Arming Themselves With The Proper Logistics

A year into their joint business venture, Diveroli and Packouz got the break they were looking for -- in the form of an enormous contract with the Pentagon. While there were many reasons the relative novices won the contract (including the Bush Administration’s efforts to aid small businesses), the most significant were their price points -- coming in at $300 million, Diveroli and Packouz lowballed their nearest competitors by at least $50 million.

While the young dealers were able to fulfill preliminary orders with relative ease, they hit a snag when they received their largest order yet: $49 million in ammunition, including 100 million rounds of AK-47 ammo. Unable to cut a deal with Russian suppliers, Diveroli turned to his favorite middle man, Heinrich Thomet, to bargain with the Albanians. Although an agreement was struck, the logistical complications behind packaging and shipping the bullets were ultimately AEY’s downfall.

Realizing he had underestimated the cost of fuel when he’d drawn up the initial contract, Diveroli sent Podrizki to repackage the bullets in lighter containers. Upon his arrival, however, Podrizki realized something far more devastating: the Albanian ammo was actually manufactured in China. Because of the U.S. embargo against selling Chinese weaponry, the stockpile was essentially useless.

Unfortunately, Diveroli and his cohorts didn’t have time to come up with a new plan to source this massive supply. In a last-ditch attempt to circumvent the law, Podrizki hired local Albanian warehouse workers to repackage all the ammo, thereby doing away with any evidence of their Chinese origins. Of course, this was not destined to be the last snag to the trio’s plan. Between shipments getting seized and agreements being broken, it’s a miracle the shipments reached their destinations at all.

Ultimately, however, it was the young men’s arrogance -- not their dysfunctional supply chain -- that ended AEY’s short reign. Since they used email to communicate, their conspiracy to provide illegally obtained weaponry was soon uncovered. AEY, and their careers as arms dealers, ended as tumultuously as it had begun.

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