburton and he's like it was everywhere yeah and it's like you literally have the vice president united states who was i think it was like the ceo company he was the ceo he he retired from being ceo so he could run uh with george bush for you know for the vice presidency yeah which is yeah he was he was damn near the fucking president he most people considered him the shadow president yeah yeah i'd love to know what kind of pictures he had at george

Starting point is 01:33:20 like what like what was he doing well yeah what was uh what was his leverage like was he blowing a guy yeah you never know who knows you don't know what they do up at skull and bones there maybe dick was at the fucking door like taking pictures in the fucking tomb i mean we know that george bush had done you know had done blow right so yeah see i don't think that would have done it i think people have been like all right this guy's cool well that well that well that's the public stuff right you know that if that was the stuff that was getting out in public who knows what was happening in private that's what i'm saying because he like found god you know did the whole i'm i'm and i'm sober now right people would have been like ah that was the past yeah it

Starting point is 01:33:56 had to be some gnarly shit probably for him to get that yeah but they didn't show that in that movie vice they just made it seem like he got hired i'm like that's the inaccurate part no way right had to be something who knows so anyway so they do this audit or fail to do this i should say right how long did that take that took about like uh about a month and they actually sent uh government contracting officers hang on sorry you need no one that's what it's there for that's why we got that mute mic right there baby we're good yeah absolutely all right we'll pause we'll pause for one sec it's crazy while we're just on the break right there before we came back i got an og arms dealer teaching my guy how to do arms deals with the u.s government and you know maybe we can fund this

Starting point is 01:34:43 podcast after that so get get fucking studying, kid. There you go. Let's go. He's got to join War Dogs Academy. We'll talk about that. But you left off, I made a note of this. You were saying, you started to answer my question, and you're like, they actually sent government contracting officers?

Starting point is 01:35:00 Yes. So what went down there? So they sent, I think it was like four ladies, right? They were all ladies, all like middle-aged ladies, very like more, actually more like older ladies, like granny types. So they weren't hot? No, they were not. But they, but it was actually really funny.

Starting point is 01:35:16 So Ephraim is like super charming in real life. Like he's very funny until he stabs you in the back. Yeah, I believe that. But like when the contracting officers came, because they wanted to do an inspection of our office, these like four ladies come and he goes and he says to them, he's like, ladies, you know, I couldn't tell over the phone

Starting point is 01:35:35 how beautiful you are, you know? He's like, you know, if it wasn't like, if it wasn't completely illegal, I'd totally be buying you all diamonds right now. I'd be buying you diamonds. Me and my mom are just like ripping a fucking Marlboro. Yeah, exactly. Take me back.

Starting point is 01:35:52 Yeah. But they loved them. I mean, they were very entertained and they gave us very high marks on their inspection. So, and you're what, 25, 26 when this is going on? I'm 24 at this time. Yeah. Yeah. So like, and you're what, 25, 26 when this is going on? Uh, I'm 24 at this time. 24. Yeah.

Starting point is 01:36:08 And it's, is it only the two of you working in this office? So at that point we had gotten an actual office. So before that we were working out of his, uh, out of his, um, uh,

Starting point is 01:36:19 living room. And it was just, uh, yeah, he had, I mean, it wasn't like super nice, but like it was a decent place. It was on the beach, you know, Miami beach. So that's nice. Um, it was just uh yeah he had i mean it wasn't like super nice but like it was a decent place it was on the beach you know miami beach so that's nice um it was a decent place not like

Starting point is 01:36:30 the apartment in the movie though yeah which was crazy but um i was actually in that apartment recently because the uh the guy who bought that apartment uh started his own podcast of course and he of course of course aren't isn't everybody. Right. Uh, and so I went on his podcast. It's called the, uh, the affiliate marketing show. Um, and yeah, it's a beautiful, beautiful apartment. I hadn't been in, I'd never actually been in that apartment before, but you weren't there like during the film and not for that scene. I've been on the, uh, set for a few of the other scenes. Um, but not for that particular apartment, like right on Collins. I have there. It's, uh, it's actually on Biscayne and it's right across the street from the arena. It's not called the

Starting point is 01:37:11 American Airlines Arena anymore. Oh, so it's on the Miami side. Yeah, it's the Miami side. It's like literally across the street from the arena. So yeah, I mean, yeah. Good stuff. Yeah, the guy's a big basketball fan. So he just walks across the street to the Heat games. And yeah. There you go. Yeah, it's a good location. But yeah, so we were working out of his living room until we were started to get into the running for the $300 million contract.

Starting point is 01:37:37 And at that point, he was like, you know, we should probably get an office. You still haven't been paid. Yeah, I know. Exactly. I haven't been paid. But you're like okay we'll get an office yeah we'll get an office where was the office um it was in miami beach on 41st street um nice yeah and i mean that's where we grew up so like miami beach now is

Starting point is 01:37:55 super bougie but like um when we were growing up it wasn't like it was like just a regular neighborhood oh you grew up i missed that you grew up on miami beach miami beach yeah yeah in the 90s. So the 90s, it was more of like a retirement community than like a tourist mecca. Really? Like it is now, yeah. I love Miami Beach.

Starting point is 01:38:13 No, Miami Beach is awesome. It's great. Yeah, it's a great town. So you have an arms deal in office in Miami Beach. In Miami Beach, yeah. 41st Street. 41st Street. How many, how big was the space?

Starting point is 01:38:22 So there were, I think like five, it was actually a decent sized space. There were like five separate offices and like one big central area. So I had my own office. Ephraim had his own office. Did he have a Tony Montana picture on the wall? So he actually, I actually got him a gift for his birthday, a Lord of War poster. Oh, that, yeah, that'll do. Yeah, with Nicolas Cage's

Starting point is 01:38:46 face made out of bullets. So it's a really cool poster and he put that up behind him by his desk. What year did that movie come out? Lord of War? That was like 03, maybe 05. Can we check that, Alessi?

Starting point is 01:39:01 2005? It was 2005? So this is relatively new. While you're doing... Did you guys think you were Nicolas Cage? Definitely Ephraim thought he was. Yeah. He loved that movie.

Starting point is 01:39:18 I'll bet. So you bought him that for The Office. So he looks the part. Yeah, so he looks the part. And the ladies from the government like that? No, he actually took that for the office. So he looks the part. Yeah, so he looks the part, yeah. And the ladies from the government like that, like, oh. No, he actually took that down when they visited. Yeah, he wanted to have a good impression.

Starting point is 01:39:33 He also, we also had a counting audit, which they wanted to see that, like, we had an accounting system to, because this was going to be a massive contract, and they wanted to see that we weren't going to like mess up with the books and everything. Yeah. Like the SBF QuickBooks going on. Yeah. So we actually didn't have any accounting system. There was like literally nothing. Like Ephraim never did any accounting. He never like, you know, so he had to hire a forensic accountant to create accounting records backdating to when he started the business so he had to go through all the deals he'd done and like create accounting records for it in paper obviously in paper yeah yeah yeah digitally yeah and so yeah i mean created the accounting system from scratch backdated that's actually kind of impressive yeah i mean he hired an accountant to do it, but it was – he had to make it look like the accounting had been done at that time, right? Because he didn't want them to know that he had just, you know, done this right now because, you know, he wanted to look like a responsible, you know, contractor.

Starting point is 01:40:39 So, yeah, I mean, they came to the office. It was not that much – it was like they just asked us a few questions they looked around and he charmed them he made them laugh and they gave us very high marks and um and then like a few weeks after that they they we got an email you know or i should say he got an email because he was the the listed with the award notice. And he calls me up and he says to me, he's like, David, I've got good news and bad news. And I say, well, what's the bad news? And he says, our first task order is only 600K. And I'm like, we won the contract? And he's like, fuck yeah, motherfucker. I'm picking you up we're going to celebrate

Starting point is 01:41:25 and he picks me up we go to this like italian restaurant and he's like ordering champagne and he's like he has this like little plastic bullet in his pocket filled with cocaine and he's like snorting coke under like the napkin you know like pretending to blow his nose in the restaurant and he's and he like passes it under under the tables i'm like no no no thanks he's like you're doing it you're doing it motherfucker You're doing it, motherfucker. This is a special moment. We're doing something. You're doing that fucking cool.

Starting point is 01:41:49 You just fucking do that right. And I was like, you know. And so, yeah. And he gives me this whole speech. He's like, David, this is a very big moment for us. You know, those fat cats in their boardrooms worrying about their stock prices at General Dynamics, they're not going to know what's going to hit them right now. They're going to be so pissed, you know those fat cats in their boardrooms worrying about their stock prices at general dynamics they're not gonna know what's gonna hit them right now they're gonna be so pissed you know what i'm telling you aui we're gonna be a multi-billion dollar company we're gonna we're gonna be flying around on private jets you know you and me buddy you gotta stick with me we're

Starting point is 01:42:19 gonna ride this out you're like sir can i Yeah. Yeah, exactly. Well, now that we won this big contract, we needed every penny we could get. So- Isn't it funny how that happens? Yeah, isn't it? Like people are like, they owe you, but it's like, no, you owe us. Exactly. Yeah. Yeah. I mean, look, in retrospect, I was an idiot. I'll be the first one to admit it. I should have seen it coming. But you tell yourself all sorts of stories when there's the prospect of

Starting point is 01:42:46 making millions of dollars on the line. So it is what it is. But that's a crazy feeling winning that contract because you're looking... What was the size again? It was $298 million. And you have 25% of it. Exactly. And we were... After he did all his renegotiating tactics which he was very good at he's very good at negotiating and renegotiating as I found out the hard way but he did that with everyone and so he he went from like a 9% margin which was what we bid it at and we ended up averaging a 20% margin. How do you pull that off? The government signed up for nine.

Starting point is 01:43:26 Right, right. Well, so he, no, the government price stays the same. He negotiated with the suppliers to lower their prices. Oh. Yeah, because once he won the contract, he's like, hey guys, I've got the contract. You want to do this business? You got to go through me, right?

Starting point is 01:43:40 Now, I would love to give you this business, but your competitors have given me a better price. Do you want to give me a better price? you want you want you want to uh give me a better price you know because i'll give you an opportunity to revise your bid because you know you're not really competitive right now but if you can be a little more competitive maybe we can do this so he would make up some pen he would make up all sorts of things you know pretty much pull every lie that he could think of against a bunch of eastern europeans exactly not the people i'm doing that to. Not high on my list there. Right, right, right. I mean, he was fearless.

Starting point is 01:44:07 Over the phone, he was fearless. He wasn't as fearless in person, but he was fearless over the phone. So, yeah, and he eventually, you know, got better prices, and we were averaging like 20%. So we were gonna like set to make like $60 million in profit.

Starting point is 01:44:22 Wasn't it also, I think that was a movie plot where they're like you guys bid nine percent do you know your nearest competitor bid like 50 so the scene you're talking about uh is where they they tell us that we were 52 million dollars under under the nearest competitor yeah and that was actually true uh but it didn't happen that way in real life it wasn't they didn't tell that way in real life. It wasn't, they didn't tell us that in person because it's actually, it's illegal for them to tell you that. They're not supposed to tell you that. Oh, that was Hollywood doing that?

Starting point is 01:44:50 Yeah. Well, they did tell us, but they told me over the phone. They wouldn't do that in a room full of people. Man, you guys were incredible pricing. Yeah. It was actually, so I was talking to the contracting officer and he was like, we were having some trouble, like a little bit later, we were having some trouble delivering uh you know some various licenses and stuff and he's like yeah yeah you know like we understand you know we're gonna do our best to support you because you guys are just so competitive we really appreciate it and we're like i'm like competitive what do you mean and he's like oh you guys were so much lower than the competition and i'm like uh how how much lower and he and he goes to me he's like he's like well

Starting point is 01:45:26 you know i'm technically not really allowed to tell you this but uh you guys were 52 million dollars you know you beat them by 52 million dollars and i'm like wow come out of your hand yeah and i i went and i told ephraim and he was pissed he was he's like fuck fuck i can't believe it we could have made another 50 million it's coming out of your end you piece of shit pretty much well that's definitely what he told himself privately so uh yeah he was he was furious he was furious but you know we won the contract so that's what counted but now you have to go deliver yeah now we got to deliver yeah so i was set to make my end, my 25% was going to be like $15 million. So I was like, all I got to do, 25% of the 60 million in profit.

Starting point is 01:46:12 Oh, in profit. Yeah, in profit. The 300 million is the total contract. So yeah, I was set to make $15 million, which is pretty comfortable. That's good stuff. Yeah, yeah. So I thought know after i'm done with this contract i'm gonna launch my own music career i'm gonna like uh you know i'm gonna

Starting point is 01:46:29 make myself the rock star that i always wanted to be you know maybe with a million or two of marketing you know i could you know give myself a good shot you know of doing it that's how the big record companies do it right had you on the previous deals because you said you guys were losing a lot of deals and before that you'd done fuel deals and then you're still trying to work in a bunch of fuel clothing and whatever right had you done the fulfillment of any weaponry related stuff to this point yourself uh well the uh the gun parts stuff okay so that's the fulfillment was i didn't did that yeah i did that yeah okay so now you win a contract and now you have to fulfill it yeah this is a way bigger one a way bigger one

Starting point is 01:47:10 yeah yeah but like to this point had you traveled all over the world yet uh so at this point let's see this was in early 2007 uh yeah we went to we went to uh we went to Vegas for the SHOT Show, also Orlando, and we'd been to Paris. What was in Paris? So in Paris was Eurosatori, which is a big international defense-related exhibition. Like pretty much every defense contractor in the world exhibits at this show, and most of the world's militaries attend as well. So in the movie they show vegas x right that's the show where where we met like uh henry tomei uh well bradley cooper bradley cooper yeah in in the movie they call him henry gerard but um yeah brad the guy that

Starting point is 01:47:57 bradley cooper plays so in the um in the movie they call it vegas x that show that they're trying to portray is actually Yurosatori, which happened in Paris. Paris is such a nice set. Why didn't they use that? Well, because I think they wanted it to be a little sleazier. It's like the arms industry. Vegas is a better vibe than Paris for that kind of thing.

Starting point is 01:48:19 So I think that's why they changed it. And who was Henry Tomei? That was the real life name. Yeah. So the real guy that Bradley Cooper plays in the movie, his name was Henry Tomei. He's a Swiss arms dealer. He'd been in business. He was like in his 40s at the time.

Starting point is 01:48:32 And he'd been in business, I think, since he was like 18 years old. Oh, veteran. Yeah, exactly. So the same age that Ephraim was when he started. And Henry had like connections everywhere. I mean, he was particularly well-connected in Eastern Europe, in the Balkans, but he had like sources like almost everywhere. And the way we actually met him was through Ralph. Ralph had done- The Mormon.

Starting point is 01:49:01 Yeah, the Mormon. Exactly. Ralph had done a deal with Henry, I think it was in the 90s, maybe the early 90s, I don't know the exact time, but where they bought, Henry had this connection in South Africa for a whole bunch of like AK-47s, but it was illegal to buy those AK-47s and import them into the United States, I think because they were like part of the apartheid regime

Starting point is 01:49:24 or something like that. Ah, yeah. And so what they did was they cut up the AK-47s and they shipped everything except the receiver of the gun, which is the part that the government considers the gun. That's the part with the serial number. Oh, wow. So they got all the other parts except for the receiver. And Ralph and his factory manufactured new receivers. And then he put

Starting point is 01:49:45 it all together and they were able to make these ak-47s at way lower prices than anyone else could because they got super low prices from south africa because south africans couldn't sell it to anyone so uh yeah so that was the first deal that henry and ralph did and they became close from that deal so you said he had been big in the Balkans. Yeah. So I'm just thinking the timeline. So obviously he was doing some heavy work during those crazy 90s. I don't know personally what Henry was doing, but he probably was involved. And he was kind of wanted in some places, right?

Starting point is 01:50:18 He was on some lists? He was on a list of concern, they call it, by Amnesty International. Amnesty International had filed some sort of report on him saying that they suspected him of supplying some like warlords in Africa, but they didn't have any proof. And so because they didn't have any proof, he did not get put on the blacklist by the United States. So it was legal for us to do business with him, but he was just a questionable character. You know, there were suspicions. There were suspicions. But you met him in at the Paris show. Yeah. So well, the first time we met him actually was in Vegas at the SHOT Show.

Starting point is 01:50:55 The first time we met him in person. But we had been doing business, Ephraim had been doing business with him for like, at least six months to a year before that over the phone because he was bidding on all these contracts for Iraq and Henry had really good connections in Eastern Europe. So Ralph introduced Ephraim to Henry because Ralph was funding Ephraim's contracts. So when Ephraim won his first contract on his own, he got introduced to Ralph by his dad. His dad also runs a government contracting business, but not lethal stuff. He only does like, like boots and clothing and stuff like that. So his dad had done some business with Ralph. And so when Ephraim won his first contract,

Starting point is 01:51:35 his dad introduced him to Ralph and Ralph funded Ephraim's contract, went very well. And Ralph was very happy with the, with Ephraim's work. he kept on funding ephraim's contracts and because he was funding ephraim's contracts he put him uh he made the connection with henry so he could get like a better source of supplies and that's how we met henry okay and then because they kind of changed up henry in the movie right he's one of those like they changed his role and things it was somewhat fictionalized well i mean i would say they changed his personality but the role was pretty accurate like he what he did was uh so he he put us he put together so he gave us a quote for like a lot of different things on the on the on the list and um but he wasn't competitive in everything like we got much better prices on you

Starting point is 01:52:23 know the grenades for example from like the man from the man from manufacturer in Bulgaria than what he gave us. But he was very, very competitive on the AK 47 ammo. And that he had a really good connection in Albania for because he was apparently friends with the Prime Minister's son. And so he, he got us a really good price on that ammo. And the reason he was able to get such a good price on that ammo was because at the time, Albania was trying to join NATO. And NATO required them to get rid of all their Soviet, their old Soviet weapons and ammo in order to join NATO. Because part of joining NATO is you need to change weapon standards so that like all NATO countries.

Starting point is 01:53:07 Yeah. Because NATO is an alliance and they are supposed to like act as a unified military. So they all have to use the same weapon system. That's a huge expenditure though. Yeah, it is. Yeah. It's an enormous expenditure. And they were going to have to pay, Albanians were going to have to pay to get the ammunition dismantled

Starting point is 01:53:26 to destroy it. So they were willing to sell it for anything because they're here, they're going to make money instead of spending money to destroy it. So that's how he got a really, really good price on the ammo from Albania. Okay. So I had started this by asking you about where you had traveled and you mentioned you've been to Paris, you've been to Vegas. Yeah. But later on, I went to Abu Dhabi for a trade show i went to south africa to india yeah they don't show those things what were you doing in south africa uh trade show oh so it was always pretty much yeah more or less but weren't you then also traveling as part of the fulfillment for this contract because you were filling it in a bunch of Eastern European countries. We didn't actually travel to most of the countries.

Starting point is 01:54:08 We didn't actually travel to most of the countries where we got the, the munitions from. For Albania, we actually sent Alex over, the guy who I, we, At the house. Yeah, at the house. Yeah. At what point was he working with you guys? So, so the, what happened was, okay, so I'll back up a little bit.

Starting point is 01:54:29 When Ephraim told us that – Ephraim told me that the bad news costs with the idea that they were going to order the full $300 million worth of stuff, right? And because that's like hundreds of aircraft loads, we get a really good price on that aircraft, right? But they're legally not required to give you anything more than the first task order. So they could have just given us that. And the first task order was only $600,000, which wasn't even enough to fill one aircraft load. So we were like, should we, are this, is this a test? Are they going to like yank the contract from us unless we deliver on the end, this money losing, you know, delivery. And so we were really nervous. And that was why he said it was bad news. But about a week and a half later, they gave us a $50 million test quarter.

Starting point is 01:55:28 So we were like, okay. Yeah. So, yeah. So we were like, okay, they were just waiting for the money to come in. So that was fine. And you're coordinating all this out of Miami? Yeah. Out of Miami. Yeah. So the problem was at that time, this is in early 2007,

Starting point is 01:55:43 there was a very large spike in oil prices and uh air freight the vast majority of the cost of air freight is the fuel and so when the oil prices spike the fuel aircraft fuel spikes and air freight costs spike you didn't buy futures contracts we didn't right ephraim didn't roll like that so uh you know, he didn't want to spend the money on the futures contracts to hedge his bets on that. Yeah. So, I'm surprised you know that. Yeah. I worked on Wall Street before I did this. So, there you go. So, you know. Yeah. Well, that's what they're there for. But yeah, that's... And a large company like General Dynamics would have done that. Oh, yeah. Yeah. But that's not how Ephraraim rolled up from you know was a high

Starting point is 01:56:26 risk kind of guy so and the currency is all that what that's actually a separate question too you just made me think of it but the currency on the u.s side they're paying you in dollars but you're paying these guys in other currency no we're paying them in dollars they're paying all right so you don't have to worry about yeah we don't have to worry about currency conversions yeah everyone was happy to take payment in dollars. All right, that works. The international currency. And so our air freight prices skyrocketed.

Starting point is 01:56:52 And for the AK-47 ammo, because it was low value, high volume, the cost of the air freight exceeded our profit margins, the increase of the cost of the air freight. So we were going to lose money on selling this ammunition to the government because we're paying more in air freight. For things like the grenades, it was much high value, low volume. So you can fit, just to give you a comparison, about 2.7 million rounds on an IL-76 aircraft. It's 45 tons. We put in an IL-76 aircraft, pull that up just so you can see that. How many rounds you said? About 2.7 million AK-47 rounds, or we did the way we repackaged it later.

Starting point is 01:57:39 Now, was that like an industry standard you knew about or did you figure that out yourself? So the standard is the weight. So you figure that out yourself so the standard is uh is the weight so you can uh an il-76 is yeah yeah exactly it's that's a this is like the we're going to war boys airplane yeah it's a soviet cargo aircraft yeah um so uh yeah you could fit 45 tons of stuff on there right now uh with with with 45 tons, the way, and I'm getting a little ahead of myself, but the way we repackaged it, you could fit 2.7 million rounds of AK-47 rounds on it. And that is, we were selling it to the government for about 10 and a half cents. So it's about like $270,000. And the aircraft alone, the aircraft costs us about 100, with the oil price spike, it costs us about $130,000 to pay for the aircraft to fly from Albania to Afghanistan.

Starting point is 01:58:36 On one trip. On one trip. Yeah. Yeah. And we had quoted it at like, I think it was like at $90,000, but then it went up to $130,000. So that ate up our entire profit margin. But grenades, you could fit about 100,000 grenades on an aircraft and each one cost about like $25. So, you know, that's like $2.5 million. Better margins. Yeah, much better margins. And so an extra $30,000, $40,000 in fuel cost doesn't make any difference there because there's enough $2.5 million. There's way more money in the profits than the increase in the air freight costs. So our big problem was delivering the AK-47 ammo.

Starting point is 01:59:19 And I realized at the time that – because they had sent us pictures of the ammunition. And the ammunition was packaged in these – what they call sardine cans, these metal tins that are vacuum sealed to prevent corrosion and stuff. And the sardine cans were packaged in these big wooden crates. And so I told Efrem, like, you know, if we remove the sardine cans from the wooden crates, we'll save the weight of the wooden crate. And maybe that's enough to get us back into profitability. And he's like, oh, that's a great idea. That's a great idea. Let's find out what those wooden crates weigh.

Starting point is 01:59:58 And I said, okay, I'll email the Albanians and get them to weigh it. He's like, no, no, no, no, no. Fuck the Albanians. You can't trust those motherfuckers. They'll give us all sorts of lies. So we got to get a guy in the ground. We got to get a guy.

Starting point is 02:00:09 He's like, I need you here, David. You're dealing with the government. You're dealing with like eight other suppliers. You got to stay in Miami. Let's get someone else to go to Albania. And I'm like, well, what about Alex? Because Alex, yeah. The Albanians don't fuck around, man.

Starting point is 02:00:26 Yeah. That's a hell of a place to dump your boy. Well, I mean, so Alex was looking for a job at the time, you know? Again, interesting job. Yeah. And he had just, he's a dual citizen with France. So he had just done a stint in the French military. Oh.

Starting point is 02:00:43 So yeah. All right. So he's a hard-on. Exactly. So he had some military all right so he's exactly so he had some military experience he's also trilingual he had gotten like a i think a master's degree in international relations so he's a smart guy yeah you know so i thought he was the perfect guy he's looking for a job anyway and he's like my best friend so let's hook him up it's like actual talent coming today yeah exactly exactly and actual town thank you i got a guitar playing masseuse entrepreneur that's fair and a miami cokehead running the

Starting point is 02:01:12 place but now i got to deal with an international relations degree you speak three languages yeah i mean like we're moving up and that's true that's true and he was gonna make the least out of all of us well you took all the risk that is true that is true and he was going to make the least out of all of us. Well, you took all the risk. That is true. That is true. And he was going to get a salary. That's right. Yeah. So we sent Alex over there and he weighed the crate.

Starting point is 02:01:32 And it turned out those crates were very heavy. And the crates, getting rid of the crates were enough to get us into profitability. But he tells me, he calls me up and he's like, you know, you do know that this stuff is like Chinese, right? And I'm like, what are you talking about? He's like, yeah, there's Chinese markings all over the crates. And I'm like, are you sure? Maybe they're like Korean or something or, you know, I'm like, you sure? He's like, oh, no, I know Chinese when I see it.

Starting point is 02:01:58 You know, this is Chinese. And I tell Ephraim, I'm like, Alex says that the ammo is Chinese. He's like, fuck. He's like, are you sure? He's like, tell him to send us some pictures just so we can check it out. That was a big mistake, obviously. And so Alex emails us pictures of it. Oh, no.

Starting point is 02:02:16 And it's very obviously Chinese crates. What Ephraim type back? Mexican? And this was a problem for us because in our contract, it specifically said no Chinese ammunition could be delivered under this contract. And the reason it said that is because there's an arms embargo against China that was put in place in 1989 after the Tiananmen Square Massacre. So, yeah, there is, for people who don't know, the Tiananmen Square Massacre, there was a bunch of Chinese university students who were protesting in the center of Beijing in Tiananmen Square, and they were protesting for democracy,

Starting point is 02:02:56 and eventually the Chinese government rolled in tanks into the square and soldiers, and there's a very famous picture of a guy. Yeah, there it is, Tank Man. Unless you tell our TikTok editors not to put this one on TikTok. Just throw that one out there. That's a good test to see if the Chinese government

Starting point is 02:03:16 is telling the truth about censoring TikTok. You can throw this one on YouTube and Instagram, but TikTok not so much. So they killed the the government the chinese government killed a lot of people in tiananmen square and uh is this embargo still in place today it is wow yeah yeah and so yeah i mean chinese never apologized no so yeah exactly they they censor all mention of tanmen Square, of the massacre in their country. Yeah. And they, so, yeah, so because of that, because of that incident, the United States put the Chinese on an embargo. And so it was illegal for American citizens or companies to buy or sell military goods with the Chinese.

Starting point is 02:04:01 So you guys had ordered this from your suppliers, not knowing, obviously, that they were going to go to China to deliver. Well, so the thing is, is that the ammo that was in Albania had been given to Albania by the Chinese in the 70s. Because the Albania is has an interesting history. It was run by this very paranoid dictator i mean most dictators are paranoid for good reason uh but the the dictator he he saw himself as like a true communist and he felt like that the guys in moscow were a bunch of like corrupt assholes who weren't true communists and so he he um withdrew from his like uh uh his I guess his, I don't know, his alignment with the Soviet Union, and made it a, he became allies with the Chinese. In the 70s.

Starting point is 02:04:57 In the 70s. This is in the 70s. And so because he did that, he thought the Soviet Union would invade him because the Soviet Union doesn't like when people leave their orbit. They invaded Czechoslovakia and a few other places pretty brutally. And so he thought the Soviet Union would invade him. And he also thought because he's a communist that NATO would invade him too. So he thought that the world's two biggest superpowers were going to invade him. And so he got his new besties, the Chinese, to give him massive amounts of weapons and ammo. Hold them off. Yeah, exactly. And his strategy was

Starting point is 02:05:32 he built a very large network of underground bunkers around the country. And he filled all those bunkers with the ammo and the weapons so that it would be safe from bombardment. And his plan was that if... They're okay. We're real soundproofed in here, but if the fire truck has some shit going down, you can hear that a little bit.

Starting point is 02:05:58 Should I wait? No, everyone's good. We're good. What happens is I'll start muting my mic over here and then I'll help it a little bit, but keep going. Okay. So his plan was that if he did get invaded, he had a plan called Total War, where every man, woman, and child in the country becomes a soldier, and everyone fights to the death. So he got massive amounts of weapons and ammunition in order to support this plan. And, of course, the war never came. And then the Cold War ended. And it got to the point that

Starting point is 02:06:31 when the Cold War ended and the country's government collapsed, their economy collapsed, they had so much ammunition in the country that they started using ammunition as currency yeah until they were able to re-establish the paper currency of the country that sounds about right yeah yeah so yeah i mean it became the most arms placed on earth per capita yeah you need someone to go away call an albanian yeah yeah we'll never see him again yeah i mean they have a pretty notorious notorious crime syndicate over there too. Yeah. World needs hit men though. It's important. Yeah. I guess so.

Starting point is 02:07:13 So they have basically, you're getting supplied some of this leftover 70s Chinese ammo. Right. Are you thinking in your head, well, maybe because it's from the 70s, we can get around this. So that's exactly what we thought. We thought, well, this ammunition does not violate the terms of the embargo, right? Because if you can buy, if you had bought like a Chinese ammunition in 1988, before it was illegal, right? You bought it legally and you import into the United States or into some other country. In 1990, after it's illegal, you could still sell that ammunition because it was purchased legally

Starting point is 02:07:46 so it remains legal right it's just you can't purchase new things or sell new things to the chinese government so this ammunition in albania was technically not violating the embargo understood but it but our contract with the u.s. Army did not mention the embargo. So it just said no Chinese ammunition can be delivered either directly or indirectly under this contract, period. That's what it said. So we realized that, you know, we know that your clause in our contract was meant to refer to stuff that would violate the embargo, right? But this stuff doesn't violate the embargo, so can you give us a waiver, right? And in retrospect, they probably would have done it.

Starting point is 02:08:40 You think so? I think so? The army wrote them back that this ammunition was critical to the mission. Don't care. And if they wanted them to stop taking delivery, if the Justice Department wanted the U.S. Army to stop taking delivery of the ammo, the army required a letter from the Attorney General of the United States. Oh, my God. And that letter never came. So they kept on taking delivery for six months after they found out it was Chinese. So- After they found out your stuff.

Starting point is 02:09:32 Yeah. After they found out our stuff was Chinese, Ephraim kept on delivering. So you got- And they kept on paying for it. So they knew. In hindsight, yeah, you could have gotten a waiver. We probably could have gotten a waiver in hindsight. But Ephraim didn't want to do that.

Starting point is 02:09:45 So at the time, the fear was that if we tell them that it's Chinese, that they would say something along the lines of, well, you know, all your competitors had to bid this contract without this stuff because that violates the term of the solicitation. So it's not really fair that you can deliver this stuff on this contract when General Dynamics, who was very upset that they lost the contract, can't deliver. They had to bid it because they knew that it was Chinese. So they were being competent and they didn't bid this stuff. So it's not really fair that we allow you to bid it. Was it $52 million more worth? That would have been my response. Yeah, that should have been. Because if it's 30, you can go fuck yourself and take the ammo. It actually was nowhere close to $52 million in difference. So, yeah. So that's what we thought.

Starting point is 02:10:34 We were afraid that they would cancel the contract due to, you know, fair industry practices or whatever. And so Ephraim didn't want to take a risk of losing a $300 million contract. So he decided that, you know what? What we're going to do is we're just not going to tell them about it. And we're just going to repackage the ammunition so that they don't find out about it. Always going to repackage it. Exactly. Because it had Chinese markings all over the crates and all over the tins. So we had to get rid of that so that they don't find out that it's Chinese.

Starting point is 02:11:04 So he told Alex, find a uh a box manufacturer in albania uh a cardboard box manufacturer was he telling him this over email uh so there some things we spoke over the phone and some things eventually we found out we talked way too much over email and that was kind of what sent us yeah it's always the emails that get you. Yeah. And the text messages. They're the cockroach in there, man. They don't die. Yeah, exactly. Yeah. It's there forever. So he told Alex, go find a cardboard box manufacturer. And we need a lot of boxes to repackage the stuff and see if he can get some labor to do this thing. So Alex found this guy named Costa Trubisca, who owned a box manufacturing company in Albania. And he quoted us, I think it was like 100 grand or

Starting point is 02:11:54 something to repackage everything, which and it was going to save us about $3 million in fuel costs. Oh, whoa. So good deal. Yeah, good deal. And we had to repackage it anyway, because of the Chinese stuff. I take that. Yeah. And, and so he starts to, to work on doing the repackaging. And we start delivering Oh, but in order before that, we had to ask the receiving officer in Kabul, we told him, you know, due to the age of this ammunition, we feel that we need to inspect it to make sure that it doesn't have corrosion. So we're going to have to break the seal, the metal tins that are sealing the ammunition so we can inspect it and repackage it into these sealed plastic bags and cardboard boxes just to make sure it's good quality. And the receiving officer was like, oh yeah, that's a great idea. You guys should do that. It's just an excuse.

Starting point is 02:12:43 Of course, it's just an excuse. We just wanted him to approve the change in packaging configuration. So he signed off on that. He was happy that we were doing the inspection. God, these guys are good. They even check everything for you? White glove service. Yeah. And so Costa starts doing the repackaging. We start delivering to Afghanistan. The receiving officer is thrilled. The quality of the ammo is great. Because the army was really desperate to receive that ammo. Because at that time, Afghanistan has a fighting season. Because during the winter, there's really deep snow and high mountains. And so you can't really go through the mountain passes to attack your enemies. And they can't attack you. So they only really fight like during the spring and the

Starting point is 02:13:29 summertime. And it was getting into springtime at this point, it was getting like March time. And, and the, our Afghan allies were starting to run out of ammo. And so the army was getting on our case, deliver, deliver, we got to get this stuff. You know, this is critical, mission critical. And so they were happy, they were thrilled that they we started delivering. But of course, as soon as things start going well, Ephraim has to start rocking the boat to see if he could make more money. And so he calls up Costa, the box guy, and he says, Can you find out for me? He's like, do you have any friends in the Albanian Ministry of Defense? And Costa's like, yeah, I've got a cousin who works there.

Starting point is 02:14:11 And he's like, can you ask your cousin, what is the government getting paid for our bullets, for our ammunition? The Albanian government. Yeah, the Albanian, because we were buying it from Henry. We were paying Henry, and he was paying the albanian government so ephraim wanted to find out what's henry's margin right and so a few days later costa calls ephraim up and he's like oh i found out from my cousin uh they're getting paid two cents around and we were paying four cents around to henry and that pissed ephraim off to no end. He's like, that motherfucker, he's doubling his money.

Starting point is 02:14:48 I can't believe he's fucking us. He's fucking us. I can't believe how bad he's fucking us. And I'm like, Ephraim, we're making a cent and a half a round in profit. And he's like, yeah, yeah, this is our contract. Who cares? He's doubling his money. We got to cut this fucker out.

Starting point is 02:15:03 And I'm like, Ephraim, just leave it alone. We're making way more money on the grenades you know why are you gonna rock the boat uh we're already delivering it's going well he's like fuck that every penny counts and so he's like i'm going to albania and i'm gonna strike a deal directly with the albanians and i'm gonna cut henry out that cocksucker so uh he's like, this is what I want you to do, he tells me. And he's like, I want you to take all those quotes that you got from all the other suppliers and I want you to modify them so that it looks like they offered us much better prices

Starting point is 02:15:39 than what the Albanians offer. And I'm going to take those quotes and I'm going to say, hey, if you don't give me a better price, I'm going to go with the other guys. So I'm like, okay, fine, I'll do that. You know, I use some PDF. Yeah, PDF editing software, super easy. Just change a few numbers, I print it out, give it to him. He flies over to Albania. And he meets with, yeah, he meets with Yili Panari, who's the head of the Albanian, of MAKO, which is their organization, government-owned organization that does the exporting, the arms exporting.

Starting point is 02:16:09 And he says to Yuli, he's like, you gotta give me a better price. Look at these prices I got from your competitors. And Yuli takes one look at the documents. He's like, that's all fake. Don't show me your fake documents. He knew right away. I mean, he knows the industry.

Starting point is 02:16:23 He knows that he has the best price in the world. Nobody else can beat the Albanians in the price at this time. Otherwise they'd have to pay for it to be dismantled, which they were doing on a small scale. They were actually paying. There was, so there's actually a, a big scandal that happened in Albania called the explosion at Gurdek,

Starting point is 02:16:41 which, yeah, it's, it has a Wikipedia page article. Yeah. That killed like a whole bunch of people and it was uh it was a d-mil contract where they were taking apart this ammunition and apparently the people taking apart the ammunition were like smoking cigarettes while they're doing this and so obviously that didn't end well yeah and um and so uh and, I've seen a lot of comments on other interviews I've

Starting point is 02:17:08 done. People think that we were involved with that. And so I get blamed for the Gurdek's explosions. Yeah, yeah. Yeah. We had nothing to do just for the record, for all the angry YouTube commenters. We had nothing to do with this. This was actually a contract that was run by another American company called Southern Ammunition. And they hired some of the same Albanians that we were doing business with. So that's the connection. All right, we got it up on the screen. I'm going to read this real quick.

Starting point is 02:17:34 2008 Gurdek explosions at approximately 12 p.m. local time on Saturday, March 15th, 2008. An ex-military ammunition depot in the village of Gerdek in the Vore municipality of Albania. U.S. and Albanian munitions experts were preparing to destroy stockpiles of obsolete munitions. The methodical destruction of the old ammunition was supposed to occur with a series of small controlled explosions. However, a chain of events led to an entire stockpile detonating simultaneously. Hundreds of houses were demolished within a few kilometers of the depot, while car windows on the Tirana-Duris Highway were shattered by the main explosion,

Starting point is 02:18:12 which involved more than 400 tons of propellant and containers. A large fire caused a series of smaller but powerful explosions and continued until 2 a.m. on Sunday. The explosions could be heard as far away as the Macedonian capital in Skopje, 170 kilometers away. Thousands of artillery shells, most of them unexploded, littered the area. The blast shattered all of the windows of the terminal building in the country's only international airport. Every flight was suspended for approximately 40 minutes. Some of the 4,000 inhabitants of the zone were evacuated and offered shelter and state-owned resorts.

Starting point is 02:18:45 The government declared the zone a disaster area. According to subsequent investigations, a privately managed ammo dismantling process was ongoing in the area. Wow. Yeah. That was huge. Yeah. Yeah. And there's a picture of it.

Starting point is 02:18:58 We have that on the screen. That looks like destruction. Yeah. So, yeah. I mean, this was a big tragedy that happened in albania and um and it became obviously a very political big political scandal uh so for some before or after the new york times article slash when you were arrested i think this was slightly before like two weeks before the new york times article came out um we'll get there yeah uh so yeah i mean

Starting point is 02:19:23 people seem to confuse us with like the other american company that was involved with this uh so for the record we had nothing to do with that uh that was we didn't have the contract to take apart the ammo um that's what they were doing but we were dealing with the the albanians that we were doing business with were involved in this situation so i think that's how people can why people confuse us um so yeah so he he tells uh yeely so ephraim tells yeely panari you got to give me a better price you got to give me a better price and yeely's like no no no you know get your fake documents out of my face you know and ephraim wouldn't leave him alone he calling him constantly constantly all fucking day he's just you're gonna take my fucking order yeah no he's like

Starting point is 02:20:10 he was more like he sounded more like like please baby please you know that was how he talked to his girlfriend anyway yeah yeah yeah yeah he uh but he's a funny guy he didn't he's a lot of things but yeah he didn't he didn't get through to these guys yeah so so yeely penari was like you know i'm not giving you he's like no no no and ephraim wouldn't stop bothering him and so eventually yeely says uh i'll tell you what i'll make a a uh a meeting with you and the guy who could actually make this decision. All right. And Ephraim's like, fine. So Ephraim and Alex, uh, go with Yeely to this like construction site.

Starting point is 02:20:49 And, um, it's like this high rise that's under construction. They walk into the construction site and they, he opens up a door and then there's this like beautifully furnished office, like wall street style inside this, this, um,

Starting point is 02:21:03 under construction building. And there in, in the, in the office is this guy who's, you know, looks like a real hard ass. And Alex told me that, you know, usually Ephraim talks a mile a minute, constantly talking, you know, like joking around, blah, blah, blah. He said the second he walked into this office, he shut his mouth, right? He knew he couldn't like mess with this guy. And he got really quiet quiet and there was another guy there at the meeting who didn't really say much but alex later recognized him as being the prime minister's son yeah who was that of albania the prime minister's son yeah that that uh so that made it into uh the rolling stone article uh that the prime minister's son was at this meeting and so the Prime Minister's son eventually actually sued us for defamation. He sued Simon & Schuster, who published the

Starting point is 02:21:50 War Dogs book. He sued Guy Lawson, who was the author. He sued me. Wait, it's not like Matt Cox's book they wrote with Ephraim? No, no, no. Or the one that Rolling Stone's author wrote? It was the one that Rolling Stone. Got it. Yeah, yeah. So the Rolling Stone author, journalist, he wrote a big Rolling Stone article. That's how the movie happened because Todd Phillips.

Starting point is 02:22:10 Yeah, what was that guy's name again? Who, Guy Lawson? Yeah, Guy Lawson. Yeah, Guy Lawson, yeah. And when the movie came out, he expanded that article into a book published by Simon & Schuster. And because of that, the Albanian prime minister's son forgot his name um sally barisha maybe i forgot whatever um he uh he sued us for defamation the court the case was thrown out of court because you can't sue a journalist for defamation especially when you

Starting point is 02:22:38 have eyewitnesses but um oh did you oh so you were a source for the journalist? Yes, exactly. So he sued me and Alex and Ephraim. Ephraim was a source for him as well. So he sued Ephraim as well. Uh, but Ephraim settled with him. Uh, I think he like took his name out of his book. Okay. Yeah.

Starting point is 02:22:58 Just cause he didn't want to deal with it or something. Yeah. But Simon and Schuster luckily fronted the legal bills for that for that situation and so uh and i think they ended up losing more money defending that lawsuit than they made on the book so that sucks that's how it goes yeah that's how it goes uh frivolous lawsuits can really kill you oh yeah yeah but so i'm glad that they they covered my legal bills uh yeah that was nice otherwise it would have been pretty bad but the core of the issue is he walks in there yeah fucking sun yes the sun is there so i you know case has already been thrown out so i could

Starting point is 02:23:28 say it again that the prime minister's son was there according to alex i wasn't there and um and the uh deliorgi who's the mobster turns out this guy was like one of the heads of the albanian mob oh yeah and the guy named like mikhail de leorghi i think is his name the dude sitting in the office yeah yeah sally barisha yeah oh shit shelson barisha yeah who is this i think yeah that's the son yeah that's oh that's the son right there yeah there he is he looks like a shady motherfucker yeah yeah and then there's the guy with him yeah the guy the guy yeah uh the uh no no not not the guy the guy with him at the meeting uh his name uh i think mikhail deliorgi which is like d-e-l-i-j-o-r-g-y something like that mikhail yeah m, Mikhail. Mikhail. M-I-K-H-A-I-L. Yep.

Starting point is 02:24:28 And then what did you say the last name was? D-E-L-I-J-O-R-G. J-O-R. Yeah. Let's see what comes up. No, no, no, no. That's not it. No, you misspelled it.

Starting point is 02:24:42 It's D-E-L-I-J-O-R-G-Y. Gosh, what a name. Oh, G-I, G-I. G-I. All right, try it. Yeah, maybe that. Yeah, there you go. Yeah, that's him.

Starting point is 02:25:05 That's him right there. That's him. Another one. Another one. Yeah. Yeah, there you go. Yeah, that's him. That's him right there. That's him. Another one. Yeah, the guy. Another one. Yeah. The guy on the right. The guy with the big smile.

Starting point is 02:25:10 Yeah. So he's like one of the head of the Albanian mob. Yeah. Yeah. He looks like it. Yeah. So yeah. So Deleorghi tells Ephraim, he's like, look, you know, I know you want a better price on

Starting point is 02:25:22 the ammo, I know you want a better price on the ammo. And I also know that you're paying this other guy, Costa Trubisca, the box guy, to do the repackaging of this ammunition for you. So why don't you give me that contract to do the repackaging? I'll make money on that. And then I can give you a little discount on the ammunition." And Ephraim's like, oh, that sounds great. That guy's fired. You're hired. You know? And so, and he got like a very small discount, like less than 10%. And so Ephraim comes back from Albania to the United States and back to Miami. And I get a call from Costa, who I was, you know, dealing with, the box guy. What year are we in now? This is in like around April, May 2007.

Starting point is 02:26:10 Got it. Okay. And Costa tells me, he's like, hey, I just found out that you guys were replacing me on the box contract. And that's fine. I understand. It's all business. It's fine.

Starting point is 02:26:20 But I have like $20,000 of boxes that i was intended for your contract can you at least buy those boxes from me because you know i got nothing to do with them now and you're gonna need them anyway so i said yeah that makes sense we'll buy the boxes from you and i told ephraim like you know hey can you buy these boxes from coast and he's like yeah yeah i'll take care of it i'll you know i'll make sure that that you know he gets paid for that and that the boxes get transferred to the new guys of course ephraraim never does it. Right. So like a week later, Costa calls me up again. He's like, Hey, I still haven't been paid for those boxes. Can you, can you take care of that? And, um, and Ephraim and, and I'm like, I go to Ephraim. I'm like,

Starting point is 02:27:00 Hey Ephraim, you know, like, can you take care of this, of the boxes? And he's like, ah, you know, the new guys, they don't want to deal with him. So they say they already have all the boxes. So fuck them. Just let it go. You know, I'm like, Ephraim, just fucking give him 20 grand, you know, $20,000. He knows everything, you know, just keep him fucking quiet. Don't make an enemy.

Starting point is 02:27:19 And he's like, he's like, ah, this guy, what's he going to do? He's not going to do shit. You know, just fucking fuck him, you know, forget about him. And apparently he gonna do he's not gonna do shit you know just fucking fuck him you know forget about him and and apparently he did do shit he was got really pissed off of course of course and he called up the new york times oh so he was the main he was the guy from that that's how the new york times investigation got started this is like you know i talked with matt about this a lot and i know you've talked with matt about it as well, Matt Cox, our mutual friend. But like, you know, Matt was writing Once a Gunrunner, Ephraim's memoir, while he was in Coleman Federal Prison with Ephraim.

Starting point is 02:27:54 Yeah. And, you know, Matt's got a hell of a Wikipedia in the past, Changeman. Yeah, yeah. But, you know, when Matt is sitting there and saying, I can't find one redeeming quality about you as a person. Yeah. I mean, the bar is low. The bar is very low. And it's like, you know, the fourth time he was in here, we've done four episodes together.

Starting point is 02:28:15 The third time he was here, we did two. The second episode there, he told the whole war dogs backstory. So I think that was episode 178. But when he did that, he was explaining like the psychology of Ephraim. And he said a lot of the same things you said earlier. But he's like with Ephraim, it wasn't so much about he needed to win. He got off more on you losing. Yeah, absolutely.

Starting point is 02:28:37 Yeah. When he was negotiating with someone, if you were still happy, he kept on negotiating. Yeah. Like he would negotiate until you were furious. What do you think that is? I think it was an ego thing. Like, because the funny thing is, I thought about this a lot,

Starting point is 02:28:53 especially once he screwed me over, you know. He didn't actually spend that much money. You know, he was actually very cheap at the time. Like he wouldn't like, you know, go to very cheap at the time like he would he wouldn't like you know go to super fancy restaurants or he he he had like an audi a6 you know which is a nice car but not for what but not for the level of money he had it's a poor person's car for his level i mean yeah yeah it could have been and and he negotiated that car super hard you know when he bought it i mean he he took me on it was such a pain in the ass. Like he, I don't know why he insisted I accompany him when he went to go buy that car.

Starting point is 02:29:29 And we went to like seven different fucking dealerships and it took him like three days and he tried to play them all off against each other just to like get a few thousand bucks off. Okay, my best example of Ephraim's like thought process is really early on, maybe within the first week of me starting to work with him. I heard him, he loved to talk on the phone with his speaker on, you know, because so you could hear both sides of the conversation. And he was on the phone for like, I think 45 minutes with AT&T because he said that he was screaming that he was, he got a, like an overage charge of like five bucks that shouldn't have been on his bill.

Starting point is 02:30:05 And he kept on demanding to talk to the manager and blah, blah, blah, you know. This is a close center. Yeah. You know, and he was furious. He was yelling. He was screaming over like five bucks. And I told, like, after he got off the phone, I'm like, Ephraim, why are you spending so much time and effort trying to get this $5 bill removed? You have millions of dollars. Why don't we just work on things that

Starting point is 02:30:29 will make us more millions of dollars? Like, you know, what are you doing? What's $45, 45 minutes for five bucks. Exactly. Like, why are you spending 45 minutes to get $5 removed from your bill? And he goes to me, he's like, it's the principle of the matter. Nobody fucks me. So that's his thing it was yeah it's it's completely the ego because he just like you know matt would describe these different stories and you know matt he's like so dramatic you know i'd be sitting there like in his prison cell like ephraim's just dictating he's writing it down and ephraim's like oh yeah and and then i fucked this guy out of a lot of money and and matt's like what he's like oh yeah no it was great bro he's like

Starting point is 02:31:12 you're supposed to be the hero in this story that's not that's not gonna play well he's like no no the people will love it he's like yeah i don't know bro i don't think so like the whole he's like literally every day it was just that he's like i keep and then he would try to talk about something where he did someone right and matt's like i think you fuck that guy like every single time it didn't it didn't register one of my favorite stories that Matt tells is he told me that when he was in prison with Ephraim, and Ephraim was telling him all these stories about how he was fucking over everybody, Matt told me this. He says, I told Ephraim, I'm like, you know, you can't just keep on burning all your bridges like this.

Starting point is 02:31:59 And he says, Ephraim looked at me and he says, Matt, there's a lot of bridges out there. Yes. Yeah. That is one of the most psychologically revealing things you'll ever hear. Yeah. Because that's what, I mean, it ended up, obviously, that story, if you've heard Matt tell it, like Matt had to sue him. Oh, yeah. He screwed Matt over out of the money that Matt was supposed to get for the book he was writing about him screwing everyone else over.

Starting point is 02:32:24 He got screwed over for that money. So's just like it's so classic of course he's gonna screw over his own like you know uh ghost writer it's just like he's he literally screws over everybody like so the guy he replaced me with after he screwed me over is a guy named danny he screwed him over the guy he replaced danny with he screwed him over he He just goes through people. Everybody's disposable. That's how he works. But we got into this because Costa went to the NYT. Now, this is where I was a little confused too. I just want to make sure you explain this so I understand it.

Starting point is 02:32:55 Yeah. The New York Times article came out. Now, he obviously goes to New York Times. They got to work on a whole process with it. It probably takes months. But it came out. It took him like six months, yeah. Okay. So, it came out after you actually got arrested though,

Starting point is 02:33:08 or they came to your office and whatever, went through it. So, when you say arrested, are you talking about like for the arms thing or for- Yeah, like when they raided your office, I should say. So, we didn't get arrested at that point. But the office was raided. Yeah, the office was raided, yeah. That was before the New York Times. That was before.

Starting point is 02:33:25 Okay. Yeah, that was before. So, I'll let you go back. Yeah, the office was raided, yeah. That was before the New York Times. That was before. Okay. Yeah, that was before. So I'll let you go back. Yeah, I'll give you the whole timeline. So yeah, so Costa, unbeknownst to us at the time, tells the New York Times about what we're doing. And he also calls up, I think it was either the FBI or Customs. Customs took the lead on the investigation. So he might have called the FBI and they the FBI or Customs. Customs took the lead on the investigation.

Starting point is 02:33:45 So he might have called the FBI and they referred it to Customs. He told them what we were doing. And his biggest mistake is he called up the local Albanian press. And he told the Albanian press that this contract that we're doing, the Albanian politicians are getting kickbacks. Which was probably true and probably why the prime minister's son was at that meeting. But we didn't know about that. I mean, it's illegal, obviously, for an American to pay bribes, even to a foreign official, not, you know, let alone an American one. But so we assume that part of that doubling of the money that Henry was making, that two cents around he put on top of what he was paying to the Albanian government, probably a bunch of that money was going to some of the Albanian politicians.

Starting point is 02:34:35 So that's probably how he arranged that whole deal. Sure. But because he told the Albanian press that and the Albanian press published it, Albania has a big problem with corruption, as most third world countries do, you know. So it's a big problem there. So I've heard. Yeah. So it's a political hot topic. And so when the Albanian press published these allegations that the politicians were getting kickbacks from this contract, about like a week or two later costa

Starting point is 02:35:05 ended up dead oh yeah yeah in very mysterious circumstances so apparently they classified it as a car crash but it's a bad start but he was he was the only car on the road in this empty field and he had apparently been run over by his own car. Yeah. So, and he was found like 30 feet away from his car, like face down in the dirt. So yeah, if it was a car crash, it was a very weird one, but nobody thinks that it was. The kind of thing where,

Starting point is 02:35:36 oh, he shot himself four times in the back of the head. In the back, yeah. Yeah, yeah, yeah. So yeah, that was a real sobering situation. Who do you think did that? Dele Orge, probably, if I had to guess. Yeah, probably. So he would have gotten wind of him somehow going to the media.

Starting point is 02:35:56 Yeah, yeah. I mean, I'm sure they have like moles inside all of the Albanian press outlets and they find out who the source is and then they go after him. Scary. Yeah. Super scary. Yeah. Hopefully it doesn't come after me, but you know. Yeah. You should be good now. Yeah. Yeah. Statue of limitations in the mind. I mean, look, I've already said this story enough times. I think if you would have killed me, you would have done it by now. So, you know, I feel all right with it, you know.

Starting point is 02:36:22 So when you find that out, you're back in Miami because you didn't go to Albania. Yeah, I didn't go to Albania. That's where in the movie they had you both go, but it was really just... Right. It was... Well, Alex. Alex was there. So they didn't want to introduce a new character in the movie.

Starting point is 02:36:35 They wanted to keep it simple. So they just had me go to Albania instead of introducing Alex. And Alex was thrilled about that because he didn't want to be... He's the kind of guy who doesn't like publicity. So he's probably not happy about me talking about him right now but uh but yeah i mean it's not it's not a secret he was he was in the book he was uh you know the war dogs yeah um so yeah so you end up you guys have this chinese ammunition you've been pushing through you have all this scandal in the background so now you don't know it but there's a new york times report that's being worked on yeah when does it go wrong where the government decides you know what these guys for doing chinese hammer

Starting point is 02:37:14 right so well before i get into that i'll uh um after the albanian um after ephraim came back from albania and you know got that price reduction, we started delivering really, really consistently. We were doing like three to four aircraft loads every week into Albania, into Kabul. And then like a few days later, after he came back, he walks into my office and he tells me, he's like, it was like the end of the day. So at that point we had about 15 employees because he was like creating more or less a boiler room where he would like, you know, he was importing some ammunition for the commercial market. And he had people like calling up every gun shop in America to try to maximize his profits. And so we had like about 15 employees.

Starting point is 02:38:01 But everyone was gone for the day. I was still, you know, I was working a little late and he he comes into my office and he tells me you know David a lot of the guys around the office they they're saying that you're not pulling your weight around here you're not you're not you know you're not helping out and I'm like what are you talking about he's like you know these Iraq contracts that we've got we're really struggling with them we need your help and you're not helping out and I said but I mean I'm not part of those contracts. We have a- It's a separate deal.

Starting point is 02:38:28 Yeah, it's a separate deal. It's nothing to do with the Afghan deal. And I told him like, I wasn't part of that contract, so I'm not getting paid on it. Why should I help out? And he says, well, you know, if we default on those Iraq contracts, you know, we may, you know, the whole company could go down and that takes your Afghan contract with it. So you got to help out on the Iraq contracts. And I said, are you going to pay me, you know, you know, a percentage of the Iraq contracts? And he's like, oh, don't be ridiculous. I mean, come on, you didn't help us win those contracts. But I want you to work on it.

Starting point is 02:39:00 Exactly. So, so I said, well, I mean, if you're not going to pay me on it, I mean, I'm working on a commission basis. I'm not getting a salary here, you know? So why don't, you know, why should I work on that? Because he owns the company. You're just getting a percentage of the deal. Exactly. He owned the company. And he goes to me, he's like, well, I'll tell you what, you know, I wouldn't make this offer to anyone else. But, you know, you're my best friend and you really helped build up this company. And, you know, if it wasn't for you, you know, we probably wouldn't be where we are today. So I really appreciate that.

Starting point is 02:39:34 I'm going to show my appreciation, okay? So I'm going to make you an offer I wouldn't make to anyone else, okay? Just for you. I'm going to give you a very generous $100,000 a year in executive compensation salary. Okay. And I'm going to give you 1% of AEY. And I'm like, 1% of AEY? I'm like, the Afghan contract is going to make us 90% of all the money we're going to make, most likely in the next like two years. Oh, so he's trying to do this to replace his deal? To replace the deal on the Afghan contract. Yeah. And I said, and I'm supposed to get 25%

Starting point is 02:40:10 of the Afghan contracts. I think I'll stay with my 25% of the Afghan contract rather than your 1% of the company, you know? And he's like, well, take it or leave it. How about zero? You have a deal though. Yeah, we had a deal. And we even had it in writing. Yeah. It wasn't like a super formal contract, unfortunately. It was a handwritten contract.

Starting point is 02:40:34 Oh, man. But it was a contract. Unfortunately for me, that contract mysteriously disappeared. Yeah. Before I could like scan it because my scanner was broken at the time and I was planning on fixing it. And he was the only guy coming into my apartment and my contract mysteriously disappeared. So, so I told him, well, in that case, go fuck yourself and I'll see you in court. And I walked out. I didn't punch him as much as I would have loved to, you know, like in the movie,

Starting point is 02:40:58 but, uh, yeah, yeah. Yeah. Yeah. Yeah. know yeah okay let's let's redo this take yeah i sucked him right in the face no look i i knew that if i punched him i i really i almost did i really did i mean i'm i'm not a violent guy at all but like um i like i was so close to punching him in the face at that point because like i i was at that moment i was looking at like the entire work i had put in for like the last two years. Nothing. Was going down to zero. Because all the money that he was, that I won from those previous contracts, he'd roll in, kept on rolling them into the next contract, into the next contract.

Starting point is 02:41:36 So all the money that I was working for, for the last two years was pretty much up in smoke now. And I was like running out of like my savings. My hundred grand at the start was down to like 25, 30 at this point and running out fast. And my daughter was like six months old at this time. Oh, so you did have a child now. Yeah. So my daughter was actually born like two weeks after we won the Afghan contract. Okay. Did you name her Afghan? What? You name her Afghan? What? You named her Afghan?

Starting point is 02:42:06 No, I didn't. No, no, no. You should have named her A-U-I. Oh, God. I'm really glad I didn't do that. Yeah. Her name is Amabel. So it does start with an A.

Starting point is 02:42:16 That's a beautiful name. Yeah, yeah. Way better written to it than the other ones. I'm glad you went for something traditional. Yeah. It was her mother's choice. There you go. Yeah.

Starting point is 02:42:23 I wasn't going to get in her mom's way. But she's six months old now and you're walking out with- She's six months old with zero and I'm running out of money quick. So it was a really, really, that was one of the hardest times in my life. I was like,

Starting point is 02:42:37 cause I went from like, oh, I'm gonna be a multimillionaire. I'm gonna be set for life down to, oh my God, I might fucking go bankrupt. Right. You know, like it was, it was a really, really tough time.

Starting point is 02:42:46 And he can just spend you, outspend you in court. Yeah, exactly. And so, so yeah, so I walked out and I contacted a lawyer and, you know, we started going through, you know, negotiations and he offered me like, like 300K as a, as a, as a severance, right? Like get the fuck out. Yeah. Like a, yeah, like 300K as a severance, right? Like get the fuck out of here. Yeah, like as a settlement. He owed me like 5 million. Already?

Starting point is 02:43:13 Yeah. Well, at the end, he owed me 5 million. At this point, he probably owed me around like 2. But he should have been owing you 15. Yes, if we had completed the entire contract. The contract was canceled, you know, like after the New York Times article came out. So he only ended up delivering around 70 million out of the 300 million. And they didn't seize all that?

Starting point is 02:43:34 They didn't actually. Yeah. All right, we'll get there. Yeah, we'll get there. Yeah, I don't know if you want me to take that tangent. But so, yeah, so he offered me like 300k. And, you know, I thought at the time, like, look, I'm about to go bankrupt, right? I, you know, I with 300k, at least I'm not going to go bankrupt. And I could start my own business. And I can move on with my life. And

Starting point is 02:44:00 yeah, it won't be the millions of dollars he owes me, but at least I won't have to fight him in court for years and years. And I don't even have the money to hire a lawyer for that. So we came up to an agreement. Of course, he wanted to spread out that 300K over the course of like three years, you know, so just because that's how he is. And we finally, you know, we went back and forth a whole bunch. And finally, we came to an agreement. And we were going to sign that agreement. And then the day we were going to sign that agreement, the feds raided his office. What was the agreement? which was enough for me to move on with my life. And I was just so sick of him. I just wanted him out of my life. That's what he was banking on. That is what he was banking on and it worked.

Starting point is 02:44:51 And that's why he's such a good negotiator because he's willing to get in the mud and play dirty. And he knows that other people just don't have the stomach for it. And I didn't. And I still don't. I mean, I'm not like- You're not getting drinks with him tonight? No, we are not friends.

Starting point is 02:45:05 We are not friends. I'm sure he would love to get drinks with me because that would be like an admission that he didn't do anything wrong that's right so yeah he would love to be friends with me but fuck him you know he could be friends with me when he gives me the five million dollars he owes me then we can be friends off it up yeah exactly let's go yeah you know then then i'll forgive him i'll forgive him i'll be like okay you're a real changed man because the ephraim i know would never give me a fucking penny so yeah what made the feds rate because again the nyc hasn't come out yet what made the feds raid the office they just finally decided like oh all right chinese ammo fuck it

Starting point is 02:45:39 fuck these guys so there's uh so the original investigation actually started off because one of Ephraim's competitors, who Ephraim kept on beating at – a small guy, not like one of the major companies, small guy that he kept on beating contracts. He told the government that Ephraim was doing like an illegal operation to like buy Chinese AK-47s and get rid of the serial numbers and import them into the United States, which was completely untrue. I mean, Ephraim wasn't doing that. But he was trying to get Ephraim in trouble. So he said this to the government. And so they opened up an investigation. And so they had an active investigation. And I think that's and then Costa told them about his allegations. Oh, so he went to both? Yeah.

Starting point is 02:46:23 He went to Ovan and MonT, covering all the bases. Yeah, exactly. Yeah. He really had, he was on a mission to destroy us. All over $20,000 worth of boxes. Over $20,000. That's all Ephraim had to do. Exactly.

Starting point is 02:46:34 I told Ephraim, pay this fucking guy, you know? Pay the box guy. You always got to pay the box guy, you know? Especially when he knows all your dirty secrets. So, you know, and over a $300 million contract, he lost it over $20,000. So, yeah. And it also, it blew my mind that he was willing to screw me because I knew all his dirty secrets too. Yeah. Right. And you're not, when it gets raided, you're not at the office. No, I'm not at the office. So I actually get a phone call.

Starting point is 02:47:01 This is about a month and a half after I left the company. I get a phone call from one of the secretaries. I was on good terms with everyone at the office except for Ephraim. Right. I was considered the nice boss. You know, he was the asshole. Because he would, like, run into, he would, like, walk into the office and he'd, like, start screaming at people. Like, hey, I'm not fucking paying you to chit chat.

Starting point is 02:47:24 Get on your fucking computer and make me some fucking money. You know, that's what he like literally do that. Good boy. Yeah, like everyone like, oh, you know, like you stress everyone out. And so, yeah, everyone hated him, you know, but so the secretary calls me up and tells me, hey, you know, the office was just raided by the feds.

Starting point is 02:47:43 And I'm like, holy shit. It's par for the course in Miami. Yeah, I'm like, they know everything, you know, the office was just raided by the feds. And I'm like, holy shit. It's par for the course in Miami. Yeah. I'm like, they know everything, you know? So I call up Alex and I tell him, you know, the feds just raided the office. And Alex was shocked because Alex didn't even think that what we were doing was illegal. When you say they know everything, are you referring to the, oh, they definitely know we were covering up the Chinese ammo? That's what I thought.

Starting point is 02:48:02 Okay. Yeah, that's what I thought. And so I tell Alex alex hey the feds just raided the office and alex is like why you know i'm like i don't know maybe the chinese ammo he's like what that's that shouldn't be illegal it doesn't violate the embargo and i'm like i don't know well you know maybe it's something else and so he he um so he didn't know the the deal what the deal said, which is – Right. Well, he knew that it was – that we weren't – well, he knew that we were repackaging the ammunition. Right. But, you know, he knew that we weren't allowed to deliver the Chinese ammo under our contract with the army.

Starting point is 02:48:35 But he thought it was just a commercial thing. Like it was just like a – you know, that it wasn't a – it didn't rise to the level of criminal. That it was just a breach of contract. Got it.'t, it didn't rise to the level of criminal, that it was just a breach of contract, you know? So, okay. So yeah, you have a breach of contract and maybe the government will sue you for some money or something, you know, but like, there's not going to be a criminal thing because we're not violating the embargo. Um, and so that's what Alex thought. And so Alex calls up, uh, Danny, who was the guy that Ephraim replaced me with after I quit. And he tells Danny, hey, you know, uh, I need some documents. I've got an aircraft landing this afternoon. I need some documents for the export permit. Can

Starting point is 02:49:10 you get me these documents? Because he knew that the documents were in the office and the feds kicked everyone out of the office so they can, you know, get all the documents and all the computers. And so Danny, Alex told me, he hears Danny cover up the microphone on his phone and whispered Ephraim hey Dan hey Ephraim it's Alex he wants he needs some documents for the aircraft what should I tell him and Ephraim says oh man those documents are in the office we can't get them

Starting point is 02:49:37 tell him that there was a bomb threat yeah yeah tell them there was a bomb threat so we all had to leave the office but we're gonna get it to him later so don't worry and and and danny gets back on the phone he's like oh there was a bomb threat so we can't get these you know we can't get these documents and alex is thinking why are these fuckers lying to me you know like why you know why why is he lying to me maybe he's planning on you know uh telling the government that i was in charge of everything and that he had no idea

Starting point is 02:50:06 he's going to make me the fall guy. And, you know, everyone will be like, I had no idea. Alex just wanted his cushy job in Albania. And he was just doing all this to keep his job. And he didn't tell me about it, right? That's what he thought he would say, probably would say if he had the chance. And so Alex was on the next flight home and Alex and I both contact legal defense attorneys criminal defense attorneys and the the attorneys tell us well you know the first thing you got to do is search your emails right search to see what kind of written evidence they have against you and so we searched Chinese ammunition and repackaging. And then we realized how many emails there were that very specifically said, you know, laid out the whole plan. I mean,

Starting point is 02:50:52 there was even an email from Ralph to, there was like an email from Ralph to us with like pictures of like wooden crates with Chinese markings on them, like a few different like pictures with like a picture of like a wood sander and like how you could use the wood sander to remove the markings from the wooden crates and like a step-by-step instruction on how to get this done so it was just like we knew right away there's zero chance that we're going to get away with this like if they have access to the emails and they probably do at this point and if they don't they're going to have it soon our lawyers told told us don't delete anything if you delete anything you're going to that's a separate crime yeah exactly uh so you know don't delete anything and they probably already have access to your

Starting point is 02:51:33 email so they can go get it too exactly even if you delete it exactly discoverable exactly even if it's deleted they can still they got it so um you know we told our lawyers that and our lawyers well you know you guys are really fucked you know you you know, we told our lawyers that. And our lawyers, well, you know, you guys are really fucked. You know, there's no way you're going to – I mean, maybe you could take this to court and get off on a technicality, but that's a risk. And, oh, do you have like 300K to fight this? Because that's what you need, you know, to fight, you know, this kind of case. You're calling up Ephraim like, we closed that deal? Yeah, yeah.

Starting point is 02:52:01 Oh, and the lawyers told me, and you cannot take a penny from Ephraim right now, you know, because it'll look like he's paying you off. So you can't take a penny from him. So that whole deal, our agreement completely, you know, got put in cold storage. And so you can't take a penny from Ephraim and you need 300 K to fight this case. And there's a lot of this evidence against you anyway. So what are you going to do? Right? So our lawyers are like, you know, as your attorney, I advise you that you cooperate with the federal government and you just tell them what you know, and you hope they don't fuck you too hard. And so- You start thinking about prison now? Yeah. So I was like, I'm like, what am I looking at here? You know? And he's like, I don't know. It depends how they charge you. We don't, we don't know what charge, what the charges are going to

Starting point is 02:52:43 be. And, but it could be serious. I mean, are they going to charge you. We don't know what the charges are going to be. But it could be serious. I mean, are they going to charge you with a violation of the embargo? Who knows? So my lawyer arranged it for both Alex and me. They arranged a meeting with the agents. And the agents sit us down separately, of course. It was actually customs.

Starting point is 02:53:03 Okay. Yeah. It was a joint investigation between ICE, Immigration Customs Enforcement, and DCIS, which is like the Pentagon's internal FBI, Defense Criminal Investigative Service. You're pissing off the wrong people. Yeah, for real. Yeah. And so they sit us down, you know, separately and they tell us, look, guys, if you're going to cooperate, there's no half cooperating, right? You either tell us everything or you tell us nothing, right? Because if we think that you left any little detail out, you get zero credit for any of this. In fact, we're going to go after you even harder. We're

Starting point is 02:53:39 going to tell the judge to really give it to you because you're lying to us, right? So you better not omit anything. You better not change anything. You tell us everything. And so of course, you know, I told them everything. And at the end of the interview, uh, you know, they were taking notes and everything. And at the end of the interview, uh, one of the agents tells me, uh, the customs guy, he tells me, he's like, you know, I know you're wondering what we know and uh and i know that you're wondering whether we knew about this chinese ammo um going in here and i just want you to know that you know when we did the raid on the office we found a to-do list on ephraim's desk in his handwriting and one of the items on his to-do list was repackaged chinese ammo oh this is the easiest case they ever made in their life and then they just

Starting point is 02:54:31 started cracking up yeah they were having such a good time with that um see and then so then they and they they told us they're like look you know you guys are not alex and you know you are not a uh you're not targets of the investigation we're really just going after ephra, you guys are not, Alex and you, are not a, you're not targets of the investigation. We're really just going after Ephraim. You guys didn't really make any money. I mean, Alex made a salary, but he wasn't getting a commission. You made nothing. And I made zero, you know.

Starting point is 02:54:53 And they knew that. And they knew that. I told them, of course. That was the first thing I told them. Look at my bank account. There's nothing there. I got nothing. I made zero money from this.

Starting point is 02:55:02 And so they told us, you know, you guys are not the targets of the investigation. We're really just going after Ephraim. So we're going to do our best. We're not going to charge you guys. You just cooperate. You're going to be witnesses. Not going to charge you at all. We're not going to charge you at all.

Starting point is 02:55:15 That's what they told us, right? And then six months go by and they don't do anything. They don't even charge Ephraim, right? And Ephraim keeps on delivering. So he's still doing this deal he's still doing the deal and he's still delivering government hadn't canceled the contract canceled the contract so yeah wait a minute office get raided yeah pentagon and ice yeah are literally investigating it and preparing charges yeah and the u.s goddamn american

Starting point is 02:55:42 government over there selling their fucking bullets to to the Afghanis to shoot it for the fucking democracy, baby. Well, they're not selling it to them. They're giving it to them. They're giving it to them. They're giving it to them for free. But they are paying for it and they are buying it from Ephraim. And they continue to buy it for like six months after that. Are you telling me that when Afghanistan fell in 2021, those fucking Taliban guys were shooting Ephraim's rounds into the air?

Starting point is 02:56:06 They definitely are now. Oh, my God. Yeah. All right. I'm sorry. Continue. Wow. Yeah.

Starting point is 02:56:14 They tell you you're not going to get charged, but then six months go by. Six months go by. He continues to deliver on the contract, the same ammo, the same Chinese ammo. And he replaced you. He replaced me with Danny, and then eventually he screwed danny over and replaced him of course uh so uh about six months go by in like march 28th uh 2008 a date that shall live in infamy yeah in my life anyway uh was the date that the new york times published front page article, and it had my mugshot and Ephraim's mugshot on the front page of the New York Times next to a picture of rusty looking ammunition, that all the stuff we were supplying was defective, and that we were putting our Afghan allies in danger by supplying all this defective ammo. Was this true?

Starting point is 02:57:11 So the ammunition that they had on the cover of the New York Times was not even the Chinese ammunition. It was Bulgarian ammunition that Ephraim had bought about 30,000 rounds of this. So we were buying the grenades out of Bulgaria. And he got an offer for 30,000 rounds for very, very cheap in Bulgaria. And we had some room on the aircraft, but it wasn't worth it to go to Bulgaria to inspect the ammo. So he figured, well, the price is so low. And we'll just ship it, we have room on the aircraft anyway. If they accept it, great, we made a massive profit margin. And if they don't accept it, no big deal. It's super cheap anyway. You know, so he rolled the dice. Turned out it was total garbage, right? The receiving officer took one look at this and he's like, I'm not accepting

Starting point is 02:58:00 this shit. And he didn't pay us for it and but afghanistan doesn't have any ammunition recycling facilities so they had nothing to do with it they didn't want to pay to ship it back so they just moved it to the side of the airport and just left it there out in the open you know to the elements so when the new york times came to investigate and they started asking around oh it had literally been rusted it's literally been rusted. That's the pictures that they got. And they implied that all the stuff we were delivering was of that low quality, which wasn't true. It was like 30,000 rounds out of like 150 million that we delivered in total. And your mugshots were like from some stupid years before, right? It was actually from Ephraim's 21st birthday.

Starting point is 02:59:00 Yeah. So it was, yeah, on Ephraim's 21st birthday, we were going to go out to, yeah, because the mugshots weren't from like, we hadn't been arrested for the arms thing or anything like that. On Ephraim's 21st birthday, we were going to go out to like some club in Miami to celebrate. And he lived in one of these fancy buildings at the time where you can't like park your own car. You have like even if you live there, you have to valet your car. And for some reason, he had a lot of beef with the valet guy. Of course. Yeah.

Starting point is 02:59:34 The valet guy was this like little Cuban guy. And they just really hated each other. I don't know why. I don't know how it started, you know. But like so we go to the valet area to get Ephraim's car and the valet guy's not there. So Ephraim's like, great, this asshole isn't here. I'm just going to get my own car. He goes into the valet guy's like closet where he keeps all the keys.

Starting point is 02:59:56 And while he's like rummaging looking for his keys, the valet guy comes from around the corner and sees him in his closet. And the valet guy starts hey you you can't fucking go in there you can't you can't go in there and ephraim's like what i just want my car why i gotta make a big deal i just want my car the valet guy comes up to him and just clocks him right in the face oh shit yeah yeah just clocked him right in the face so ephraim starts punching him back the security guard um runs over uh the security guard grabs the valet guy i grab ephraim we pull them apart ephraim's shirt is all like ripped and uh and ephraim's scream he's like you motherfucker i'm gonna get you deported you piece of shit i'm calling the cops you know and uh and so you know

Starting point is 03:00:40 we we go up to f we go up to ephraim's apartment so he can change his shirt. And he actually calls the cops. And he's like, oh, I was just assaulted by my valet guy. I want to press charges. And so we're about to go down and we see over his balcony that there's four cop cars in the driveway of his building and he um and as we're in the elevator uh heading down he goes he's like he's like oh shit he's like i've got a bag of coke in my pocket he's like he's like he's like listen david he's like listen if anyone's get arrested getting arrested here it's gonna be me i mean you weren't even involved you were just pulling me out you know you were just breaking up the fight so so can you just hold my coat for me and i'm like uh i mean can we just like go put it back in your apartment you know and he's like yeah we're already here we're already

Starting point is 03:01:35 here you know just he's like you'll be fine you'll be fine you just hold the coat and i'm like oh man uh fine you know and so i put it like in my sock just in case, you know? And we go to the cops, they separate us and they ask us each what happened. And I, you know, I tell them what happened. Then they go and talk to the valet guy. They talk to the security guard. The cop comes back and says to me, turn around, put your hands behind your back. You're under arrest for assault. You didn't even do it. Yeah, I know. And I said, what are you talking about? I was just breaking up the fight. And the cop says, well, you know, the security guard says that you were holding the valet guy down

Starting point is 03:02:17 while your friend was beating him. And I said, that's not true. We were just, security guard was breaking up the fight and I was breaking up the fight. It was just them two fighting. And they're like, yeah, well, we've got a witness so you know that's all we need i'm like look at the security cameras right there's security cameras all over the place why don't you just look at the footage and you'll see that's not true they're like we don't need to look at the security cameras we have a we have eyewitness testimony so so you're under arrest i'm like you fucking assholes and so they arrest me arrest me. They handcuff me, put me in the car. You got coke in your sock.

Starting point is 03:02:46 And I got coke in my sock. And I'm freaking out, obviously. And I'm thinking, man, what should I do? Should I take the coke out of my sock and just leave it in the back seat? Are they going to do their check? I don't know. And so get to the Miami Beach Police headquarters. And I decide to leave it in my my sock cop takes me out of the car

Starting point is 03:03:09 and uh takes uh it was actually a female cop she takes her her her flashlight and she like does a real close inspection of the back seat and i'm like okay that was the good call right there uh yeah good thing i didn't do that takes me into the uh to the uh holding area and another cop is like okay uh yeah they do like a very thorough pat down uh but not your foot but not my scent the cop tells me take your socks and shoes off and put it on the table and i'm like i'm fucked i, I'm fucked. And so I'm thinking, should I take my, should I leave the bag of Coke like under my foot? Should I put it in the sock? Like, what's the best move here? Trying to like spray around on the ground.

Starting point is 03:03:54 Yeah. Well, I mean, it was a little like dime bag, you know, it was like so obviously drug related. So I decided to leave, you know, to leave the Coke in the sock, but my feet were sweating. So I had to like, you know, like use my finger to like separate the bag that was sticking to my foot. So it gets into the sock, take, you know, I put the socks all crumpled up on the table. It was inside, no, I put the socks inside the shoes and put the shoes on the table it was inside no i put the socks inside the shoes and put the shoes on the table and um the cop takes the socks out he puts them on next to the shoes and he looks at my he takes the shoes and he i have i have flat feet so i have orthotic devices inside my shoes they're like these little plastic inserts and so the cop takes the orthotic devices and he's like what's

Starting point is 03:04:43 this and i'm like it's a weapon of mass destruction and i'm like that takes the orthotic devices and he's like, what's this? And I'm like – It's a weapon of mass destruction, asshole. And I'm like, that's an orthotic device for my flat feet. He's like, are you sure it's not a weapon? That's literally what he asked me. He's like, are you sure this is not a weapon? And I'm like, no, that's an orthotic device, flat feet. He's like, I never heard of it.

Starting point is 03:05:02 And he's like, you sure? This is not a weapon. And he takes it and he's knocking it on. He's trying to see if there's a secret compartment in there. Oh, my God. And he looks through the shoelaces. He tries to see if the sole of my shoe opens up. It gave my shoes the most thorough investigation I'd ever seen in my life. But not the coat?

Starting point is 03:05:23 But not the socks. Oh, my God. And after he's done with the shoes, he's like, okay, put your socks and shoes back on. He didn't look inside the socks. I think because he was so distracted by like the orthotic device. So I'm like, okay, I just narrowly avoided a bad situation. I put my socks and shoes on, go into the holding cell. There's a bathroom in there, a little toilet. So I take it out, I dump it in the thing, flush it real quick. I'm like, okay. Yeah okay yeah exactly but you got a mug shot out of this but i got a mug shot out of it you guys got let off on it though i imagine so reviewed the tape yeah so

Starting point is 03:05:54 i mean we got out the next day um and uh and yeah and we got bailed out the next day and the uh they just dropped the charges because we eventually got the the footage from the security cameras but the New York Times goes and goes yeah exactly pulls up these mugshots the mug shots and we do not look great in those yeah you're still you lost some weight sweating yeah I mean the mug shot it was like four in the morning at that so the way so they hold you in a holding cell right and for like like two three hours and then they hold you in a holding cell, right? And for like two, three hours, and then they stick you in a transportation van, right? With a bunch of like homeless drunks. And the transportation van, the way they do it, it's like this cargo van, and it's split down the middle with like a metal like panel to split the two sides. And there was like one like homeless woman. So they put her, they had to separate the men and the women. So they put her by herself on one side and they stuff all the guys in on the other side. So we're like packed in like sardine cans and homeless people smell pretty bad. And so, you know, I'm like barely able to breathe in there. I'm like dying of the stench. And they

Starting point is 03:07:01 just kept us there for like an hour and a half without moving while the cops are like watching some sports game. Don't get arrested kids. Yeah. It's it, it was like, I didn't even do anything. It was, it was so infuriating. And then, you know, then they finally make you wait in line for like a million years, uh, to once you arrive at the, at the, uh, the processing facility. And then they finally take your mugshot. So at that point, not looking good, I... Not looking good. I'm not looking good. I'm not feeling good.

Starting point is 03:07:28 I'm very upset. A New York Times article comes out. You think you're not getting charged at this point because they said they're not doing anything, but six months has gone by. March 23rd, 2008. March 28th, 2008. New York Times publishes the article,

Starting point is 03:07:44 and we look pretty bad. And it creates this enormous like firestorm in the media, because I think Ephraim might have had like a little bit of weed on him when he got arrested. So they found that. It was a small amount, but that got into the record. So the media started calling us the stoner arms dealers. These couple of kids, you know, have a $300 million contract and they're smoking weed, right? You know? They're smoking the pot. Yeah, exactly. That reefer madness. Yeah, somewhere Richard Nixon's like, get them out.

Starting point is 03:08:16 Yeah. And so it creates a big firestorm that it gets into the Associated Press network. So every major newspaper around the world publishes this. I had like a Google alert on my name and I saw my name pop up in like every major newspaper around the world, like 300 newspapers. And now your lawyer calls you like, yeah, remember that deal? Yeah. Not anymore. Yeah. And like Congress started holding hearings on the floor of Congress. You know, there's actually – there's YouTube.

Starting point is 03:08:44 On YouTube, there's YouTube, on YouTube there's a clip of like this Congressman, like I think he had like either mine or Ephraim's face on like one of those big like tripod like paper things. Yeah, yeah, with the easel. The easel, yeah, the easel with like a paper. Type in Congressman Ephraim de Vrolis. AEY. AEY.

Starting point is 03:09:02 See if we can get that. That's hilarious. So did you guys think you were going to have to testify in front of Congress? Yeah, so they actually subpoenaed us to testify in front of Congress. And you were going to have to go up there and say, I plead the fifth? Exactly. So our lawyers told them, you know, they're just going to plead the fifth because they're under a criminal investigation. You would have looked gangster if you did that. I know.

Starting point is 03:09:19 I'm kind of disappointed it didn't happen. But Congress decided to withdraw the subpoena because they because they didn't just want to waste their time that would have been a nice that would have been a nice talking pony show yeah yeah you would have to throw on the new york accent to look a little tougher exactly according to my attorney's advice i'm pleading the fifth i'm pleading the fifth that's now that's like kind of a oh did we actually get it no i was gonna say this is like a really exact one. Yeah.

Starting point is 03:09:47 No, there's, it's an, yeah, YouTube. You're going to have to go on YouTube. It's, and it's an old video. It's like probably from around 2008. Congressman A-E-Y. Yeah. Congressman. Yeah.

Starting point is 03:09:59 There's Ephraim looking great. Yep. Yeah. That's after he gained weight. Yeah. Yeah. That's after he gained weight. All right.

Starting point is 03:10:04 Go up. Congressman. A-E-Y. A-E- Yep. Yeah. That's after he gained weight. Yeah. That's after he gained weight. All right. Go up. Congressman. AEY. AEY. Yeah. Don't do photo. Yeah. Get rid of that whole second part there.

Starting point is 03:10:12 Which one? Ephraim? No, no. Just do congressman. Get rid of everything after congressman. Yeah. Right? And then do AEY.

Starting point is 03:10:19 Yeah. Testimony. Ephraim DiVroli. Yeah. Yeah. There you go. Let's see if we can get it. Right here? testimony F from Diveroli yeah yeah there you go let's see if we can get it uh right here

Starting point is 03:10:29 hearing yeah there you go that's that's that's click that Nancy Pelosi yeah

Starting point is 03:10:35 post it alright do we got volume here let's see I haven't watched this in so many years I listened to the testimony and reviewed all the documents there

Starting point is 03:10:44 there there are four things that need to be going on here. Serious communication problems, some serious incompetence, phenomenal carelessness, and a culture of mediocrity. I asked the contracting officer to deliver the weapons because a hurricane hit Miami, Florida. So is this the guy who was holding it up? You know, I thought I saw a different video, but yeah, go to the other popular,

Starting point is 03:11:14 the other, you know, go to where the bump is. To the right. To the right. This bumper? Yeah, yeah, yeah. There's a bumper there. I just saw it. When this $300 million contract was awarded.

Starting point is 03:11:28 Yeah. You didn't know. I see Mr. Parsons. It might have been a different video. It might have been a different video. Yeah, I saw this video where a congressman had our pictures on the floor of Congress. Yeah. Wait, it might have been...

Starting point is 03:11:46 Wait, is it that one? The hearing on 22... Waxman. I think that's it. Waxman. Yeah, that one. Yeah. Yeah, grab that one. I'm not going to put the volume on yet because it's really annoying to go through and look. Keep going. Keep going. We'll see if he can find it.

Starting point is 03:12:03 Just bear with us out there, people it's like a little hard trying to find this live but bottom line is like it had a picture of you yeah yeah yeah all right don't yeah yeah yeah we're good you can you can find that later i guess put it put in the clip so um so how soon after that did charges come down so around two days after the new york times article came out um uh the the army put out a statement saying that they were shocked and appalled and had no idea and that they were going to cancel the contract so um and about like maybe a week after that my lawyer calls me up and he's like hey you know the government the the prosecutors say that they're going to have to charge you and that's how it looks yeah exactly it's because there's just so much uh political

Starting point is 03:12:50 scandal surrounding this there's a lot of political pressure and you guys were you know you and alex were and ralph were so involved in the in the contract that they feel like they can't um charge ephraim without charging you guys so and, and the way they, what they did was they charged us with, the way they charged the case was they said, you guys, with every plane load of ammunition that you sent of this Chinese ammunition, you supplied a document called

Starting point is 03:13:23 a certificate of conformance where, and supplied a document called a Certificate of Conformance, where, and in the Certificate of Conformance, it lists the type of ammunition, the quantity of ammunition, the year of manufacture, and most crucially, the place of origin. So you put the place of origin as Albania, and you knew that it was China. And not only did you know it was China, you had a whole operation to repackage the ammunition to hide the fact that it was China. So submitting this document to the government is an act of fraud. And you did this for 71 aircraft loads. So that's 71 acts of fraud.

Starting point is 03:13:58 Counts? Yeah, 71 counts. Exactly. And you can get up to five years in prison for each act of fraud. So you're looking at like 355 years in prison if you take this to court and you lose. Now, does your guts fall out of your asshole when you hear that? tell you what, if you plead guilty, we're going to combine those 71 acts into one. So the most you can get is five years max. And because you plead guilty, we're going to tell the judge to go easy on you and to give you the low end of the guidelines. So, you know, maybe you'll get one year, maybe just probation, who knows, up to the judge, not up to us, but we'll go to bat for you

Starting point is 03:14:38 because you plead guilty. So that's your options, right? Easy call. Exactly. Oh, and don't forget. Where do I sign? Yeah. And you need 300K to fight this if you want to fight it in court. So do you have that? No. No, you don't? Okay, all right. So obviously it was not much of a choice. So Alex and I pled guilty.

Starting point is 03:14:58 Eventually Ephraim pleads guilty. He fought them for like another few months. Maybe like four years, right? Right, but that was because he messed up. Oh oh yeah he like he like played with guns or some shit committed a second crime while awaiting sentencing for the first uh yeah ralph i'll tell that story but ralph decided to fight it all the way and he uh and that's why it stretched out for like three years because he went to trial once and he had a hung jury one juror refused to convict him and then they did the whole thing again

Starting point is 03:15:30 and he got convicted he got sentenced to four years as well and so ephraim did plead guilty and probably would have gotten on the low end of the guidelines maybe one year or something maybe even probation who knows um Probably more than us because he was the ringleader of the operation. But while he was awaiting to be sentenced, the plea agreement very clearly states that if you commit a second crime, you invalidate that plea agreement. Because how are the agents going to go to bat for you with the judge and tell the judge that you're you're very sorry and you're a reformed citizen if uh if you commit a second crime and so they told him get out of the arms business you can't do this business while you're awaiting because he was still doing it right so but of course the way ephraim rolls

Starting point is 03:16:19 he what he does is he uses his newest lackey the guy he replaced the guy he replaced danny with because he you know keeps on going through new ones right he uses his newest lackey to start a company under his lackeys name and he uh starts doing business under that guy's company's name right uh but ephraim's like a real control freak. So whenever it got down to like negotiating, he had to do the negotiating himself. And so he tried to do this deal with a company called Knight Industries based in Central Florida, where he would like import these high capacity magazines from Korea and stamp them with Knight's logo

Starting point is 03:17:01 so that he could sell them at a much higher price. It was a legit deal. But while he's like negotiating with, while he's negotiating with Knight Industries, he, the guy realized who he was and Ephraim admitted who he was. And, you know, like, he's like, yeah, you know, I've got this thing going on, but don't worry. This is a totally legit deal. I could do this deal. You know, don't worry about it. Right. The guy did worry about it. He wasn't sure if it was a totally legit deal. He thought maybe Ephraim's trying to like entrap me and to get his sentence reduced, which is a very reasonable thing to think. So he calls up the ATF and he says, hey, you know, I've got this convicted arms dealer

Starting point is 03:17:42 who's trying to do a deal with me. What should I do? And the ATF says, oh, that's really interesting. Why don't you introduce one of our undercover agents as your business partner? And so he introduces Ephraim to the undercover agent. The undercover agent says, you know, I'm the kind of guy who needs to look you in the eye and shake your hand in order to do this deal. So why don't you come up to Central Florida and we'll sign on the dotted line. And of course, Ephraim wasn't allowed to leave South Florida because that the terms of his bond, he couldn't leave the Southern district. Feels very entrappy. Absolutely. Oh, we're just getting started. So the, the agent keeps on trying to get Ephraim to bring a gun to the meeting so that they could go shooting. Right. Cause he knew that Ephraim couldn't be, couldn't handle guns

Starting point is 03:18:24 cause he already had a conviction and he loves guns, right? So he was trying to get him, he was trying to entrap him into that. Ephraim, to his credit, refuses to bring a gun to the meeting. He says, I'm not bringing a gun to the meeting. But when he actually meets the agent, the agent says, hey, I brought my gun, check this out. It's the latest HK on the market. And Ephraim's like, oh, that's so cool. I love that. I've been wanting to check that out. Let me see that thing. Picks it up and he says, what can I say? Once a gun runner, always a gun runner. Am I right? Oh, that's so good.

Starting point is 03:18:59 And the agent slaps the cuffs on him. Right there. Right there. And he says, you're a felon in possession of a firearm you're under arrest oh my god you can get up to 10 years in prison for that so he could have gotten and he vowed and he uh violated the terms of his bond so they didn't give him a new bond so he had to stay in county jail for like a year while waiting sentencing and uh he could have gotten a total of like 15 years, five for the fraud charge and 10 for the gun charge. But he hired the best lawyers in Miami, spent literally like $2 million on his lawyers. And they negotiated it down to four. And they ended up with Matt Cox.

Starting point is 03:19:35 Yeah, exactly. And that's how he met Matt Cox. And you ended up with like seven months house arrest? Correct. Seven months of house arrest. So you didn't have to go to prison. I very narrowly avoided prison very grateful for it right now at the end of the day it's kind of crazy because the only reason you're even a convicted felon is because the new york times did a report on this yeah and actually the part that looked like the most egregious was kind of taken out of context. Yes, absolutely. And when you look at what you guys did,

Starting point is 03:20:08 it was, there was an element of fraud, obviously, on saying this is not Chinese ammo. Right. That was wrong. But you still pulled this off. Right. You were legit, like, it's not like you weren't legit. Right.

Starting point is 03:20:22 Like, you guys, like, no offense, like two young assholes in Miami. I'll take it. Watching Lord of War on Friday nights. Yeah. You know, we're doing $300 million worth of deal for the United States government. Yeah. Does that ever hit you? Like, that's some pretty badass shit.

Starting point is 03:20:41 It's, yeah, it doesn't seem real. Yeah. It's pretty intense. but uh listen david we'll put the links that down in the description and other than that is there anywhere else you want people to get you on social media yeah on social media it's david packhouse p-a-c-k-o-u-z um on almost all social media is just david packhouse except for tiktok it's david m packhouse but i don't really use TikTok. We'll link it down below so people can get you.

Starting point is 03:21:07 But thank you so much for coming out, man. I appreciate it. My pleasure. Everybody else, you know what it is. Give it a thought. Get back to me. Peace. Thank you guys for watching the episode.

Starting point is 03:21:15 Before you leave, please be sure to hit that subscribe button and smash that like button on the video. It's a huge help. And also, if you're over on Instagram, be sure to follow the show at Julian Dory Podcast, or also on my personal page at Julian D. Dory. Both links are in the description below. Finally, if you'd like to catch up on our latest episodes, use the Julian Dory Podcast playlist link in the description below. Thank you.

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