The Jordan Harbinger Show - 839: David Packouz | The Real-Life "War Dogs" Gun-Runner Part Two

Episode Date: May 25, 2023

David Packouz (@DavidPackouz) is an entrepreneur, inventor, musician, and CEO of Singular Sound. He's also a former arms dealer, whose story was portrayed in the movie War Dogs with Jonah Hill, Miles Teller, Ana de Armas, and Bradley Cooper. [This is part two of a two-part episode. Catch up with part one here!] What We Discuss with David Packouz: How does an Orthodox Jew with 10 siblings become an international arms dealer? How federal government contracts work — and why some of them almost always go over budget. How corruption at every level of the Russian government hamstrings its military and stifles innovation. How David and his partner Efraim Diveroli got hooked up with lucrative government arms deals when they were barely adults. The countless ways in which Efraim is not as charming as Jonah Hill made him out to be in War Dogs. And much more... Full show notes and resources can be found here: jordanharbinger.com/839 This Episode Is Brought To You By Our Fine Sponsors: jordanharbinger.com/deals Sign up for Six-Minute Networking — our free networking and relationship development mini course — at jordanharbinger.com/course! Like this show? Please leave us a review here — even one sentence helps! Consider including your Twitter handle so we can thank you personally! See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

This episode is sponsored in part by Conspiruality Podcast. You know how I'm always talking about critical thinking and spotting manipulation? Well, there's a podcast that's all about dismantling new age cults, wellness grifters, and conspiracy mad yogis, basically the wild overlap of spirituality and misinformation. It's called the Conspiruality Podcast. The hosts, a journalist, cult researcher, and a philosophical skeptic, dive deep into how this stuff spreads, from Project 2025 and the Heritage Foundation's dystopian vision of the future to how former leftists get pulled into far-right conspiracies.

An interesting episode to check out is called Speaking Truth to Goop, where Jen Gunter breaks down the pseudoscience behind the wellness industry in a way that is super entertaining and eye-opening. It's sharp, funny, and makes you a lot harder to fool, which, if you listen to this show, you know I'm all about that. From exploring cults to analyzing our cultural and political landscape, the Conspiratuality Podcast will help you stay informed against misinformation and resist fear tactics.

Find Conspirality on Apple Podcasts, Spotify, and wherever you get your podcasts. Coming up next on the Jordan Harbinger Show. So literally 15 years ago, almost to the day, the New York Times published this front page article about us. They had both mine and Ephraim's mugshots on the front page. We did not look good. Welcome to the show. I'm Jordan Harbinger.

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even the occasional former jihadi, four-star general or legendary actor. And if you're new to the show or you want to tell your friends about the show, the starter packs are the place to do it. We got sets of episodes like negotiation and communication, China and North Korea, disinformation in cyber warfare, crime and cults, and more. just visit Jordan Harbinger.com slash start or search for us in your Spotify app to get started. As I mentioned before, we got an AI chatbot on the site. It's recently been updated to GPT4, which is cool. It's a lot more useful. You can find any info from any episode of the show, any feedback Friday

question, any sponsor promo code. Jordan Harbinger.com slash AI is where you can find it. I would love your feedback on this thing. Sometimes it says weird stuff, but it's really, really freaking useful and cool. So definitely go ahead and check it out. Today, part two with David Packout. If you haven't heard part one, go back and have a listen to that one if you have not done so yet. Part of the inspiration for the movie War Dogs became an arms dealer as a kid, almost went to federal prison for a really, really, really long time and avoided that. But the story is a damn good one. So here we go with part two with David Packhouse.

You guys had won the contract. Tell me how you find out and what that moment is like because there's got to be, it's like finding out you won the lottery. I was just getting home. I remember. This was in late January of 2007. I had just gotten home and I get a call from Ephraim. He's like, I've got good news and bad news.

And I said, what's the bad news? And he's like, our first task order is only 600K. And I said, well, we won the fucking contract? He's like, fuck yeah, we won. He's like, get dressed. We're going out to celebrate. And so what he meant by the task order, just to give you a little background. The way the contract was structured was it's a $300 million contract, but that's estimated to be

ordered over the course of two years. Right. Okay. And what they do is they give you like many contracts under that contract and they call that a task order. And legally, actually, according to the contract, they only were legally required to order the first task order. And we weren't informed what the size of that first task order would be. So obviously we bid the contract with the idea that they were going to order the full amount over the course of two years. And that's what, you know, the logistics costs we put in and, you know, the way we negotiated with suppliers. If the government was going to drastically reduce the quantity, it would really screw us. We would not be able to deliver. And so when we saw that the first task order was only 600K, we're like, well, unless they

order something additional, we're fucked because we can't deliver 600K worth of ammo at the prices we offered them. So, yeah, it turned out that that was just, you know, their way to just get the contract rolling. And a few weeks later, they gave us, like, I think it was like a $30 million task order. Sure. So that's like the Trader Joe's sample where it's like you can have that little light. Exactly.

Exactly. Just to make sure you like it. Yeah, they wanted to see the ammo and be like, is this real? Because did they audit, were they like, oh, this is a legitimate company, not just dudes in their garage? Because they didn't know. They gave us several audits before awarding the contract, which we'd never gotten before for any other contract, even the $15 million contract. We didn't get this. But for this one, they actually asked Ephraim to go meet them in person. There's a scene of us in the movie. I think this was in the trailer where we're stoned out of our minds and talking to the U.S. to the military contracting officers. It didn't happen like that in real life. I actually didn't even go to that meeting because Ephraim wanted. someone, because he was so young, he decided to take Ralph with him because Ralph is an older gentleman.

So he felt that Ralph would give him more credibility. And so he took Ralph with him. And as far as I know, he didn't smoke weed before that, though, that wouldn't surprise me either. I mean, he was doing drugs all day, you know, regardless of the situation. So that wouldn't surprise me if he actually did that. But so they wanted to meet him in person. They also sent a team of financial auditors down to our office. and they asked to see our accounting system to make sure we had a good accounting system to support this contract.

And the funny thing was that, well, wasn't so funny at the time, we didn't actually have any accounting system. Ephraim never kept any records whatsoever. He just did everything by the seat of his pants. So he had to hire a forensic accountant to come in and build the entire accounting record for his company for the past like two or three years, I think two and a half at that point. And so they had to like pretty much create this paper trail and make it look like it had always been there. Oh my God. Yeah. Wow.

Stress. Yeah. It took several weeks to do that. Several weeks to create an entire paper trail for that whole thing. So they had a whole for like a whole accounting audit to make sure the accounting system was in place, which we put together at the last second. They also had a sources audit. They actually wanted to know where we were. getting all the stuff.

Okay, good. I'm glad to hear that. Yeah, yeah. That's, you know, inspires a little bit more confidence. They wanted us to list everyone we were getting it from. However, with that being said, there was nothing stopping us from changing our sources afterwards. Okay. We were not legally required to use the sources that we told the government we were going to use. They just wanted to know that we had contacts with sources that had the capability of supplying us.

That's almost like a plausible deniability thing. They told us they were getting it from this South Korean arms company. Right. And then they couldn't get it from there. So they went to this warlord in Albania. In their defense, there is some logic to it because you don't want to limit your suppliers' capabilities. You know, like if a new source, you know, sources sometimes drop off. They end up selling it to somebody else before you, you know, or someone who you thought was a good connection in the government gets arrested for corruption.

Surprise, surprise, you know. So sources can dry up. And sometimes new sources arise and you want to be able to have the flexibility to do that. So, you know, with that in mind, they did not limit our capabilities of choosing our sources. But they did want to see that we had real sources that they believed could supply it, lined up. And so that we had a real plan, that we were just blowing smoke and pretending and, you know, doing everything by the seat of our pants, even though we were doing about half of it by the seat of our pants. But it sounds like you're backstopping it a little bit. Yeah.

Some people might have questions about why the Albanian ammo is Chinese. So I'm going to do like a two-second aside here and feel free to jump in. But basically, Albania was crazy during the Cold War. So the dictator, Enverhoja, and I'm probably butchering the name, he kind of just said, like, I don't trust the Soviets. Yeah. But I'm a communist, so I don't trust the West either. And I'm near Yugoslavia, which is kind of also in between the Soviets. in the United States and playing both sides. So he was a paranoid, kooky dictator, and he built,

I think, 800,000 bunkers all over the country. And so when you go to Albania today, there's still tons and tons and tons of these little gun turrets that stick out of the ground on farmland near the highway. At every bridge in the middle of towns, there'll be like a garbage-filled gun emplacement. Yeah. 800,000 of them. Each one cost about as much as an apartment. They had a housing shortage, surprise, surprise. His thing was, when I get invaded by either the U.S. or the Soviet Union, I'm going to pull every man, woman, and child into one of these bunkers, and we're going to shoot them until there's nobody left. And so I'm going to stay in power. Total war, yeah. And so in order to get the ammo, this is a little hazy, but basically

he just said, hmm, who's communist and isn't Russia and isn't, you know, but of course no capitalists. Oh, China, let me get some help from China. And China was like, great, we have an ally that's not Tibet or somebody we've invaded. And they gave them a foothold in the Mediterranean So they were thrilled to get the Albanians as their ally. And it was actually Mao, Chairman Mao, who made that alliance with the Albanians and supplied them with massive amounts of Chinese military equipment. He even gave them whole factories that they were able to set up in Albania, which actually came out in court later that how do you even know that this was made in China

when the factories were shipped over to Albania and they could have made what looked like Chinese ammunition in Albania. So that became a matter of legal debate later on. Interesting. Yeah. There's not even really any way to prove that the ammunition was originally from China at all. How much ammo was this again, the total amount? So the AK-47 ammo was about 150 million rounds. That is so much. And how much fits in like one plane load or whatever? If I recall correctly, it was about 2.7 million rounds was in a 45-toned aisle 76. You need, I'm not great at math, but you need like 50 planes. Yeah, just for the AK-47 ammo, yeah.

These are massive freight planes. Yeah, 45 tons each year. Wow, okay. Yeah. That's a lot of freight cost. Yeah, it's about like two container loads, you know, like what, those 40-foot containers that you see, you know, on ships. It's like two tractor trailers about.

Wow. It's 45 tons. It's a little more. Okay. We ended up delivering before the contract was canceled about 70, I believe it was 71 aircraft loads of ammunition. So there's one or more every single day is just landing. Yeah, we were doing that from three to four a week at one point.

Oh, my God. And repackaging it, that saved you guys a bunch of money and somehow you ended up with a margin on each one of those. It actually saved us a lot of money. So the repackaging, I think we spent like $100,000. to get it repackage, and that saved us around three or four million dollars in air freight costs. Oh, yeah. That's a really good return then. Yeah. Wow. And you're getting the ammo through Heinrich or Henry. Yeah. There's a part of me that's like, Ephraim didn't try to screw over Henry.

Like, there's the one guy. Oh, no, he did. Okay. All right, then. And how did that go? So not well, actually, which actually was this that led eventually to the downfall of the contract. Oh. Yeah. So what happened was, is that once we made the deal with the Albanians and, I mean, with Henry, and we made the deal to repackage it and things were starting to get repackaged and we're starting to go and start to get delivered, of course, you know, as Ephraim's natural tendency to be, he was looking for a way to squeeze more profit out of it. And so the guy who was doing the repackaging for us, Costa Trabiska was his name. Alex founded because he owned a cardboard.

a box factory in Albania. And so we were looking for massive amounts of cardboard boxes. So we found him to supply to the boxes. And then we're like, hey, you have a bunch of workers in your factory. Would you be willing to do this job for us? And he, you know, he agreed to do it. Ephraim went over to Albania to try to convince the Albanians to give us a better price. The way he did it was he, before leaving, he tells me, he's like, hey, listen, I got to

convince the Albanians to give us a better price. So the only way they're going to give us a better price is if they think that we have better options than them. So why don't you take the quotes that we got from like the Kazakhstan's and from Ukrainians and just, you know, doctor those documents. So it looks like the prices are much better than they are. Okay. Better than the Albanians. And I'm like, okay, yeah, that's what you want me to do. I'll do it, you know.

So I, you know, edited some PDF documents, made it look real, you know, and gave him copies of it. He gets, Alex told me, you know, he met him at the ear. report. Alex goes with Ephraim to meet Yili Pinari, who was the head of the export company in Albania, who was in charge of selling this ammunition. And Ephraim shows him the papers, and Yili takes one look at it. And he's like, that's all fake. He didn't even look at it. He's like, don't bother me with your fake documents. Yeah. And so Ephraim was, you know, begging and crying, saying, ah, you know, the freight, you know, like, it's going to kill me. I can't do this. I can't deliver profitably, you need to do me a favor, so we can do more business in the future,

you know, every excuse he could think of. And the Pannari was like, look, you know, you and I both know that this is the best deal that you can get. There's no one else in the market that's going to sell you ammo this cheap. And it was true because Albania at the time was trying to join NATO. And one of the requirements NATO has is that they get rid of all their old Warsaw packed ammunition. So the Albanians actually hired someone to start destroying the ammunition. They actually hired an American company to do this.

And later, this is months after us, that turned into a huge political fiasco, a tragic disaster, actually. There was a huge explosion at the plant that they were disassembling this ammo. And it killed, like, I forgot the exact number, but like something like 30 people. Oh, God. Yeah, like men, women, children, civilians from the surroundings. town is an enormous explosion. Nothing to do with us. People think that has to do with us because it was Pinari and some of the other people who we were doing business with were also involved in this other contract.

So the Albanians often, you know, they combine our stories. They think that we had something to do with that. I've gotten a lot of hate on YouTube for that reason, but it is what it is. So Ephraim asked Costa, who was doing that was the box guy, if he had any connections with the Albanians to get him like, you know, information about what the Albanians are actually getting paid for the ammo. So Costa actually had some connections in the Ministry of Defense. And he found out that the Albanians were getting paid two cents a round for the AK-47

ammo. And we were paying Henry four cents a round. Oh, okay. So Ephraim lost his shit, right? Because he's like, Henry's making so much money on us. you know, fuck that guy. He's screwing us. He's screwing us. And I told Ephraim, I'm like, actually, I mean, we're making around the same amount of money as Henry is. We're making about same. Same margin. More or less the same. I mean, the margin is different, but, you know, the total amount of money is the same. Right, right. And, you know,

because we had to pay for air freight. And he's like, yeah, but it's our contract. Fuck him. I want to make more money. I'm going to buy it directly from the Albanians. And that's when he flew to Albania and tried to do this deal directly with Pinari. And Pinari was like, you know, he actually brought him into a meeting with another guy whose name was Dili Yorgi, who it turned, we found out later, was part of the organized crime element of Albania. He was like the mafia boss. Surprise, surprise, yeah.

And as soon as as Ephraim enters the room, this is what Alex told me because he was there, as soon as Ephraim enters the room with Dili, you know, Ephraim is the kind of character. He's always talking shit. You know, like, no matter who it is. And I've seen him talk shit to some, like, you know, tough-looking characters, you know, like we've gone out, like, you know, to clubs in Miami and he'll, like, you know, go up to, like, this big buff guy and grab the girl's hand who's with him, say, hey, bro, I think she's better off with me. You know, stuff like, like things that are just insane that a normal person would just not do, you know?

And, like, he's gotten to many fights that I've had to, like, pull him out of. Got to a point where I only went out with him because I felt like almost obligated. as part of our business relationship to do that, to keep him out of trouble. He's dead. We'd probably not be able to do any more deals. And so, all right. It was very, very frustrating to go out with him. Anyway, so he's a big talker.

But the second he stepped into this office and Diliorgi was there, he got really quiet because he could tell right away that it was like this building, this high rise that was still under construction, but they like go through this under construction, you know, this under construction dusty area. And suddenly they entered this office. and it looks like a Wall Street board room, you know, like super shady, you know? Like, what's this doing here? Yeah, like this office doesn't exist, but it's also like well equipped.

Exactly, yeah. Like this definitely, there's movers and chakers here. And he gets into the office and suddenly Ephraim, who's usually a big talker, suddenly is real quiet and doesn't say anything. And Deli York, he tells him, he's like, look, you know, here you want a better price. And Ephraim's like, yeah, yeah, we need a better price. He's like, well, we can't give you a better price. But we know that you're hiring this other guy, this Costa-Trabishka guy, to do the repackaging.

And you're paying him money for this. So why don't you give us that contract to do the repackaging? We'll make some money on that. And then we give you a little better price on the ammo. So that way everybody wins, wins, right? And Ephraim's like, yeah, fuck Costa. Here's, you know, you got the contract. Let's do this.

And Costa got stuck with $20,000 worth of Carbara. board boxes that now he had nothing to do with. And he called me up, Costa called me up. And he's like, hey, listen, you know, I understand business is business, but can you at least make arrangements to buy these boxes? And I said, yeah, yeah, I'll talk to Ephraim. I'll make sure that he buys this us. Yeah, we'll cover you. And I told Ephraim, hey, you know, like, make sure that you buy these boxes from Costa, you know, so because the, and Ephraim's like, yeah, yeah, yeah, I'll take care of that. I'll take care of that. Of course, he never did anything. He just didn't give a shit. And that really pissed off Costa. And Costa, we found out later, decided to go to the New York Times and tell them what we

were doing. And he went to the FBI and told them what we were doing. And his biggest mistake was that he went to the Albanian press and told them what was happening. And that ended up getting him killed. Oh, wow. Yeah, because like a few weeks later after that, he died in very mysterious circumstances in a car crash when there was no he was driving down this like road that was like a flat road in this open field there was no other cars around but somehow he crashed i don't know into what and he got thrown from the car like 30 feet and he ended up dead yeah that's pretty sketchy yeah oh man so yeah so that unfortunately is what happened to two costa i wonder why they killed him for that probably because where the ammo came from was not supposed to be selling ammunition right

Well, no, what it was, the main issue was that he told the Albanian press that the Albanian politicians were getting kickbacks. Oh, yeah. And they gave the contract to the mob, which it's like these guys knew about, oh, man, whatever. Because Albania, like many countries, like third world countries, they have like a big problem with corruption. It's one of their major problems. And so he said, hey, you know, there's this continent. The government is selling this ammo. They're pocketing all the profits.

the politicians are in league with the organized mob. They're going through this Swiss arms dealer. He told him everything. Yeah. You know, and then he ended up dead. That's kind of sad because he really like ended up dead because of, well, because of you guys in a way, because Ephraim screwed him over. Yeah, well, because Ephraim screwed him over.

And then he felt it was, I guess, his moral duty to blow the lid off this. Yeah. I mean, he's still involved, so there's that. But it's also like, well, he was. wasn't going to die. Yeah. Yuck. That sucks. And Henry was never cut out in the deal. I mean, when Effer made that deal with the Albanians, they still had everything go through Henry. And I assume, I don't know for sure, but I assume it was because Henry was doing the payoffs to the various politicians because that's how they managed to shield the money trail. Yeah. And, you know,

other deals, you know, who knows? I mean, it's really hard to cut somebody like that out when they're better connected than you. Because if someone's playing the long game, they see that it. it's not worth it. They know they're going to play again. They need to not piss off that person. True. Versus like some dude bro from Brooklyn or wherever you guys were based at the time. We were from Miami, but yeah. Miami, yeah. So Ephraim had a different philosophy than that. He felt everyone was expendable. So actually, I got this story from Matt Cox. Matthew Cox was in prison with Ephraim and became

Ephraim's ghost writer. Oh, that might have been who I was talking to earlier. Yeah, it must have been Matthew Cox. Yeah, Matt Cox. So he was Ephraim's ghostwriter in prison. And he told me that when he was writing Ephraim's story, and Ephraim was telling him the whole story, he tells, you know, he realized that from like screws pretty much everybody he's ever done business with. Literally everybody's done business with.

And, you know, Matt tells him, Matt told me that he told him. You know, he's like, I told him, you know, Ephraim, you can't keep on burning all your bridges, man. And Ephraim said, there's a lot of bridges out there, bro. Oh, yeah, that's the complete opposite of how I do anything in my life. And most people who are successful, yeah. That's very cringy and gross to hear. Because it's like, I know, but I don't care.

That's really good. It's like sociopathic sort of level of empathy. That's exactly it. Yeah. Was shipping the ammo mostly smooth sailing or is it like, oh, this, now the Russians are stopping this or this country is trying to not let it happen? So in the beginning, it was a real challenge. We didn't ship anything for the first like three months.

And because it was to ship ammo over internationally, it's a lot harder than shipping like just any random commodity. You need a bunch of documentation. You need an end user certificate from the buyer, right? That's a document saying that, you know, this ammo is going to the government of Afghanistan, to the military of Afghanistan. And the military of Afghanistan promises not to re-export this to any other party

without the supplier's permission. That's the first thing you need. And each document takes time because every bureaucracy has to go through its procedures and oftentimes various people hold things up and it's always a headache. So you need to get your ad user certificate

or EUC as they call it. And once you have your EUC, you take that and then you get the export permit from the supplying country. They have to go through their government and their procedures to get that. And once you have both of those documents, then you need to get a flyover permit.

If you're shipping this by air, for every country that the plane flies over, you need to get their permission to transport these goods over their airspace. Okay. So the flyover permits turned out to be a real nightmare to get for this. I bet. Because, yeah, we're flying over Central Asia,

and a lot of those countries are very much aligned with Russia, as we found out later, the Russians were pressuring them to not approve these permits because they wanted us to fail in supplying the U.S. Army. And we eventually, it took several months, but eventually we got every flyover permit. So the way we would do it was when a country would not want to give us a flyover permit, what we would do is we would contact the military attach, the U.S. military attache within that government. And when the United States has an embassy in the country, they have a military. a military attache that's a representative of the U.S. armed forces in that embassy. And so we would contact that military attach and say, hey, we're U.S. government contractors. We send up a copy of our contracts, so they see we're real. And we need your help in convincing this government to give us a

flyover permit. And then that military attach would apply diplomatic pressure as they were able to, within that country, to make them approve this permit. And that worked for almost all the countries that we worked on except for Uzbekistan. Uzbekistan just refused to give us a flyover permit and no matter how much pressure we tried to exert. And then I had the idea, I told Effort, well, what if we hire the Uzbekistanian national airline to do the shipping? And he was like, yeah, that's a great idea. And so we asked them for a quote and they actually gave us a quote. And it was actually relatively reasonable. It wasn't even outrageous. And suddenly our flyover permit was granted. Right. It's like, we would love to hire you, but there's just one problem, one of the wealthiest

men in every Uzbekistan who owns this area. We can't seem to get flyover permits. Do you know anything about that? And he's like, let me make one quick phone call and solve this whole problem. Exactly. Skin in the game. They have some motivation. Exactly. They need some skin in the game. That's impressive. Look, my question was, how do you even start the process of figuring out who to talk to the person that's going to give you this permission? And this kind of knowledge is so specialized that it's no wonder there are riches in these little tiny, well, in these little tiny niches where it's like,

okay, I can get ammo from this place, from this other place, over these places, and it's just like, well, that's where the cash is, because it's a huge pain in the ass, you need a ton of connections. And you can't just hire some one-stop shop that's going to be able to do this. Exactly. You learn as you go.

I mean, that's like any business. Every business has its quirks. And I think that a lot of people stay out of the arms business because there are hazards, both moral business and, you know, possibly physical at times. Sure. Definitely political. So the hazards are significantly more than just basic commodity businesses. You're listening to The Jordan Harbinger Show with my guest, David Packaus.

We'll be right back. If you're wondering how I managed to book all these great thinkers, authors, creators, arms dealers every single week, It's because of my network and I'm teaching you how to build your network for free over at Jordanharbinger.com slash course. This course is all about improving your relationship building skills and inspiring other people to want to develop a relationship with you. It's all done in a very easy, non-cringy, down-to-earth way. It's not awkward.

It's not cheesy. It's all practical. Takes a couple minutes a day. And many of the guests on our show, subscribe and contribute to the course. So come join us. You'll be in smart company where you belong. You can find the course at Jordan Harbinger.com slash course. and no, I don't want your credit card information.

You're not going to get billed. There's not a ridiculous upsell. That's just something that I think does well for everybody and makes you appreciate the show just a little bit more. So enjoy. Now, back to David Packhouse. Look, I've been in North Korea. I've been to Albania.

It was at the time the poorest country in Europe. Now I think it's Moldova. But like these are not places where when you're 40 and you have kids, you want to just be schlepping into. And it's like, who you can meet? This gangster, this corrupt politician, this arms dealer, we're all going to meet in a warehouse. in the middle of nowhere and inspect this product.

Right. Like, no way. It's a bad idea, even if they're like, no, we're just going to do business. It's just, you're going to draw the short straw at some point. Right. You're going to meet an F-frame. Yeah, except for Henry. He manages to skate by somehow.

Nothing seems to touch him. But again, he's a broker. He's probably like, I'm not inspecting the product. I'll meet you at the four seasons in Geneva. I'm not going there. You're coming here. I'll get you a visa. No, I mean, Henry would be on the ground.

Really? Yeah, yeah. I mean, to inspect the product, I don't know about the delivery aspect, but he has been on the ground and the sources to be there. So, you know, he gets his hands dirty. Yikes. Yeah, that's a guy I'd love to talk to, although we'd never tell me anything. He wouldn't.

Yeah. All the most interesting people are the ones who are like, I don't know what you're talking about, Jordan. Yeah. No, we are merely an importer exporter of textiles. Yeah, I mean, if he told you everything, he'd ruin his business. So maybe once he retires, if he ever does that. This is probably a ridiculous question. It feels like one, but is this stuff insured?

Because it's three loads per week. What happens if some of it goes bad or isn't working or the plane doesn't make it? I mean, it seems like you should have that. But can you even insure that? I think there might be insurance that you could buy, but it would be extremely expensive. And I know that at least as far as we were concerned, we did not insure anything. This all seems like a really fun and interesting business. And there's a lot of wheeling and dealing, which I would have loved in my 20s.

I'm way, way too old for this kind of stuff right now. I don't know about you. Same. Yeah, no, I'm out of that business with no intentions of going back. I do picture you guys walking around with silk suits and metal briefcases and sunglasses. Just the straight up Nicholas Cage, circa, 1996, aesthetic period. That's exactly what we did. It wasn't silk.

It was regular suits. But we did have, yeah, we did have those cool shades and metal briefcases. Because we specifically tried to look like Nicholas Cage because that's who we were basing our look on. We wanted people to take us seriously, you know? Yeah. Maybe that wasn't the way to go. But at the time it works, though, right? Because everyone's like, oh, that guy, he looks like an arms dealer.

All right, fine. More than anything, it was that we always carried documentation proving that we had active contracts. And once you show them that, and they're like, okay, I mean, regardless of how young these guys look, they actually have, they're doing business. so you want to do business with them or not. How did you start to smell that Ephraim was going to screw you over? So after, of course, after the logistics issues were taken care of and we started delivering on a regular basis, three, four aircraft a week, started going into Afghanistan, and I had more or less taken care of all the issues.

And the only things I really need to do is more or less just like babysit the logistics companies and make sure that the receiving contracting officer in Afghanistan signed off on the documents. So my workload went way down because I had already set everything up. And I stopped coming into the office as much because I didn't have to do my job. And he started complaining and he's like, hey, you know, he goes to. I remember I was staying at the office late one night where everyone else had left. I still had some stuff I had to do. And Ephraim comes into my office and he says, hey, you know, a lot of the guys around the office are complaining that you're not pulling your weight.

At this point, we had about like 15 people working for us. We had started just us too. But like after we won the $300 million contract, he decided to spend two grand a month on an office. That was when we actually moved out of his apartment. You're like a we work saying AK-47s and missiles. Yeah, pretty much. So he comes into my office and he's like a lot of guys around the officer like, you know, saying that you're not pulling your weight around here. And I'm like, what are you talking about?

Well, what guys are saying that? Because I'm doing what I need to do. And, you know, I don't know what you're talking about. He's like, yeah, you know, because you're not coming into the office that much. I'm like, well, I'm taking care of what I need to do, right? You know, my job is to babysit the Afghan contract. And that's what I'm doing and things are smooth. So what's the problem?

And he's like, yeah, but, you know, you're not like helping out with our other. contracts that were going for. And I said, well, I told, first of all, I told you not to go for those contracts because he was like chasing literally every fucking thing. He was chasing, you know, $2 million contracts, you know, a half a million dollar contract. I'm like, dude, why are you wasting your time with that? We got a $300 million contract.

Let's concentrate on delivering this successfully and, you know, pulling as much profit at it that we can out of this. And then that's going to make us the vast majority of the money. We're more than, you know, getting distracted by, you know, going after a whole bunch of tiny contracts that we might not even win. But he was like, hey, man, we're on a roll. Everything's money. I'm going for it all.

So you take care of the Afghan contract. You leave the rest to me. I'm like, okay. I mean, that's what you want to do. So he started chasing all these other contracts. And a lot of them, as these things tend to do, got to be a bit of a logistical headache. And he's running around like crazy screaming at everyone in the office to do this, that, and the other. And I'm like, listen, you know, I.

we have a deal-by-deal basis. I'm not responsible for, you know, I'm responsible for the deals I work on. That's what I'm getting paid on. So if you decide to do other contracts, I'm not getting paid on that. You know, why should I work on that? And he's like, yeah, but like if the company, you know, goes bankrupt, then the Afghan contract gets destroyed too. So you've got to make sure that the company is taken care of.

And I said, well, in that case, are you willing to give me a percentage of the company? instead of just the contracts I work on. And he's like, oh, come on, come on, don't be ridiculous. I want you to work for free. Yeah, that's exactly it. He wanted me to work for free. And I said, well, in that case, if you don't give me a piece of the company, then I'm not going to do it.

And he's like, well, how about this? I'll give you 1% of the company. Instead of the, like, massive amount you're going to get from the $300 million. Yeah, I'm like, well, you know, we have a deal as for the Afghan contractor was I was supposed to get 25% of the profit in the mission. So I was like, well, 95% of the money that the company's going to make is going to come from the Afghan contract. So I think I'll just stick with our deal on the Afghan contract rather than going to 1% of the company. Yeah, for all the headaches.

Yeah, exactly. And he's like, well, that's my offer. Take it or leave it. And I said, what's, are you not going to pay me what we agreed on in the Afghan contract? And he's like, you're in breach of contract. You're not doing your job. I'm like, I am not in breach of contract. I'm doing my job.

And if you're not going to pay me what you agreed on, I'll see you in court. And so then I left. And that was the end of that. And I sued him. I was getting my lawyer all lined up and everything. And two months later, the feds raided his office. I was already long gone by that point. Two months out of the company.

But one of the secretaries in the office called the up. And she's like, hey, because I was on good terms with everybody. Sure. Like, I was considered the nice guy, and he was the asshole. Right. So, like, when people would have problems with him, they would come to me and complain about him, you know? So I remained in good terms with them.

I'm still good friends with some of the people I worked with back on. So one of the secretaries calls me up, and she's like, hey, I just want you to know that the feds just raided the office. And they're like, they told us all to step away from our computers. And they told us to leave. And they're gathering up everyone's computer. And they're packing up all the files, all the files. all the filing cabinets and they're taking it all.

And I'm like, oh, shit, we're fucked. And so I called up Alex, who is still in Albania, supervising the repackaging job in Albania. And I told him what happened. I'm like, hey, you know, just FYI, the feds just raided Ephraim's office. So Alex calls up Ephraim. A guy, new guy named Danny, answers the phone. Danny is the guy that Ephraim replaced me with once I left. He ended up screwing Danny over two.

Oh, I'm so surprised. Yeah, and he ended up screwing the guy he replaced Danny with as well. I mean, it's just like a never-ending succession of people that he promises the world to and then screws over. So, but I just heard recently that he just recently got into some big lawsuit with somebody. So he's still doing the same thing. Yeah, he's the same guy. So Danny answers the phone. You know, Alex wanted, you know, wanted to feel him out, see what was going on.

And so Alex is like, hey, Danny, I need, you know, I need some of documents, you know, for shipment that's coming in today that's going to be leaving today to Afghanistan. I need these and these documents. Can you send them over to me? And Alex told me that he hears Danny cover the phone, the mouthpiece of the phone, and he still can hear Danny talking. And he's like telling Ephraim, hey, it's Alex. He says he needs this documents.

What should I tell him? And he hears Ephraim saying, oh, don't tell him anything. Just tell him that there was a bomb threat. Yeah, yeah, there was a bomb thread. So we had to leave the office and so we can't get the documents. But as soon as they clear things up, we'll get it to him right away. So don't worry about anything. And so Danny gets on the phone and repeats exactly what Efferm told him.

And Alex is thinking, why are they lying to me? Why are they lying to him? Who cared? Right. Just, hey, we got rated. Like, it's not good, but whatever, we'll figure it out. So in Alex's mind, I don't know the real reason. But in Alex's mind, Alex is thinking, well, maybe Ephraim is thinking that he's going to

throw him under the bus. Oh, yeah, good point. Ephraim is going to claim he had no idea about the Chinese ammo. This was all Alex's idea. Alex was the guy who was supervising everything. Alex is the only one who knew about the Chinese ammo, and it's all Alex's fault. And, you know, and Ephraim was totally innocent. And so that's what Alex is thinking.

And Alex is like, there's no way I'm fucking going down for this motherfucker. Alex wasn't getting paid such other. He was getting paid a straight salary. He wasn't getting a commission or anything. He was getting paid a straight salary. and it wasn't even a particularly high salary. So Alex is like, you know what? And this is not worth it.

I'm out of here. And he's on the next flight home. And so Alex and I both hire lawyers. And our lawyers, the first thing they tell us is go look through your emails and look for the keywords of what you're worried about. Make sure there's no evidence in there. Yeah. Smoking gun emails saying cover up all the Chinese documents. Yeah, exactly.

Well, they're like, well, you know, if there is smoking gun evidence, we should know about it. So why don't you gather all the things that you think could be damaging and send it over? And so we both look through our emails and we realize how much smoking gun there is. We were not careful at all, unfortunately. I mean, I think in the beginning, Ephraim was like, hey, we should only do talk by phone, you know. But then after like a few days, we were also frazzled. And like we had to like, we were all on different time zones. So we had to get time-sensitive information to people who might be asleep and we were super tired.

So eventually someone just started writing, hey, you know, do this, this, and make sure you repackage the out. Make sure there's no Chinese documentation. And that came out there. And we were all copied on these emails. So there was literally rock solid evidence that we were aware of the whole situation at the time. And our lawyers said, hey, you know, this evidence is pretty strong against you. It's not like Effraib is going to pay for your legal defense. So if you're going to fight them in court, you're going to need, do you have like a few hundredk?

Because that's what you're going to need. And I didn't have a few hundred K because Effraib didn't give me a penny. And Alex sure didn't have a few hundred K. He wasn't getting paid very much. So really our only option was to cooperate. And the government told us that they're like, hey, you know, if you guys cooperate, we don't think that you're not really a target. So we're not even going to charge you.

We're really just going forever. We're like, great, because, you know, he tried to screw us over, so we owe him nothing. We're not making any money off this whole thing. So why should we go down for it? And six months go by and nothing happens. And we're like, okay, well, maybe they decided not to pursue this case, you know, because they don't always bring charges with every investigation they do. About six months later, I think it was March, I remember it was March 27th of 2008.

So literally 15 years ago, almost to the day, the New York Times published this front page article about us. They had both mine and Ephraim's mugshots on the front page. We did not look good. And it was right next to a big picture of a rusty-looking ammunition. And the New York Times said that we were delivering low-quality, defective ammunition to the Afghanis and we were putting all the soldiers in danger, you know, and that this was all George Bush's fault because he hired these two stoner idiots to do this $300 million contract. So that was like the whole narrative.

And the reason they got that picture on the front cover was because Ephraim had bought, I think it was 30,000 rounds of Bulgarian. It wasn't even the Chinese stuff. It was Bulgarian ammo. He had bought it Saitum-Seed because he had gotten like a super, super good deal, like even better than the Albanian deal. It was like literally like I think like maybe 20% the cost of the Albanian ammo. Oh wow. Yeah. So it was super cheap, practically free. And but he didn't have, it was a small quantity, like very small, like 30,000 rounds and, you know, 2.7 million rounds fitted in aircraft.

So that, you know, it was something that we were already shipping grenades from Bulgaria. So we figured we'll buy these rounds. If we didn't have time to expect it. If it's good, we'll make some money on it, good margins. If it's bad, the government will just reject it. And, you know, it's not such a big loss because it was so cheap. And we had room on the plane anyway. So Ehrm decided to go for that. And when it got to Afghanistan, the government inspected it and it turned out to be total shit. And they rejected it. And they're like, we're not paying you for this. We're not giving this to any soldiers. And so the U.S. Army had nowhere to put that 30,000 rounds. So they just put it to the side of the airport runway where they had unloaded it. And they just lost it.

left it there. Oh, and that's the photo the New York Times takes, this rusty, moldy, out in the weather for months at a time, even though it's already 20 years old or 40 years old ammunition. Oh, man. Exactly. So that's the ammo that the New York Times saw because all the other ammo was already issued

to the troops. I don't think they went very deep into Afghanistan. Probably not a safe thing to do. So they just asked the local people, hey, can you show us some of the stuff that AEY has delivered? And they're like, yeah, some of the stuff they delivered.

And so they took pictures of that and they extrapolated and said, oh, this is the sum of the stuff that they delivered, implying that this is all the stuff that we're delivering. And so that became a huge political scandal. And there were hearings in Congress. You could look this up on YouTube. There's like, I think it was Henry Waxman, who was like one of the lead congressional people at the time, like has, you know, is talking about us on the floor of Congress. They said that Congress contacted us and said that they wanted us to testify in front of Congress.

And our lawyers said, well, if you make them testify, they're just going to plead the fifth because they're under criminal investigation. So Congress said, well, on second thought, we're not going to bother with that. So we didn't end up testifying in front of Congress. And the U.S. Army was like, whoa, we had no idea about any of this. We're taking the contract away, even though it came out later in court that they were informed by the Justice Department, who were doing the investigation. As soon as they raided the office,

the Justice Department found handwritten notes on DeVaroli's desk. One of the to-do items was repackaged Chinese ammo. So that kind of tipped them off. And the Justice Department knew what was going on, and they told the Army, this came out in court later, they sent the Army an email saying, hey, this ammo is Chinese. it may be illegal, you should probably stop taking delivery on this.

But they needed it. Yeah, the Army said, well, this is mission critical supplies, and we're going to continue taking delivery on it unless we get a letter from the Attorney General of the United States requesting that we stop taking delivery on it. And the Attorney General never sent that letter. Why they never sent the letter? I don't know. Maybe they made the political calculation that, hey, as long as there isn't a political stink about this,

let's just keep it quiet and continue taking delivery. Maybe they didn't care. I don't know. But they only started caring once the New York Times published that article. And suddenly the Army pretended like they were shocked and appalled. Right. And they had no idea the whole time. And then they immediately canceled the contract with AEY.

And they put it out for open bid. And then the Justice Department brought charges against us right after. that like a week later. Nothing like a good public humiliation to get the government to take action. And by the way, this is when people crap on journalists, this is why good journalism is so important, by the way. It's not the focus of this conversation, but it's like really the only thing keeping a lot of this stuff in check is articles like that, even though the photo is a little disingenuous. Right. This kind of deal would be the least of our concerns if people weren't worried about getting exposed. Right. I mean, you see that in countries with no free media. It's just a mess.

That's very true. I fully support free journalism. and the freedom of the press and freedom of speech, I do wish that journalists would be less disingenuous. That's the internet, man, click farm crap. Yeah. It obviously did a lot of harm to us. Not that we were totally innocent or anything like that, but it definitely skewed the story.

And once one publication publishes something, none of the other journalists bothered to check whether it's true or not. They're just like, oh, as reported in the New York Times, this and this happened, and it's the gospel truth from then on, no matter, even if there is counter evidence to it. So what do they charge you with? Just that one specific act of fraud, which was repackaging the ammunition, is that it? So the way they work is, and this is kind of speaks to how the justice system works in the

United States, was they said to us, you know, first they had told us they weren't going to charge us with anything, right? And when we initially agreed to cooperate. They're like, oh, you're cooperating. You're not even a target. We're not going to even charge you. But then once it got into the newspapers, they're like, oh, we need to charge you because you're too closely associated with the actual acts of, you know,

that we're charging DeViroli with so we can't just let you go and charge him only. The initial thing that they charged us with was they said, you know, you delivered 71 aircraft loads of this Chinese ammunition. And each aircraft load had a document, right, that stated what was in the aircraft. I know where this is going. Right. So like it states, you know, what the type of ammunition is in the aircraft, the quantity of the ammunition, the year it was manufactured, and the place of origin. And under place of origin, you guys put Albania. And you knew that the real place of origin was China. And not only did you put this false information on the document, you actively covered it up. You had a whole repackaging operation to hide the fact that it was Chinese origin. And then you lied on the document. documents. So each time you lied on this document and you submitted it to the government, Ephraim signed the document, but I'm the one who was submitting it all to the government,

so I was liable. You know, you submitted a document that you knew was false to the government, and each one of these documents is an act of fraud. That's terrifying. Yeah, and you did the 71 times. So we're going to charge you with 71 acts of fraud, and each of these acts of fraud could get you five years in prison. So you can get 355 years in prison. or you can plead guilty and they use their discretion as prosecutors to combine those 71 acts into one. I'm scared for you right now, even though I already know the outcome is different because you had kids at this point, right? Which makes it 100 times scarier. Yeah.

My daughter had just been born. She was actually born like a month after that we won the contract. My God. Oh, man. Yeah, my daughter was one years old at the time. and so they're like if you plead guilty then we'll combine it to one act so you can get maximum five years

and because you plead guilty we'll tell the judge it's not up to us what sentence you get but the judge will tell the judge who's going to give you the sentence that you should get on the low end of the range so maximum you could get legally is five years but

we're going to recommend the judge gives you one year or even less who knows maybe you'll only get probation so let me think about that I could get probation or 355 years in prison. And even if I do win the case, you know, if I fight them in court,

I need a few hundred thousand dollars to fight that. I even have a fighting chance because you use a public defender or as the private lawyers love calling them a public pretender. Yeah, that's not fair, though. The public defenders are usually better than these private lawyers, whatever. Well, not to shit on public defenders.

Yeah, they're busy. With the private lawyers, yeah, exactly. This is another issue with the system. the public defenders often have one to 200 cases they're working on at any one time. Prosecutors have five or ten. So the level of distraction and focus between the prosecutor side and the public or defenders, it's just not equal. You're lucky if your public defender even knows your name, let alone the details of your case,

you know? Skill-wise, though, it's not fair to say public defenders don't know what they're doing. They're way more experienced a lot of the time than the other guys. But yeah, the level of focus that you're going to get. I mean, do you get better service in first class on an airplane or do you or an economy? Right. It's not because the flight attendant in first class knows the job better. Yeah, I 100% agree.

I'm not, you know, saying that the public defenders don't have their hearts in the right place and aren't skilled. Yeah, yeah. That's not what I'm saying. I'm saying that the system is stacked against them. It's true. I just like to stand up for those types of attorneys because they're way more idealistic and frankly. I think you have to be. Yeah.

And like I went to law school. with a bunch of those people and they were the best people in law school. The A-Holes like me became podcasters or like, you know, went to private practice. Right, right. Look, I completely believe it. I think you have to be idealistic to be a public defender. But from a defendant's point of view. Yeah, you get more attention. Yeah, the chance of going to prison for 355 years, I wouldn't feel comfortable being case, you know, 199 on a public defender's, you know, caseload. and if I wanted to get a private defender, then it cost two to three hundred thousand dollars,

which I didn't have. So it wasn't really much of a choice. Even if I had the money, I probably would have the same choice, but I didn't even have the money. So, you know, I didn't have the money so I didn't even really have a choice. But, of course, I pled guilty.

And eventually, Ephraim pled guilty as well. Alex played guilty as well. And Ralph didn't plead guilty. Actually, he went to court and he ended up losing. Oh. Yeah. So he got,

Ralph got sentenced to four years, you know, because he fought them. Yeah. Well, at least it wasn't 355 years. But, but he spent all,

like every penny he had, he spent defending himself in court. I think he spent like a million dollars plus. Oh, geez. Yeah. And I got very, very lucky. I,

went back to school. I started working at a nonprofit. I, you know, tried to make a good move, man. As possible. What are you doing now? Sir, are you still in the arms business? Actually, I work at an orphanage for no money.

It was actually a food bank, but yes. I wasn't even that far up. Yeah. It's like, I go to church every day, even though I'm Jewish, and I go to synagogue, and also, yeah, like I sweep the streets outside the school as a hobby. You know, when you have that kind of, when you have years of prison hanging over your head, you're going to do anything that you think even gives me a slight chance. So, you know, I told myself there's no way I'm going to miss out years of my daughter.

life, you know, for this. For Ephraim Diveroli, of all people. No, thank you. Exactly. Exactly. This is the Jordan Harbinger show with our guest, David Packhouse. We'll be right back. If you like this episode of the show, I invite you to do what other smart and considerate listeners do,

which is take a moment and support our amazing sponsors. All the deals, discount codes, and ways to support the show are at Jordan Harbinger.com slash deals. You can also always search for any sponsor using the AI chatbot on the website at Jordan Harbinger. AI. Thanks so much for supporting those who support the show. Now for the rest of my conversation with David Packows. So how did they catch Ephraim, man? I mean, he doesn't seem like a guy who learns from his mistakes. So I assume he's just like busy selling rockets and missiles and guns. Yeah. So Ephraim probably, if I had to guess, he probably would have gotten maybe a year in prison

just because he was the ringleader. But he pled guilty. So they also reduced his counts down to one, just like mine. But when he signed his plea agreement, the way it works, you plead guilty, you sign a plea agreement admitting to all your crimes and you promise not to do any more crimes. And then, and the government promises, the prosecutors promise to give a positive recommendation to the judge saying this is, this guy's been cooperative and he feels really bad and he's a changed person. He'd be a good citizen from now on. So, you know, go easy on him, judge. And, but part of that agreement is you can't commit any more crimes before your sentence because if you commit more crimes, you know, the judge isn't going to like, they can't tell the judge, hey, you know, go easy on

them. Ephraim got four years. So what other crimes did this moron freaking commit after he please? This is like Billy McFarland from Firefest. Like, hey man, just stay out of trouble for one second. Cool. I'm going to go scam people with fake mail tickets. Be right back. Pretty much. Yeah, it is pretty entertaining, at least for me. I'm sure not for Ephraim. But so what happened was they told him to stay out of the arms business while he was awaiting sentencing. But of course he couldn't do that. He created some shell companies being run by like one of his new employees that he, you know, promised the world to who he replaced Dan with. Right.

But of course, he's such, he's a control freak. So he couldn't let his employees do all the talking. When it got down to it, he was trying to sell these magazines, these high capacity magazines. to some gun dealer in central Florida, in the Orlando area. And when it got real close to making this deal, Ephraim wanted to negotiate. And so he insisted that his employee put him on the phone as a, you know, as a consultant, right?

And he gets on the phone and the guy he's talking to who's a gun dealer in Central Florida realizes who he is and he Googles him. And he realizes, hey, you know, this guy is in a lot of trouble right now. What if he, I assume this is what he was thinking, I don't know for sure, but I assume he was thinking, what if he's trying to entrap me into doing something illegal? That's a reasonable assumption, actually. Yeah, a very, very reasonable assumption. This is pretty much how these things work. And so he calls up, so he's nervous, and he calls up the ATF. Wow. Not wouldn't be my first call, but okay, I'd just be like, I don't know if I'd go to the feds, but, you know, whatever.

The ATF are the people who are responsible for licensing gun dealers. Oh, so he's probably, yeah. Look how good of a dealer I am. I'm proactive. Exactly. Like, I'm being, you know, clean cut here. Yeah. You know, I don't want to get in any trouble.

I want to make sure I'm not breaking any laws or regulations. So advise me what to do on this ATF. And the ATF is like, oh, that's so interesting that this guy wants to do business with you. Why don't you keep on talking to him? And why don't you introduce one of our undercover agents as your partner? And so the undercover agent gets on the phone. And then he says to Ephraim, you know, I'd love to do this deal with you. But I really, you know, I'm the kind of guy who really has to meet someone in person and

shake their hand and look them in the eye before I could do a deal. Okay. Why don't you come up to Orlando and we'll shake on it and do this deal? And Ephraim's like, yeah, I totally understand. I'm like that kind of guy too, you know, so sure, I'll be up there, you know, this weekend, we'll shake on it and, you know, do this deal. And so Ephraim goes up to Orlando, which breaks his. the conditions of his

probation. Yeah, or his bail or whatever. His bail, exactly. And he was not allowed to leave the Miami-Dade County. And so he goes to Orlando, which breaks the conditions. And he meets this undercover ATF agent. And the agent tells him,

hey, you know, I just picked up this cool new HK handgun. It's the newest thing on the market. Check this out. And Ephraim's like, oh, I heard about that. That's so cool. I've been wanting to try those out. Hey, give me that. Let's go to a range.

Let's go shooting. And he, like, picks up the ATF hands him the gun. He's like, let's go shooting. And then he tells the ATF agent, he's like, what can I say? You know, once a gun runner, always a gun runner, am I right? Yikes. And then right after that, right after that, the ATF agent slaps comes out of him. And he says, you're under arrest.

You're a felon in possession of a firearm. Oh, wow. Because you already pled guilty, which makes him officially a felon. And if you're a felon, if you're in possession of a firearm, you can get up to 10 years in prison. So they arrested him. They told the judge, hey, this guy's a flight risk because he already didn't respect the conditions of the bail he's on. Sure. So why should we give him bail for this?

And the judge agreed. And so they kept him in county jail, actually, in central Florida for like a year. Oh, wow. while Ralph's trial was getting worked out. And eventually, I think after a year, he got sentenced. He hired the best lawyers in Miami. He spent, I heard from somebody, he spent like $2 million on his lawyers over the course of like three years.

Oh, my God. That's insane. I mean, these guys were her expensive. Roy Blacks firm, and he's like one of the most famous lawyers in Miami. I think he doesn't even like talk to you unless you put down a million dollar retainer. Wow. Okay. Yeah, for real.

And he got best lawyers in Miami. I mean, he could have gotten 15 years total, five for the fraud charge and 10 for the gun charge. But his lawyers convinced the judge to give him a combined sentence of four years. Man, it's so classic, right? Like, he can't help screwing people over, screws over the guy, gets the New York Times piece written. That's what exposes everything, gets him in trouble. Hey, you can't do this. Well, nobody's going to tell me what to do.

There's no consequences that I'm going to ever face. And it's just like Shakespearean. in that the gun is also his undoing at the end of the day, right? Yeah. It's straight out of a movie. The whole once a gun run in a row is, it's just like, you know, he's got his movie Hollywood line. Right.

Right at that critical point. It's like almost made for the screen. Yeah. It's like watching Blow with Johnny Depp where they're like, man, I feel so bad we have to arrest this guy. And he's like, where's my knife, right? It's like the same thing. Yeah.

Do you think if you'd made all that money in that deal that you would have actually quit being a arms dealer? or would you just keep going? I mean, in Law and Wall Street, we say golden handcuffs. You're like, I'm done after this. And then you're like, except I've got this sweet boat and this house in Antucket. And my wife likes sending the kids to the super private, expensive private schools. Maybe I'll work for a few more years.

I mean, you're not going to quit if you made $15, $20, whatever million on a deal. You're not going to. I would have to agree with you. I mean, I, you know, my plan was always to quit. My plan was $5 to $10 million. That was my number. You know, like I thought above $5 million, I'm probably set for life. as long as I don't spend ridiculous money.

And, you know, 10 million, I'll be really set. And I could, you know, maybe use half a million and jumpstart a music career. That was my dream because I'm a musician. I play guitar. I'm a singer. I write songs. And, you know, I realize that you need money to have any sort of promotion and to get out there. And so my dream was I was going to make a few million dollars and use some of that money to

jump start a music career. But in reality, when I think about it, I'm like, I don't know, man. You know, like if I had made $10 million and I had $50 million coming, if I just stuck out one more year, would I really not stick out one more year and make another $50 million? Yeah, I mean, and then once you make that $50 million, are you going to not stick another year and make another $100 million?

You know, it's just like it never ends. So I have to say that in retrospect, I'm actually really happy with how things ended up going, that I had a real kick in the ass. And it really, really showed me what was important in life and sent me on a much better path, which I'm a much happier on now. Do you mind if I ask how much you actually made is in an arms dealer? It's embarrassing to say. Good. Then people won't do it, you know? Come on. That's the point. Well, I mean, I would have made a lot if I hadn't been screwed over. But in the end, in the end, I actually only pulled out.

And this is so embarrassing to say, but I only pulled out about $30,000 out of the whole thing. Oh my God, you would have been better off working at Chipotle or something like that. I would have. And the reason for that was it wasn't that I didn't make any money. It was that Ephraim insisted on rolling the money I made into the next deal. So he was like, hey, I'm using my money to fund this. So why don't, you know, you're making money on this contract. So why don't we use some of your money to fund this?

So he kept on, he never let me pull the money out, which should have been an obvious clue that he never really intended to pay me. but he kept them running, you know, rolling the money into the next deal, to the next deal, to the next deal. So by the time that he ended up screwing me, that was like all my money. Yeah, no, it makes sense. I mean, I wouldn't even be that embarrassed about it. Yeah.

You were literally like a kid. Yeah. And also you were being taken advantage of by somebody who manipulated the governments of multiple countries. It's not like it was hardly you getting fleeced when you should know better. 2020 hindsight, of course, like, oh, he wanted me to do this. That was the first red flag. I don't know, man.

I wouldn't be so hard on yourself. Well, I mean, I'm over it. 15 years will do that. Yeah, of course. Look, what are you doing now? Because actually, I want to know what you're doing now and if any arms dealer skills overlap with it, but also I think what you're doing now is awesome.

Thank you. Thank you. It's actually an interesting story of how I got into my current business. Well, I'll give you the slightly longer version. Yeah. Because I know what you're talking about, which I'll get to. But the first, so what happened was the way I got into my current business is I was under, this actually led directly from the whole war dog story.

I was under house arrest. I got seven months of house arrest, which is a breeze. I mean, I have no complaints about that. Gosh, even now, and now in the days, I'm basically under house arrest right now. I got two little kids and DoorDash. Exactly. That's fine. Sign me up.

Yeah, yeah. It's a million times better than prison. Sure. That's for sure. So I was staying home for seven months and I was playing a lot of guitar and I really missed playing with the drummer because the drums give the music the energy. You know, you dance to a beat, but I obviously couldn't go to the studio because I couldn't leave my house and no drummer was going to I'm under house arrest. I can't make the meeting. Yeah. Okay, that's a valid excuse. And of course, no drummer, you know, I had a few friends who were drummers, but they weren't going to like

pack up their entire drum set into a van and bring it over my. apartment and there's barely any room in my apartment at the time for a drum set. And even if we did, it would wake up the entire neighborhood. So it wasn't exactly something I could do. So I bought a drum machine, which is like, for those who don't know, it's like an electronic device that is a tabletop thing. It has a bunch of buttons. Each button makes a different drum sound. You could tap the buttons to make a beat and it plays it over and over in a loop. And then, you know, so I'd make beats and I'd play my guitar to it. But every, you know, you can make different beats on it. But every time I wanted to change the beat on the drum machine. Like when you go from like verse to chorus,

the beat changes, I'd have to stop playing my guitar. Oh yeah. Press a button on the machine. Blame. And go back to playing my guitar. Exactly. It interrupted the flow of the music. So I thought, man, I really need like a hands-free drum machine, a drum machine in the form of a guitar pedal, like, you know, something I could tap with my foot. Guitar pedals are a common device that guitar is used to create effects on their guitar. So like, you know, like when you change the sound of the guitar from like clean to distorted, it's most of the time you're hitting a guitar pedal and it changes the sound. So I thought, I need to combine the drum machine and a guitar pedal. And I went online to look for it and I couldn't find anything. I asked my musician friends and they're like,

never seen anything like that. But if you find it, let me know because I want one too. That sounds super cool. And so I thought, nobody's making it. Everybody wants it. This is going to be my ticket to redemption here. Sure. And so it took me three years, but eventually I got a working prototype. It's called The Beat Buddy. This thing is, as Gizmodo says, a genius idea. Yeah.

I love that line. I mean, yeah, you can die nod on that one. Exactly. It's a pedal that you could press with your foot, goes on the floor. And it moves according to the beat. And when you tap it, it does like a drum fill. if you hold down the pedal it does a transition when you let go it goes to the next part so you can go from like verse to chorus back to different parts and you could also plug in

it also has a thing you can plug in more buttons to have more capabilities oh very cool like midi control and whatnot exactly it's not for midi control so yeah so that's that was my first product came out in 2014 and it became a very big success in the musical world had some of my musical idols ended up buying it. It was super cool. Really? That's friggin' cool. That must have felt great. Yeah, it was amazing.

It was actually, so one of my favorite bands that I grew up learning to play guitar was Allison Chains. Oh, I love Allison Chains too, man, definitely. Yeah, people are going to be like, what? Jordan likes Alice in Chains. Yeah, it's going to surprise a lot of people. Yeah. So,

Mikey Ness, the basis of Allison Chains, came up to me at, like, our second trade show in 2015, and he He was like, oh, you make the beat buddy. And I'm like, yeah. And he's like, yeah, I just bought one two months ago. I've been writing all my new music with it. Wow.

And I was like, dude, I learned to play guitar listening to your music. Yeah, that's super cool. It's so freaking cool. So cool. I guess you're much smarter than they made you look in the movie. Do you get that all the time? Well, thank you. I appreciate.

People have said that. Yeah. I also get that I'm much more handsome than they portray me in the movie. I say I have way better hair. I'll leave that up for debate. Yeah. I like that line. Only Hollywood could give me a full head of hair.

That's right. But, yeah, yeah, thank you. I do appreciate that. I mean, you know, the movie, they changed a lot. I love the invention. I was actually talking about the other one that I is going to change the world. You know, the guitar thing's cool, but this, stand back, everyone. Yeah, yeah, yeah.

So this is what I actually am really excited about now. That was, the reason I mentioned that was because that was my first invention. Sure. And since then, I've come out with six other products, musical products. I don't know if we have time to get into them, but like, just very short one. This is the simplest one. It's a product that organizes your cables. See, it's called the cable.

XLR cable winding. How does that not exist already? Yeah, that's amazing. I was playing some shows and I had like seven cables and it was taking me forever to wrap it around my arm. And I was like, I just need like a freaking cable and, you know, a wheel. and boom. That's one of those that's so, because you go, wait, that doesn't exist?

Okay, and you make it and immediately everyone needs it who uses that. Exactly. So that's our simple version. We also came out with the world's most advanced looper pedal. For the musicians,

they'll know what I'm talking about, a looper pedal. It's a common thing, but we came out with, it's almost like a digital audio workstation in a looper pedal. It's like a hybrid of like pro tools or logic. We can link to the singular sound site

and the show notes as well. But show me the Insta floss, man. That's where I'm like, I don't want to floss my teeth again after this interview. The Insta floss, as you mentioned, is the first product that is not music related. I came up with this with my brother. And we were eating mango. And, you know, mango gets all those fibers stuck in your teeth. And so we were flossing our teeth afterwards.

And we're like, man, this is such a pain in the ass. I wish we had a machine that could floss our teeth for us. Yeah, no kidding. Because everybody hates to floss. So we started batting around ideas, and eventually we came up with this. It's called the Insta floss, and it's like a improved version of a waterpick water flosser. The difference between this and a water pick, a water pick is a single jet of water that you have to trace your gum line, both the top and the bottom and the inside, which is very difficult to do from behind your teeth. And you also have to keep it at an exact 90 degree angle to the tooth.

So what we did was we created this like H-shaped manifold, and it has 12 jets of water. instead of one, and they shoot from the sides. So all you have to do is bite, and this turns as well. So all you have to do is you bite in over here, and you're done. In 10 seconds, you just sweep it across. I know people are like, wait, is Jordan kidding about this? I want, first of all, you have to send me one of those. Of course.

I will absolutely use it every single day. Because I floss. I hate doing it. I do it every night. I try to do it in the morning, but I'm too effing lazy because I just woke up. It just looks way better and way more efficient. I want one for my kid. You probably don't have kid sizes yet.

Not yet, but we are going to make that. And I'm thinking like, oh, what if we don't need to throw plastic string in the toilet or which you're not supposed to do or in the garbage anymore every night and drool on my dirty fingers. Of course I wash my hands, but I'm still shoving my fingers in my mouth, right? Like it's all the thing. Instead, I have this device that actually does it even better and works in 10 seconds instead of five minutes or however long it takes me to floss while I'm watching YouTube.

Exactly. Really good. Definitely. I'm not kidding. I'm emailing you my mailing address after this because I want one of those things. Yeah, please do. I'd be happy to send you one. Thank you very much.

Incredible story. Thanks so much for coming on the show, man. I hope we sell enough Instafloss to have made this worth your time. I think we probably will. I hope so too. I hope so too. Yeah, thank you. Yeah.

Anyone who wants to see it can go to Instafloss.com. It's like Instagram, but Floss. Instafloss. dot com and you can see we have a video showing how it works and you could also order it. We're actually in the middle of producing it right now, the first production run, and we are going to deliver the first units to customers in June. David, thank you very much, man. Really appreciate it.

My pleasure. My pleasure. Thank you. I've got some thoughts on this episode, but before we get into that, here's a preview of my conversation with an expert who spent more than two decades rooting out the counterfeit goods and services that fuel a trillion dollar industry that only benefits petty crooks and organized crime networks. It's not just handbags or designer clothes.

Alcohol, makeup, even cancer medication are just the tip of the iceberg of what gets counterfeited. Here's a quick listen. Anything and everything is counterfeit from automobile parts, cancer medication, alcohol, kids coughs are up. I mean, anything that somebody can fake to make money, they're going to do it. I mean, we found human feces, rat feces, and carcinogens in some of the counterfeit makeup. It's really, really scary.

I mean, people can actually die or really get harmed over this stuff. The general public thinks, oh, it's poor people just trying to get by, trying to make a living. But somewhere down the chain, a criminal organization is involved in that counterfeit item. The sales of counterfeit goods is actually listed in Alcatus training manual on a quick and easy way to raise revenue for operational purposes. Because why? It's a crime that's completely worth doing for them where they can make huge amounts of money. And then let's look at the human impact. Where are these goods made?

Chinese kids in these factories in the middle of nowhere. There was an investigator online who said he was about to do a raid with the police and he heard children's music and he thought, oh, wow, they have child care for their workers and then when they came in they found a bunch of kids at sewing machines, handcuffed to the machines and he said the smell was unbearable because they weren't allowed to go to the bathroom. The common perception, oh, it's poor people just trying to get by or trying to make a living. It's really not the case. I mean, this stuff's tied to organized crime, criminal cartels.

I mean, there's a whole big picture behind this stuff. You will see law enforcement do seizures where they're pulling $3 million out of someone's house. And that's all the proceeds from counterfeit goods. When you're buying that item, you are contributing to that child labor. You're contributing to that terrorist organization. That is where the money is going, undoubtedly. Even if you don't care that the Gucci bag you got for just $20 can't be spotted as a knockoff by the snootiest in your circle of friends,

Here why the trillion-dollar counterfeiting industry should concern you. Check out episode 308 of the Jordan Harbinger Show with Chris Buckner. A lot here, but I don't want to make the episode any longer than two parts with my giant clothes. This kind of business is a feast or famine sales cycle because you can bid on 100 contracts, you can lose all of them, and you get one that's like $100 million and that's your income for the whole year. Of course, you're only getting a percentage of that.

It's like any sales cycle for any big B-to-B company, although they made way less money doing this than the $1,000. they would have if they were not cutting corners everywhere. As you probably heard or picked out from the show, the Albanian ammo turned out to be Chinese. Albania is a crazy place, man. I've been there, really great people, cool food, everything, but they had a dictator named Enverhoja, and he pulled out of the Soviet Union, or at least the agreement with the Soviet Union, and he was convinced that the West was going to invade, and the Soviets were going to invade, so he built something like 800,000 bunkers throughout the country, and you can still see

them. They're filled with garbage and water and dirt and they'll be in the middle of a farm field and along every road and they cost as much as an apartment to build because they were really, really fortified and had a communication system in them and everything. Absolutely wild. These bunkers are, again, they're still there. There's gun emplacements and places where you can shoot out of. He expected total war, right? Every man, woman and probably child in the country to be fighting the Soviets and or the West at the same time, NATO at the same time. She's just a really interesting factoid about, well, unchecked kooky power in a dictatorship like Albania. And that's where they had gotten that ammunition.

And it turned out to be from China. And oops, the consequences thereof. I love stories like this. If you guys know anyone I should talk to who's the subject of a book or wrote a book or a subject of a movie, then definitely suggested to me, especially if you're able to introduce me to them. Big part of the show is fan guest suggestions. I always appreciate it. And I hope you enjoyed this conversation as much as I enjoyed it as well.

I thought it was a trip. All things David Packhouse will be in the show notes at Jordan Harbinger.com or ask the AI chatbot. Transcripts in the show notes, advertisers, deals, discount codes, ways to support the show all at Jordan Harbinger.com slash deals. Please consider supporting those who support the show. I'm at Jordan Harbinger on Twitter and Instagram. You can also connect with me on LinkedIn. And speaking of connection, the best things that have ever happened to me in my life and

business have come through my network. And I'm teaching you how to build the same type of network for yourself in our six minute networking course. It's 100% free. It's not schmoozy. It's not gross. It's free on the thinkific platform at Jordanharbinger.com slash course. It really just takes a few minutes a day. I spend like two minutes a day doing this stuff. Maybe not even that. I wish I knew this stuff 20 years ago. It's changed my entire life, my business, everything. Dig that well before you get thirsty folks. Build those relationships before you need them. Jordan Harbinger.com slash course. This show has created an association with podcast one. My team is Jen Harbinger, Jace Sanderson,

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