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9 posts from March 23, 2008 - March 29, 2008

March 29, 2008

Botach Tactical and AEY Inc., family arms dealerships

How did an unknown firm with a 22-year-old president secure US defense contracts worth over $300 million?

AEY, Inc. won, and subsequently lost a multi-million dollar contract to supply ammunition to Afghanistan, The New York Times reported on Thurdsay. The firm's president, 22-year-old Efraim Diveroli, is scheduled to testify before Congress in April.

Efraim Diveroli probably didn't land those contracts all by himself, public records show.

Efraim's dad, Michael Diveroli, told the media that he had nothing to do with his son's arms trading.

"I would prefer he became a nice Jewish doctor or lawyer rather than an arms dealer. He's never asked for my approval on the company. He doesn't always take my advice, I don't influence him. As a father of a boy genius he's hard to control," Michael Diveroli told WFOR-TV.

That's hard to believe. Fedvendor.com lists Michael Diveroli as AEY's sales manager and its government business contact. The elder Diveroli incorporated AEY in 1999 and installed his son as president in 2005. Michael Diveroli also has two businesses of his own that get government contracts for police equipment and office supplies.

The House Oversight Committee will hold hearings on April 17th to investigate AEY's history, past performance, and compliance with US and contracting law. Efraim Diveroli, AEY vice president David Packouz, and AEY general manager Levi Meyer have been invited to testify, along with senior officials from the Departments of State and Defense. Neither Michael Diveroli nor his arms dealing brother-in-law, BK Botach, is scheduled to testify.

Efraim Diveroli's uncle Bar Kochba Botach is in the weapons business. According to the New York Times, Efraim Diveroli worked for his uncle BK at Botach Tactical, a purveyor of police and military supplies, headquartered in Los Angeles: 

The younger Diveroli’s munitions experience appeared to be limited to a short-lived job in Los Angeles for Botach Tactical, a military and police supply company owned by his uncle, Bar-Kochba Botach.

Mr. Diveroli cut off an interview when asked about Botach Tactical. Mr. Botach, reached by telephone, said that both Michael and Efraim Diveroli had briefly worked for him, but that after seeing the rush of federal contracts available after the wars began, they had struck out on their own.

“They just left me and took my customer base with them,” he said. “They basically said: ‘Why should we work for Botach? Let’s do it on our own.’ ” [NYT]

Botachmainlogo

Botach Tactical is part of Botach Defense Group. (BDG coupon codes available here.)

At left, you'll see the Botach Defense/Botach Tactical logo, a red Star of David and a sword, emanating lighting bolts. 

Botach Tactical's website sells everything from boots and "tactical undergear" to handcuffs to tomahawks to pocket search mirrors.   

Botach Tactical doesn't advertise guns or explosives on its Yahoo-hosted website, but they will sell you plastic training guns and real magazines. Body bags, too. (Before you whip out your credit cards, be advised that Botach seems to have a lot of  bitterly dissatisfied customers.)

In 2005 Rep. Maxine Waters (D-Ca) and some of her constituents confronted Botach at his at unmarked establishment at 3423 W. 43rd Place in Los Angeles. Local residents and city officials became concerned when they found out that Botach had quietly converted a former pawn shop into a gun dealership 12 years earlier. Botach has many other business interests in California, including Botach Management, also at 3423 W. 43rd Place, and a cold storage warehouse around the corner from his tactical store/gun dealership/property management company.

Kley_zion_logo Kley Zion is Botach Tactical's sister firm. Arguably, Kley Zion and Botach Tactical are the same company. According to the masthead on its homepage Kley Zion is "Your Professional Specialist Serving the World[:] Law Enforcement - Military - Public Safety Special Operations - Corporate Security."

Botach and Kley Zion not only share quarters at 43rd Place in Los Angeles, they also have the same federal tax ID number, the same DUNS number, and the same GSA contracting number, according to their respective websites. The klezion.com domain is registered to Bar Kochba Botach. The fictitious business name "Botach Tactical Kley Zion" was filed at the Los Angeles County Recorders office in 2006. "Botach Tactical" is a separate fictitious name for a California partnership between BK and Schlomo Botach.

According to their respective websites, both Botach Tactical and Kley Zion are pre-approved to supply goods to the federal government, including the GSA and the Defense Department. However, only Botach appears to have been awarded federal contracts.

Over the past 8 years, Botach Tactical amassed federal contracts worth over $10.8 million.   

Botach sells various weapons and ammunition to a handful of federal clients, but these products account for a relatively small share of the company's business with the federal government. Botach makes most of its federal money by filling large numbers  of small orders for products classified as "individual equipment," including specialty clothing, boots, and headsets. They also do a brisk business in night vision goggles and other optical equipment.

On Fedvendor.com, Botach Tactical has two profiles. One of them lists physical and mailing addresses in California. The other says that Botach Tactical's mailing address is the same Miami Beach address as AEY, down to the suite number:

925 41ST. SUITE 306 MIAMI BEACH, Florida 33140-3339 3423 W 43RD PLACE LOS ANGELES, California 90008, USA Tel: 305-534-0777 Fax: 305-534-1297 Contact

Information: Michael Diveroli 3423 W 43RD PLACE LOS ANGELES, California 90008, USA Tel: 305-534-0777 Fax: 305-534-1297

Note that Botach's contact person is Michael Diveroli, Efraim's father. Michael Diveroli's stated address, above, is Botach Tactical's LA headquarters. One old company profile I found on Lexis-Nexis lists Michael Diveroli as the owner of Botach Tactical, probably incorrectly.   

The Miami Beach address also shows up on a handful of Botach contracts awarded between 1999 and 2004--as the only address. These contracts also specify that the work will be performed in Florida. So, it appears that Botach Tactical had a significant presence in Florida for several years.

There's no indication that BK Botach had anything to do with the ammunition contract that got AEY in trouble.

The media are captivated by the idea that a boy genius and his twenty-something buddies cooked up a $300 million arms deal. No doubt, Efraim has a very impressive CV for an arms dealer his age. (He was allegedly caught on tape negotiating with Albanian officials.) Yet, the record suggests that members of Efraim's family probably had a much greater role in this enterprise than they're letting on. At the very least, family connections help explain Efraim's extraordinary success in securing contracts.

Now that Efraim has left the country, the Michael Diveroli appears to be shifting the blame to his absent son.

March 28, 2008

More on Efraim Diveroli and Michael Diveroli

Efraim Diveroli, is a fresh-faced 22-year-old arms dealer whose firm, AEY, somehow attracted $300 million in government contracts between 2004 and 2007.

How did Diveroli manage to do business with the federal government on such a massive scale?

Maybe it's a family affair.

Records from the Florida Secretary of State show that Efraim's father, Michael Diveroli, is the manager and registered agent of Worldwide Tactical, LLC, located at 925 41 St. (Ste. 106), Miami Beach, Florida. Diveroli was also the registered agent and president of the now-defunct Advantage Police Supply, LLC, principal office 925 41st St. (Ste. 306).

Efraim Diveroli's company, AEY, gave the same address to the Miami Dade County procurement office.

AEY also provided that address, down to the 306 suite number, when it was awarded a multi-million dollar contract with the Army in 2007.

Michael Diveroli's Worldwide Tactical, LLC has been awarded over a million dollars in federal contracts since 2000, records show. Worldwide Tactical also got an emergency two-year contract in 2006 to supply cots to the State of Louisiana. Worldwide Tactical recently renewed a contract to provide cold weather search and rescue gear for Lincoln/Lancaster County, Nebraska.

Another Michael Diveroli company with headquarters at 925 41st St. (Ste. 106)  is Business Products Depot Corp. Federal procurement records show that AEY is doing business as Business Products Depot Corp.

Let's hope Congress has some questions for Michael Diveroli, too.

(Original reporting by Lindsay Beyerstein, please credit.)

Update: The New York Times reports that Efraim Diveroli worked briefly for his uncle, Bar-Kochba Botach, proprietor of the LA-Based Botach Tactical. Botach is an established firm that has won many federal contracts to supply military and police gear. According to the NYT, Efraim left his uncle's company to strike out on his own as an defense contractor.

Update 2: Michael Diveroli business is even more diversified than I thought. Here's an online ad from Business Products Depot offering a diaper plant for sale: "One of a kind, modern automated diaper-making machine, available for sale. The machinery is in excellent working condition. Includes over 500k in spare parts !!!"

Update 3: Steve Sailer has unearthed some remarkable details about Botach Tactical, which operates out of an unmarked building in South Central Los Angeles.

22-year-old defense contractor will testify before Congress

Henry Waxman wants 22-year-old Efraim Diveroli to testify about how his company, AEY Inc., landed over $300 million in government contracts between 2004 and 2007.

In a letter dated March 25, the Army informed Diveroli that he and AEY were debarred from future federal contracts because Army investigators concluded that AEY had passed off old Chinese ammunition as Hungarian-made. The US military is not allowed to buy from Chinese military companies.

Many news accounts have remarked on the age of the ammo--some of it was manufactured over 40 years ago. Note that the Army knew it was buying some pretty old rounds. AEY said that the ammo was made between 1965 and 1975. Most of it was actually produced between 1962 and 1974.

I reviewed some government contracting records and learned that AEY wasn't just a defense contractor. The firm had contracts with the IRS, the EPA, the DOE, the State Department, and other agencies.

AEY contracted to provide the following goods, in addition to weapons and ammunition for the Army, the Navy, and the Coast Guard:

-Small arms to a branch of the Department of Energy that protects nuclear installations
-Commercial printing for the EPA
-Computer phone cords to the IRS
-Sporting goods for the air force
-Cartridge and propellant devices for the US Embassy in Bogata, through a State Department contract
-Miscellaneous weapons for the US Special Operations Command
-Equipment for the Diplomatic Security/Anti-terrorism Assistance office of the State Department

AEY also had federal contracts to supply body armor, scopes, scaffolding and concrete forms, composite food packages, forklifts, and many other items.

Diveroli is also the president of the Florida company Ammoworks, according to Nick Juliano of Raw Story. Ammoworks, shares office space in Miami Beach with AEY, but does not appear to have received any federal contracts.

The Army investigated the sketchy ammunition that AEY sold them, but it's not clear whether any other agencies are checking the quality and source of the materials they got from Diveroli and AEY.

The National Nuclear Security Administrative Services Center should probably take a good look at the guns they bought from AEY to defend nuclear reactors.

Ex-AL gov. Don Siegelman freed pending appeal

Former Alabama governor Don Siegelman is set to be released from prison today, by order of the 11th Circuit Court of Appeals:

A federal appeals court on Thursday ordered Siegelman released pending the appeal of his corruption case. Prison spokeswoman Tammy Jarvis said he cannot be released until court documents are received, but the papers were expected sometime Friday.

In its ruling, the 11th U.S. Circuit Court of Appeals said the former governor had raised "substantial questions of fact and law" in challenging his conviction. [TIME]

Siegelman will go free pending an appeal of his conviction for bribery. For some reason,  Richard Scrushy, Siegelman's co-defendant (who allegedly offered the bribe), will not be released pending appeal.

The House Judiciary Committee wants to hear Siegelman's testimony about his alleged selective prosecution by US Attorneys.

March 27, 2008

Uzbekistan legalizes money laundering until 2013

Attention, terrorists, drug dealers, and corporate criminals: The Republic of Uzbekistan has legalized money laundering until 2013.

The Financial Crimes Enforcement Network (FinCen) warned American banks about the threat on March 20:

The Government of Uzbekistan has taken a series of legal actions that undermine the jurisdiction's AML/CFT regime. Uzbekistan had made progress in addressing AML/CFT deficiencies by enacting an AML/CFT law that went into effect in January, 2006. However, the Government of Uzbekistan subsequently suspended implementation of the law through a series of decrees until January 1, 2013.

Among other things, the decrees suspend the authority of Uzbekistan's financial intelligence unit to collect and analyze information on, and monitor, financial and property transactions; identify possible money laundering and terrorist financing mechanisms and channels; share information on identified crimes with law enforcement agencies for criminal prosecution; and cooperate and exchange information with foreign agencies and international organizations on AML/CFT issues based on international obligations and agreements of Uzbekistan. The decrees also suspend reporting, programmatic, and customer identification/due diligence requirements for covered entities. Moreover, the decrees subject reports to secrecy legislation and call for the General Prosecutor to strengthen bank secrecy "to prevent interference with activities of banking and other credit organizations" (Presidential Decree No. PP-565, January 12, 2007). The most recent decree (No. PP-3968, February 20, 2008) prohibits financial institutions, law enforcement, and other supervising bodies from inquiring about the sources of cash deposits in any amount, upon threat of civil or criminal penalty.

Following the latest presidential decree, which criminalizes official inquiries about the source of cash transactions, a global anti-money laundering body known as the Financial Action Task Force issued the following statement:

"The FATF is particularly concerned that a series of presidential decrees in Uzbekistan has effectively repealed the anti-money laundering/combating the financing of terrorism (AML/CFT) regime in that country and generates a money laundering/financing of terrorism (ML/FT) vulnerability in the international financial system." [FATF, February 28, 2008 (.pdf)]

These stark warnings have generated remarkably little media attention.

In the global financial system, loopholes in one jurisdiction can have repercussions worldwide. For example, if a wealthy Saudi Arabian wanted to discreetly sponsor some jihadis bound for Afghanistan, lax anti-money laundering laws in neighboring Uzbekistan might make his life easier. Or, suppose someone with suitcases of cash from the opium trade wanted to bank that money to buy some weapons. Uzbekistan might be a good place to do that.

This week, the US is sending a diplomat to Uzbekistan for talks:

But, in a possible sign of political relaxation in a country the West says tolerates little dissent, the government has pardoned six jailed human rights activists this year.

President Islam Karimov, ruling Central Asia's most populous nation since 1989, has also promised to liberalize Uzbekistan's rigid financial system and he has softened his critical stance towards the West.

Some Tashkent diplomats have linked the shift in Uzbekistan's stance to Karimov's bid to emerge from global isolation.

Uzbekistan has large gas and oil reserves and is also among the world's top 10 gold producers and the No. 2 cotton exporter.

Acting U.S. Deputy Assistant Secretary of State for Central Asia Pamela Spratlen was due to arrive in the Uzbek capital Tashkent for talks later on Thursday, an embassy statement said.

"We are convinced that the involvement of the Uzbek government in a discussion on a broad range of topics that are on our bilateral agenda," the statement quoted U.S. Ambassador to Uzbekistan Richard Norland as saying.

He listed potential topics as regional safety, trade and investment, cultural exchange and human rights. [Reuters]

It's not clear whether the timing of the US visit had anything to do with the recent changes in Uzbekistan's money laundering laws. 

Smoking Gun exposes Tupac document forgery

Last week, the Los Angeles Times reported that associates of Sean "Puff Daddy" Combs murdered rapper Tupac Shakur in 1994.

Yesterday, the Smoking Gun revealed that the Times had been duped by an incarcerated forger:

The Times appears to have been hoaxed by an imprisoned con man and accomplished document forger, an audacious swindler who has created a fantasy world in which he managed hip-hop luminaries, conducted business with Combs, Shakur, Busta Rhymes, and The Notorious B.I.G., and even served as Combs's trusted emissary to Death Row Records boss Marion "Suge" Knight during the outset of hostilities in the bloody East Coast-West Coast rap feud.

The con man, James Sabatino, 31, has long sought to insinuate himself, after the fact, in a series of important hip-hop events, from Shakur's shooting to the murder of The Notorious B.I.G.. In fact, however, Sabatino was little more than a rap devotee, a wildly impulsive, overweight white kid from Florida whose own father once described him in a letter to a federal judge as "a disturbed young man who needed attention like a drug." [TSG]

The Times has since issued an apology. (Scroll down to read the story as it appeared on March 17.)

March 25, 2008

McCain's credibility gap

Recommended reading:

Keven Drum wonders, 'Why does John McCain get away with routine demonstrations of abject ignorance and rank hypocrisy?'

Francis Bacon triptych could fetch $70 million at auction

A three-panel work by Irish-born figurative painter Francis Bacon could sell for $70 million dollars at a May 14th auction in New York.

Triptych 1976
is one of the last important Bacon paintings owned by a private collector.  Most of his work is, happily, already in museum collections by now.

Triptych, 1976, has been in the Moueix family since it was bought from a show in Paris at the Galerie Claude Bernard in 1977, where it was illustrated on the cover of the catalogue. It has figured in all major exhibitions of Bacon’s work, and will be the highlight of Sotheby’s evening sale of contemporary art.

The complex theme of the large-format work includes that of the legend of Prometheus, who is bound to a rock by Zeus and has his liver devoured by an eagle, to which Bacon added elements from Aeschylus’ trilogy The Orestia. Orestes killed his mother, and was punished by being attacked by vultures, shown in the central panel of the work: two solemn faces are portrayed in the side panels, while naked bodies writhe below them.
[Art Newspaper]

Here's a picture of Triptych 1976.

My favorite Bacon triptych is Three Studies for Figures at the Base of a Crucifixion. When I worked in advertising, I proposed a Bacon-inspired campaign for an anti-psychotic drug. Luckily, my proposal was rejected.

March 23, 2008

Roger Stone, Eliot Spitzer, Miami Velvet, and the FBI

The Miami Herald is reporting that Republican dirty trickster Roger Stone tipped off the FBI to Eliot Spitzer's patronage of prostitutes months before the Emperors Club VIP scandal broke:

Stone confirmed details of the letter, saying a high-end call girl at an adult-themed club called Miami Velvet told him she was disappointed to have missed a call to entertain Spitzer. She said her friend had taken the call, and she described the details about the socks, Stone said. He referred The Miami Herald to his lawyer for comments. [MH]

Stone had his lawyer write to the FBI in November, after the FBI asked to meet with Stone regarding some unspecified matter. According to the letter, a prostitute confided to Stone that she had been scheduled to service Spitzer. The letter claimed the the prostitute worked at Miami Velvet, a Florida swinger's club. (NSFW)

Stone refused to meet with the FBI. Instead he threw them a bone.

''The governor has paid literally tens of thousands of dollars for these services. It is Mr. Stone's understanding that the governor paid not with credit cards or cash but through some pre-arranged transfer,'' the letter said. [MH]

Roger Stone is paying good money to invite the inference that he had some role in  Eliot Spitzer's demise. Remember, Stone's lawyer sent the letter to the FBI and later gave a copy to the Miami Herald. (That provenance reduces the letter's epistemic value to nearly zero.) The FBI won't say whether it received the letter. Stone's lawyer blacked out the addressee info on the copy he gave to the Herald. So, we have no independent record that the letter was sent, much less that it had any effect on the FBI's investigation.

Spitzer's tenure was brief, but he outlasted Stone. Stone was a consultant to the New York State Republicans until Joe Bruno fired him for leaving a threatening voice mail message for Spitzer's elderly father.

Stone is also Watergate/CREEP veteran who sports a Richard Nixon tattoo on his back. He's the class act behind the anti-Clinton 527, Citizens United Not Timid.

Some say that Stone predicted Spitzer's downfall. Stone did say that Spitzer wouldn't serve out his term, but he didn't get into specifics. After the scandal broke, he claimed that he'd known all along.

If Stone did know, the letter is a red herring.

According to the criminal complaint filed against the alleged Emperors Club ringleaders, the federal investigation of the club began circa October 2007. Stone's letter is dated November 19. The bank report showing that Spitzer was wiring money to an Emperors Club front company was generated in July 2007. 

Roger Stone probably sends poison pen letters to the FBI in bulk. It's like playing the lottery for free. If a target subsequently experiences a downfall, Stone can wave the letter around and declare victory.

Still, it wouldn't surprise me if Stone had some foreknowledge of Spitzer's fate. He's a well-connected dirty trickster, after all. Spitzer was outed following a protracted federal investigation, which someone with Stone's contacts might well have found out about, one way or another.

He might have been feeding information about the FBI's investigation back to investigators in the hopes of ingratiating himself.  Stone is a high-profile swinger, so setting his story in at a sex club could provide a pretext for knowing gossip about Spitzer's sex life.

The weakest part of the official story is explaining how the public corruption investigation into Eliot Spitzer meshes with the larger investigation of the prostitution ring as a whole. The complaint says law enforcement heard about the Emperors Club from an ex-employee-turned-informant in October 2006. Judging by the complaint, the federal investigation didn't really get underway until a year later.

The Emperors Club did have prostitutes in Miami. So, I wondered if there might be any connection between EC and Miami Velvet.

After much digging, I found nothing in the public record to suggest that Miami Velvet was associated with prostitution in general, or the Emperors Club in particular.

All in all, it seems unlikely that Stone's letter hastened Eliot's Spitzer's downfall. The investigation was already underway by the time Stone sent the letter. .

If Stone did know that Spitzer's downfall was imminent, the letter might be a cover story to allow him to take credit for his enemy's demise without revealing his true sources.

Miami Velvet turned out to have an interesting business model in its own right, though. Details below the fold.

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