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Miami Beach’s stoner gun-runner drama — now a Hollywood movie —

The tale of how three young guys from Miami Beach won hundreds of millions in weapons contracts from the Pentagon has been turned into a Rolling Stone article, a book and a soon-to-appear Hollywood movie called War Dogs.

Efraim Diveroli, David Packouz and Alexander Podrizki sold aging weapons and ammunition originally from China and the former Eastern Bloc to America’s allies in Iraq and Afghanistan, all the while inhaling epic clouds of marijuana smoke. They were in their early 20s. Now another player in the drama, a Cypriot man named Charalambos “Pambos” Fellas, has appeared in a massive leak of documents obtained by the Miami Herald and the International Consortium of Investigative Journalists. The never-before-seen records — called the Panama Papers — come from Mossack Fonseca, a Panamanian law firm that sets up offshore companies for the rich and powerful.  Fellas served as the director of an offshore company based in Cyprus, called Evdin Ltd., that supplied weapons to the fledgling arms dealers in Miami Beach.The Miami Herald searched for Fellas’ name in the Mossack Fonseca files and discovered that he served as a so-called “nominee” director for at least 30 offshore companies set up by MF between 2002 and 2007. The companies were all based in the Seychelles, an offshore haven in the Indian Ocean.

Critics call corporate figureheads such as Fellas “dummy directors” and say they serve little purpose except to shroud a company’s real owner in secrecy. There’s no evidence that Mossack Fonseca set up Evdin. The company does not appear in the leaked files.  But Fellas’ role in the scandal illustrates how the anonymous ownership of companies enables wrongdoing.

It’s clear he was standing in for someone else at Evdin: The company’s real owner was Swiss arms dealer Heinrich Thomet, according to a 2008 investigation by the U.S. House of Representatives.   Thomet had been placed on a U.S. government watch list of suspected arms smugglers in 2006. The reason for his blacklisting was classified by the Central Intelligence Agency, the inquiry found.

Gunning it

In an interview with the Miami Herald, Packouz confirmed that Thomet used Evdin to sell the young men weapons. He said that he and Diveroli met Thomet at an arms fair in Las Vegas in 2006 as they were getting into the game of selling arms. (Diveroli’s family worked in the industry.)

“He was a lifelong arms dealer,” Packouz said of Thomet. “He had connections everywhere.”  The next year, the young men’s company, AEY, underbid industry giants to win a nearly $300 million weapons contract from the Pentagon. Thomet agreed to help AEY fulfill the massive order, Packouz and Podrizki told the Herald.

Thomet’s alleged scheme to sell arms to the United States hinged on Evdin, his Cypriot shell company. Corporate rules in the Mediterranean island nation don’t require company owners to disclose their names. Evdin offered the Swiss arms dealer the anonymity he needed to do business with the U.S. government. His young Miami Beach stooges were the middlemen.

In 2007, Evdin bought 100 million rounds of ammunition from Albania — bullets that had been imported into the Balkan nation from China decades earlier — and sold the stockpile to Diveroli, who had the ammo repackaged in order to hide its origin, according to the federal case.  There is an embargo on trading in Chinese weapons. Federal prosecutors indicted Diveroli, Packouz and Podrizki in 2008 for fraudulently repackaging the ammunition.

“We were so stupid,” Packouz said.  Diveroli, who was portrayed as leader of the pack in news reports and federal court papers, pleaded guilty and was eventually sentenced to four years in federal prison. Packouz and Podrizki also pleaded guilty, with Packouz placed under house arrest for seven months and Podrizki for five. Another partner, a Utah-based machine-gun maker named Ralph Merrill, fought the charges, was convicted and received four years in prison.

Guy Lawson, a journalist who covered the scandal for Rolling Stone and later wrote a book called Arms and the Dudes, says the defendants were railroaded — and that the U.S. Department of Defense used the fledgling players from Miami Beach to work at arm’s length with Thomet.  “In reality, the Pentagon wasn’t a victim here,” Lawson said. “They knew exactly what was going on. … Nobody in any position of power or influence suffered any consequences except the three Miami Beach dudes and the Utah businessman, the fall guys.”

Asked about Thomet’s role in the case, Maj. Adrian Rankine-Galloway, a Pentagon spokesman, said in an email: “I seem to recall recently seeing a movie trailer that roughly follows the story you spell out.” The Department of Defense declined further comment.  Thomet denied owning Evdin when asked by The New York Times, which reported on the deteriorating condition of the ammunition sold by Diveroli in a 2008 story.

Apart from its role in shielding Thomet, Evdin was also used to bribe Albanian officials, according to the Times piece. Kosta Trebicka, the Albanian businessman who was the Times’ source on the bribery claim, later died in a suspicious one-car accident, Rolling Stone reported. His death was ruled accidental.  Thomet could not be reached for comment.

His former partner, Karl Brügger of Swiss arms manufacturer B&T, told the Miami Herald that as far as he knew, Thomet was working for a defense supplier called Tara in Montenegro.

Dummy directors

In 2008, a Times reporter tracked down the man who stood in for Thomet — Evdin’s dummy director, Pambos Fellas — at his office above a nightclub in Larnaca, Cyprus

Fellas told the reporter that he served as a director for hundreds of companies and knew nothing about Evdin’s activities.  “Professional dummy directors pose a huge problem for law enforcement, for creditors, even for journalists,” said Shruti Shah, vice president of the U.S. chapter of Transparency International, a global anti-corruption group. “They are just frontmen. If a [shell] company does something wrong, it is impossible to track down who is responsible.”

The three young men still live in South Florida. The government’s case against them did not include charges that the arms had been faulty.  Diveroli was released from federal prison at the end of 2014. Actor Jonah Hill plays him in the movie War Dogs, based on Lawson’s work and set to hit screens on Aug. 19.  His lawyer, Matthew Troccoli, said Diveroli is writing a book called Once a Gun Runner that will be released in the next month.

The close friendship between Diveroli and Packouz is no more.  The duo partied hard when they were raking in Pentagon contracts. Rolling Stone reported that they often cruised around town in Diveroli’s Mercedes and hosted models at South Beach’s Flamingo condo tower, where they both lived.  Another favorite pastime included smoking marijuana before spraying targets with machine-gun fire at a local shooting range.

Packouz, played in the movie by Miles Teller, now runs a music technology startup. He said he’s been invited to attend the premiere of War Dogs in Los Angeles.  Podrizki is a commercial real-estate agent in Miami Beach.  “Looking back, I’ve made my peace with the consequences,” Podrizki said. “I should have never gotten involved in an industry that profits from war and violence. … As far as how we were treated by the government and the media, if they scrutinized the arms, financial-services or energy industry with the fervor they did us, the world would be a far better place.”

Several lawsuits are still playing out in the aftermath of the case.  Diveroli is being sued in Miami-Dade by Packouz over compensation allegedly owed from their time as arms dealers. Merrill, the Utah businessman, is suing Diveroli and Packouz for $1.83 million in federal court in Miami.  The Miami Herald also reached Fellas — who was never charged and is no longer a director of Evdin — via an email address listed in the leaked files.

He responded by threatening to report the Herald to the U.S. Embassy in Cyprus over its line of questioning.  “I dismiss all your allegations against me,” Fellas wrote when asked about Thomet and his own work with Mossack Fonseca.

The records reveal that MF was still working with Fellas years after his role in the stoner gun-runner scandal became public.  In 2013, the files show that the firm ran a due-diligence check on its reliable dummy director.  The risk that Fellas engaged in money laundering or other wrongdoing, Mossack Fonseca concluded, was “low.”

By Nicholas Nehamas

nnehamas@miamiherald.comRead more here:

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