War Dogs Exposed: The True Story | David Packouz | The Jared Goetz Show

I thought I might go to prison for decades, you know, at the time. And I was like, man, my life is over. And I had a 1-year-old daughter at the time.

Oh my God.

And I was like, I'm going to miss my daughter growing up. And, you know, I just like pretty much let down my family, my, you know, everyone I knew, you know. And I was very, very depressed, you know.

So that was when you were 25?

I was 25 years old.

Yeah. I couldn't imagine having my best friend work on something for that long.

Yeah.

Where we got through the shit together.

Yeah.

And then said, hey, you could either take this tiny, tiny fraction of it or nothing.

Yeah.

I mean, that is— that's a sociopath.

Yeah, he's completely a sociopath. A former arms dealer during the war in Afghanistan, a major weapons contractor for the U.S. Department of Defense. In early 2007, AEY Incorporated secured a nearly $300 million government contract to supply the Afghan army with ammunition and weapons, but got arrested for violating terms of AEY's contract with the U.S. Army. He is now an entrepreneur, inventor, and musician, and the chief executive officer and founder of Singular Sound. David Pak House. To be honest, I hated working with Efraim. Yeah, he's just a pain in the ass to work with, just in general as a person. So yeah, so his book called Once a Gun Runner, it's like 90% bullshit and like 10% truth.

Yeah, too many people out there that are trying to figure out what to do to make money. Yeah, everyone's talking about e-commerce or social media marketing or, you know, content creation, but not really many people are talking about government contracting. What's up, Zen Hard listeners? This episode is sponsored by Zendrop. Zendrop has a very special place in my heart, not only because I started the company, but because dropshipping is really a life-changing business for me. You see, I tried tons of things when I first got started, and what I love about dropshipping is that there's always an opportunity to sell a new product to a new person. There's billions of people and millions of products you can sell., and you never need to touch inventory. All you need to do is pick a product, run ads to it, and if people buy it, you make a profit. So if you're interested in getting started in your e-commerce journey, check out zendrop.com and get started today. What's going on guys? Welcome to the Zen Hard Podcast. In this episode, I'm interviewing David Packhouse, and yes, that's the same David as the movie War Dogs. They made a whole movie about his story, and in this episode we get to go deep into what actually happened and his perspective on it from $300 million government contracts to facing jail time and building inventions and a whole bunch of other really interesting things. This episode goes deep. It's fun. It's entertaining. So stay tuned and I hope you enjoy. War Dogs was incredible movie.

Yeah. Thank you.

How many times have you watched it? Oh, man.

Well, every girl I ever date wants to watch it with me. So, so a few times. So, yeah. Well, I can't give a number, right?

Trying to tap into the secrets. Yeah.

Now that I, now that I put it out there in those terms, but I've seen it a few times. So the interesting thing though, was for me, was I was involved in the process of making the film.

Oh, really?

Not like deeply, like they entered the— they didn't give me any artistic discretion at all, like zero. They were like, yeah, I mean, they gave me a little bit of money.

Yeah.

For me to be involved, not nearly as much as Miles Teller got to pretend to be me. But that's kind of how Hollywood works. So, but they were very clear, you get like zero artistic control over the process, right? So I knew they can make whatever film they wanted, but they wanted me to be involved because they wanted it to feel more authentic. So the screenwriter, the original screenwriter, Steven Chin, came down to Miami when he first started the project and interviewed me for about a week and used those interviews. He recorded all the interviews and he used those as the basis for the first version of the screenplay.

Gotcha.

But then Todd Phillips, the director, got another screenwriter named Jason Smilovic to kind of rewrite the screenplay a whole bunch of times over like the next year.

Is that what they do?

That's what they do. Yeah, they like rewrite it, they rewrite it. Like it got rewritten like 10 different times. And what usually happens, it depends on the kind of movie they're trying to make, right? If they're trying to make like an artistic film, then usually they'll kind of stick to the original version.

Right.

But if they're trying to make like a big blockbuster Hollywood film, then they try to mold it into the Hollywood format, which, you know, is very— that's why people say, you know, Hollywood films all have a similar structure. Because they're trying to appeal to the biggest part of the bell curve, right? You know, when they're spending $40, $50 million on a movie, they need to know they're gonna make that money back, which means they need to have a certain amount of action, certain amount of relationship drama, certain amount of comedy drama, you know, et cetera.

They have a formula.

Exactly, they have a formula. And so it took them about a year to go from the original version that Stephen Chin wrote to the, version that they actually made into a movie. And along the way, they would send me different drafts of the script.

Yeah.

So it was cool to see that kind of transformation.

Yeah.

And to see what kind of parts they cut out, what kind of things they added in. So I kind of got like an interesting insight to the Hollywood sausage-making process, so to speak.

What is it— how long does it take to read a screenplay?

Uh, so, well, it's, it's usually— they, they estimate that, that like, uh, a screenplay averages about 1 page per minute of the film. Okay, so like, uh, hour— 90-minute film will be 90 pages.

Gotcha. It's just like reading a 90-page book.

Exactly.

So how many pages did you read of this thing before?

I mean, I read, I read the whole thing because obviously I was excited.

And every time they revised it, you'd read?

Yeah, I'd read. I mean, like, if I saw there weren't many changes, I'd skip over certain sections. But, but yeah, they usually would make changes to certain parts, or they'd like cut something out, they'd add something in, and And, and it's funny because like, there's certain, there's certain lines from this that like from the movie that they cut.

Yeah.

But like that kind of stuck with me. So like me and I have, I have 5 brothers, right? Okay. So like while I was going through those different versions of the screenplay, like, you know, like I would like kind of, I wasn't allowed to show them to my brothers, but you know, off, off, off the record, they saw it, you know, between me, you and the whole internet. They saw like, you know, versions of the script. I never emailed it to them, so they didn't have a copy. But, but, but we read it together, you know, because we were all excited. And like, there's this one part, this one line in the film that they cut from the final version where like, like, like Miles is like, what, we got to go to like Jordan? And Jonah, you know, like where they decide to go to the Triangle of Death.

Yeah.

And Jonah goes, he's like, David, we're international arms dealers.

International.

Like that. And so like whenever my brothers and I go like traveling on a trip. We're like, we're international, bro.

International.

And like, it's so funny because like we quote it as if it happened in the movie. Yeah, but that scene was cut from the final film. Yeah, so like we're quoting a version of the movie that never actually—

so they didn't say that part of the movie.

They never said that, which I thought was— I thought it was a great line, you know. Yeah, it was.

I could have seen him say that.

Yeah, yeah, no, it totally made sense. Yeah, but no, he— they cut it.

How did they find your story and decide to make a movie about it?

So the way the whole movie happened was, uh, there was— well, to go, to go back a little bit, um, we got in trouble because the New York Times published a front page article about us, and it was not a flattering article. It had our mug shots on the front page of the New York Times.

Really? Yeah. Wow.

Uh, next to like an image of like rusty looking ammo. Um, oh yeah, that's right. Yeah, they said it was like all this was— we were delivering low quality ammunition and endangering the soldiers in the field, which was untrue.

Yeah.

Um, and, uh, but it created a big, like, uh, political, uh, stink. And, um, and Rolling Stone saw this article and they were like, uh, I got a call from a journalist from Rolling Stone, a guy named Guy Lawson, and he told me, he's like, you know, this is right up Rolling Stone's alley. Are my editors keep telling me, write about young people doing fucked up things. That's our, that's our target demographic. And, you know, you guys really fit the bill. I'm like, oh, thanks.

Thanks.

You know, thanks for that. That's quite the compliment. And I told him, like, you know, I'm a musician. I've always dreamed about being written in Rolling Stone. Yeah. Just not for this. And he's like, oh, we could work your music in there. Don't worry about it.

We'll mention it.

Yeah, he gives offers, the carrot.

Yeah.

And so I said, OK, fine. But like, I was— at the time, we were about to get into some deep legal trouble. And my lawyer told me I can't talk to any journalists. So my lawyer said, look, after all the legal jeopardy is done, you can talk to him and, and do all that. So that took like 3 years. So by the time the Rolling Stone article— so the, the New York Times article was published in 2008, that was like the end of my arms dealing government contract. I was 25 at the time.

Wow.

Yeah, yeah.

So just a young, a young man.

Yes, on the COVID of New York Times, on the COVID of the New York Times, mugshot. It was not a flattering picture. Yeah, it was not a flattering picture. I look like a criminal.

Yeah. Wow. Yeah.

Um, but, uh, yeah, it was not good. And I thought I was going to go to prison for years. Oh my God. Yeah, it was, it was, uh, quite a stressful time in my life.

How long did the arms dealing go for in your life?

So I started in late 2005 and ended in like early-ish 2008.

So you started in your early 20s?

Yeah, I was like 22 when I started.

We're also stupid in our early 20s, except if you're listening and you're in your early 20s.

Yeah, you're very smart to listen to this podcast. Yeah, you'll get slightly smarter.

I made a lot of stupid choices in my early 20s. Like, sure, I used to throw the world's largest foam party. That was like my first business.

Doesn't sound so stupid to me, you know.

But I raised money from some trust fund kid, and then I couldn't pay him back, so I got sued. And I felt like the worst guy in the world. But I can't even imagine what you felt like. Yeah, being, you know, facing prison time and being on— like, what was that? What was that like?

It was harsh. Um, I thought I might go to prison for decades, you know, at the time. And I was like, man, my life is over, you know. Like, and I had a 1-year-old daughter at the time.

Oh my God.

And I was like, I'm gonna miss my daughter growing up. And, you know, I just like pretty much let down my family, my, you know, everyone I knew, you know. And, uh, it was, it was real. I was very, very depressed, uh, you know.

So that was when you were 25?

I was 25 years old, yeah.

And, um, how long were you in that state where you're like, I think I'm going to be ruined?

So it was really bad for a few months, uh, just like until, you know, kind of saw the lay of the land of how things were going to go. But it was still like sitting on edge because that after a few months they like offered me a plea deal, right? So at first they were like, oh, we're going to charge you and you're going to— you might go to prison for like 300 years.

Oh my God.

Yeah, because the way they charge it, they— it was, uh, we had like 71 aircraft loads that went into Afghanistan with the ammo that was— that we were lying about. Yeah. And, um, and they said each aircraft, we supplied a document called a certificate of conformance where we told the government what kind of ammo is there and, and how much and where it was— came from, where it was manufactured. And we put Albania, and yeah, it was really China. And so they're like, each document that you submitted to the government is an act of fraud. Oh, and you can get up to— you can get up to 5 years for each one, and that's 71 acts, so 355 years.

Oh my God.

So I was like, my life is over, you know, I'm fucked. And, um, but then they were like, okay, but if you plead guilty, we'll combine it into one. Yeah. So you can— most you can get is 5 years, and because you plead guilty, we'll tell the judge to give you on the low end of the guidelines. So maybe you'll get a year, maybe you'll get, you know, just probation. It's up to the judge.

That's still horrible, but yeah, compared to your whole life, it's probably— was it— was it a relief get that news? Absolutely.

I mean, I was like, okay, the most I can— I'll plead guilty, and the most I can do is 5 years in a worst-case scenario. Yeah, most likely no more than a year if, if things, you know, if I play my cards right. And that was an enormous relief. Um, but, uh, but I was still sitting on the edge of my seat because, like, I had no idea, because the judge could be having a bad day and they'll be like, oh yeah, you know, the prosecutor is saying to give you on the low end, but you deserve the high end, so I'm gonna give you the high end, you know. And then you have have to do 5 years, and it's really up to the judge. And, you know, the judge is a human being, and, you know, they might be having a bad day that day.

Someone else's hand is completely scary.

Yeah. And I was waiting for 3 years to get sentenced. So for like 3 years, I was on the edge of my seat, you know, not knowing what was going to happen.

What were you doing during those 3 years?

So I was trying to be as good of a citizen as possible. My lawyer told me, he's like, you have to make yourself look good to the judge. That's your number one job right now, right? And so I went back to school. Um, I went— I started— I had, before I into the arms dealing business, I was studying chemistry.

Yeah.

And, uh, I quit like halfway through the bachelor's degree to go into the arms dealing biz. And, um, so when I went back to school, I, I just decided I was kind of tired of chemistry. I decided to go into mechanical engineering. So I started doing mechanical engineering, uh, and I, I wasn't allowed to do government contracting or, you know, the arms dealing business. Yeah. And government contracting is the more broad version of what we were doing.

There's a lot of different government—

yeah, yeah, exactly.

There's tons of things.

It's pretty much selling stuff to the government. Yeah. And, uh, we were selling mostly weapons and ammunition, but you can sell anything to the government.

So even services?

Yeah, yeah, services. Uh, um, I— my first government contract was for 40,000 gallons of propane.

Okay.

And it went to the Air Force Base in Wyoming. Uh, yeah, I mean, we worked on— also, we worked on food contracts, on vehicle contracts. Um, my, my, uh, current partners in War Dogs Academy— there's one of the businesses I have now where we teach people how to do government contracting.

Oh wow.

Yeah, they specialize in, uh, in laundry services, and they're— they have a $9 million contract to supply laundry services to the U.S. Army in, uh, in Germany. Wow. Yeah, yeah. So they're, they're killing it. And, uh, and so, yeah, you can— one of our students in War Dogs Academy got a contract to supply hypnotherapy services to the US Army, like to work with like the PTSD and stuff.

Wow.

So yeah, they literally buy everything.

Do you think that— does that go away with this new Department of Government Efficiency?

I mean, some things may get reduced. Yes. I mean, they're trying to cut whole departments. We'll see if that lasts. Yeah. But, um, because I think you need an act of Congress for some of that, but we'll see. Who knows? Uh, it seems like cutting first and asking questions later. So we'll see what happens. Yeah, uh, but the government, to function, they need to buy things. Yeah, they need that, you know. So if you want to have a government of any size, you know, then you, you're going to have government contracting. There's no other way for the government to function.

How did you discover government contracting at such a young age?

Yeah, so, um, I discovered it, well, through my friend— former friend, I should say— Ephraim DiVeroli, who in the movie is played by Jonah Hill.

By the way, is he still incarcerated?

No, no, he, he did— he ended up serving 3 and a half years.

Oh, Wow.

Uh, but he got out. He's been out for a while. He lives in Miami. No, we're not friends.

Not friends. Do you ever see each other?

Uh, the last time I saw him was in a deposition when I was suing him.

Oh wow.

So yeah, we're not friends. We're not friends.

Arch nemesis. Yeah, yeah, yeah.

He still owes me $5 million. Uh, so, you know, when he pays me that, we could be friends again.

Shake hands, move on. Exactly.

Yeah, if, if he ever pays me that, which he won't.

So were you guys like in school together?

So we knew each other from, uh, synagogue actually. We're both Jewish.

Yeah.

And cue the anti-Semitic comments on YouTube. Uh, I've seen a lot of that. Yeah, uh, unfortunately, but, uh, it is what it is. So, um, I actually like it when anti-Semites comment on my YouTube videos because— because, yeah, because then it helps the algorithm, you know. The more YouTube feeds off of outrage, so if people are outraged, so go ahead, anti-Semites.

I'm Jewish too.

Yeah, so there we go.

Welcome the comments.

There we go, there we go.

Get more views.

Yeah, yeah, exactly. So yeah, you should embrace, embrace the hate, you know. It's, uh, it's, uh, it's good for the algorithm, unfortunately.

Well, I'm sure any hate you get now is— yeah, trumps in comparison to the pain you suffered from being on the New York Times.

Oh yeah, yeah, yeah. No, no, it doesn't really bother me. It's fine. I kind of just laugh it off, you know. People think I'm like part of the, uh, the Elders of Zion, you know, the Protocols, you know, I'm part of the Illuminati. I To me, it's kind of a compliment. It means people think I'm important. Yeah. You know, that I'm like involved in like, you know, secret goings-on at the world stage. Um, but yeah, and so it's fine. Uh, but yeah, we were saying we met in synagogue. Um, uh, we both of our parents were very religious Orthodox Jews. Yeah, grew up Orthodox. And, uh, so, uh, but neither of us liked to pray, so we would kind of sneak out of synagogue and go hang out outside and And that's kind of how we met. And so he, he got kicked out of, uh, we went to Orthodox Jewish schools, but different ones, not the same one. Um, and they're very strict, right? So, uh, he got caught smoking weed and so he got kicked out of school and when he was 16 and his parents said, oh, you know, if you're not taking the rules seriously, you're going to learn what life is about. You're going to join the workforce.

Yeah.

So they sent him off to work for his uncle. Who owns a big pawn shop in LA. And one of the things pawn shops sell in America is guns, right? And he became like a gun nut. He became, you know, teenage boys get obsessed with guns, sports, music, you know, certain things, you know, that kind of really becomes your identity as a teenage boy.

Yeah.

So he became a gun guy and he got obsessed with guns even though he was 16.

Yeah.

And, uh, he, um, started selling the guns to the lo— to the, to the customers in the store and his Uncle noticed he was pretty good at this, and so he— and his uncle was bidding on, you know, the local cops would come in and buy things, and they told the uncle, oh, you should, you know, go through the government contracting system so you could sell to the whole department instead of just selling to, you know, a couple guys here and there in the department. So his uncle started bidding on government contracts to sell, you know, like firearms and small arms ammo, bulletproof vests, boots, boats, you know, various accessories to the local and state police. And so he learned how to do government contracting from his uncle. He, um, his uncle put him on the job to fill out all the paperwork and, and do these government contracting, uh, bids. And so he learned how to do that. He worked for his uncle for about 2 years, um, and then his uncle claims that he stole like $70K from him. He claims that his uncle stole the $70K from him. They, they're both well-known scumbags in the industry, so, you know, I believe them both. Yeah.. And so he quit and he came back to Miami and he took over a company that his dad wasn't using called AEY Inc.

Okay.

And in the movie, there's the famous scene. Jonah's like— Jonah Hill is asked, what does AEY stand for? And he's like, oh, you mean like morally? And he's like, no, like what do the letters stand for? No, it stands for nothing. Like IBM stands for nothing. And the guy's like, oh, it stands for International Business Machines. He's like, get the fuck out of here, you know? You know, so there's that scene in the movie. And actually, AEY does stand for something.

It's—

yeah, so that's one of the things they changed in the film because it was funny. It stands for the initials of his dad's 3 sons. Okay, so the E in AEY is Ephraim. So it stands for Avrami, Ephraim, Yeshaya.

Gotcha.

The 3 names.

And it was just like a holding company that they were—

it was just a holding company. Originally started it as, I think, a label printing business, and he just never did much with it. So it was just kind of like mothballed. And so Ephraim took it over, registered it with the federal government so he'd be eligible to bid on government contracts. And this was in 2000, early 2005, late 2004 when he started by himself. And he was still 17. That's why he was doing everything under his dad's name, his dad's company's name. And this was right after the invasion of Iraq. And the Bush administration pretty much destroyed Iraq, and then they were trying to build up the country and turning— turn it into a democracy. That was the idea, right? They did the same thing with Afghanistan, right? So part of that nation-building process was they had to spend a lot of money to build this nation. So, uh, the way they spent money is through the government contracting system. So there was literally trillions of dollars getting put in. I think, I think they spent about $1 or $2 trillion on the entire—

wow—

yeah, on the Iraq-Afghanistan combo. Wow. Yeah. So that's some of our national debt. That's where it went.

Wow.

And so he, he would— Ephraim started bidding on all— because he already knew the gun business from working for his uncle. So they were trying to build up the, the Afghan and Iraqi National Army and police forces, and they need guns and ammo and bulletproof vests and uniforms and boots and all that stuff. And so he started bidding on all these contracts, and he started winning a bunch of these contracts, started doing really well. And then after about a year of working by himself, we bumped into each other at like a mutual friend's house, and he asked me what I was doing. At the time, I was in college studying chemistry. Yeah. Uh, I also had a few side businesses. I was working as a professional massage therapist at part of the movie. That is true. Uh, it was very part-time thing. I had done it before I had started my part-time businesses that were making me more money at the time. Um, but, uh, I noticed that girls like massage therapists, so yeah, why not? It helps.

Great perk.

Exactly, exactly. So it didn't hurt in that department. But, uh, uh, but I was— I also started, uh, a business importing, um, SD cards from China and selling them on eBay. I was importing, uh, bedsheets and towels from Pakistan and selling them to nursing homes. That part is true too, though not in the way they portrayed in the movie. Okay, in the movie, like, I'm going to guys nursing home and like begging him to buy my towels and he's turning me down, you know. They have to make it entertaining. They have to have it a better arc, you know. So in real life, I actually never even took delivery of the— like, I was just a broker, you know. Yeah. And I was doing containers. I wasn't like, you know, filling my apartment up with like, you know, boxes.

Better for the movies.

Yeah, it was better in the movie.

Yeah.

So, so I was doing, you know, this— these businesses and doing pretty well, you know. Um, I, I had like, at the time I had saved up about like $100K, you know, that I had made in the past year. So I thought I was pretty hot shit, you know. I was like, you know, I'm 22 years old, I have $100 grand in the bank, I have way more than any of my friends. Yeah, we're all like flipping burgers, you know, and working as waiters. Um, so I was like, I'm pretty good at this business. Yeah, you know. And so then I meet him and he asked me what I'm doing, and I tell him, you know, um, doing the, the SD cards, the bed sheets, etc. And he's like, oh, you know, that's the stuff you're doing is a lot of the things you're doing is similar to what I do in my business, you know, finding suppliers overseas, arranging logistics, figuring out the financing, import licensing, all that stuff. He's like, but I bet I'm making way more money than you.

Yeah.

So you should come and work with me. I need a partner, a smart guy, a guy I can trust. Yeah. You know, we would make so much more money together than you're working, than you're making on your own. And I'm like, well, you sure about that? I mean, how much money have you made? You know, I thought, I thought I was pretty well. Yeah, I thought I was doing pretty good. Yeah. And so he's like, he's like, okay, I'll tell you, I'm gonna tell you, but only to inspire you. I'm not, I'm not bragging. Yeah, okay. And he opens up his laptop and he's like, he logs into his Bank of America account and he shows me, and he has $1.8 million in cash in his bank account, in his checking account, his business checking account. And I'm like, holy shit. Wow. I thought I was pretty hot for like having $100K, right? And he, and, and he's like, yeah, this, I made this in the last year.

Wow.

And I'm like, whoa, this guy knows something I don't know.

Yeah.

You know, I'm like, okay, I'm in, teach me what you know.

Yeah, please.

And that's, that's how I got into it.

Wow. So he brought you in because you were smart. Yeah. You could bring some value to him. He needed a partner. Yeah. What was the first thing you guys did together?

So, uh, so the idea originally was to— was that I wouldn't work on like arms dealing contracts. Yeah.

Uh, other government contracts.

Yeah. So the idea was that I would work on fuel contracts, right?

Oh yeah, that's what you said.

That was your first— that was the deal I actually got because the reason I picked fuel was because it's there. It's a, it's a consumable good, right? So they're constantly buying more. It's never going to end, right?

Well, on that notion though, like, there's probably tons of people that can supply fuel. Like, correct. Is it the lowest bidder that gets the deal, or so it works?

So the way government contracting works is it's a combination of factors. It really depends on the size of the contract, uh, which is, uh, affects which which things they take into account, right? So if it's a contract— these days, the number is under $250K. That's considered a small contract for the government. So you don't need any past performance history. You could be a brand new newbie to the game, and you could win a quarter million dollar contract.

That's $250K in like top line revenue.

Yeah, that's top line revenue. Whatever your profit margin is, whatever you manage to squeeze out of your suppliers and situation. Of, you know, how you bid the contract. And the profit margins can vary widely. You know, like, I've, you know, you know, for big contracts, it's usually on the low end, like 10% or lower. But for large— for small contracts, I've seen people make like 40%, 50% margins. Yeah, yeah. But you really need to know the industry really well in order to know that you're going to still win the contract with those margins. So when you're first starting out and you don't know the industry that you're bidding on well, usually you'll be pretty conservative. You'll just put on like 10% and hope to win a contract. So you build up past performance. Once you have a bit of past performance under your belt, you know, some contract— contracts that you've delivered successfully on, now you're eligible for the bigger contract.

Gotcha.

Yeah. Otherwise, above $250K, they require you to prove that you can do this business, right? And that you have some history doing this.

So how is it not— and I want to go back to the story, but I'm just curious, how is it not just a race to the bottom on all these contracts. Like, for example, in my business, we do fulfillment for dropshippers, and people come to us, they ask for a quote, we give them a quote, they got a cheaper quote somewhere else, they come back to us, we come lower. We're able to win because we actually own our supply chain and we can usually beat people. But in this competitive thing, it's mostly brokers, right?

Yeah, so there's a combination of things. Yeah, there's a lot of brokers. There's also, uh, businesses, uh, you know, end suppliers, so to speak, who also bid on contracts. But the end suppliers aren't always the most competitive, right? So like, take ammunition, for example. Yeah, right. Manufacturers have certain fixed costs, right?

Right.

They have to pay for the copper. They have to pay for the gunpowder. They have to pay for the labor, the electricity. And those things fluctuate with time.

Right.

Right now. So when they're bidding on an ammo contract and, you know, they're selling to the government, there's only so much, so far they can go, you know, as far as being competitive. Yeah.

I'm creating new ammo.

Exactly, when you're creating new ammo.

Right.

Now, if you're a broker and you find, you know, this police department has had this ammo sitting in their warehouse for 10 years, and it's kind of coming to the point where they don't really want— they need to use it or lose it.

Yeah, you can negotiate better terms.

You can negotiate.

Liquidate it.

Yeah, the liquidation opportunities are large, right? And the same thing goes with food, with clothes that are out of fashion. So there's a lot of industries that, that a broker can beat the manufacturer.

Because you could find the deal. It's all about finding the deal.

Exactly. It's all about finding the deal.

But fuel has a price.

Yes. So fuel is, is tends to be to move with the markets. Yeah. Right. Now, you would be surprised that a lot of large companies, they don't— they aren't even registered to do business with the government.

Really?

Yeah. Yeah.

Interesting.

You'd be surprised.

It's a big business to do.

You would think so because it's a pain in the ass. Gotcha. Right. So there's a lot of paperwork. There's a lot of regulations., there's a learning curve when you first start doing it. Um, the government pays you net 30, which a lot of businesses don't like.

And I heard— I have a friend, uh, who lives in my neighborhood who does government contracting for accounting services, and they can go back and audit him 3 years later on things that have been done for years.

Yeah. So there are issues like that. I haven't heard of anything like that happening too egregiously. I'm sure it can happen. But, um, but yeah, you really need to dot your i's and cross your t's with government contracting. You could get in trouble. It's a lot more bureaucracy than the private sector.

Gotcha.

And you need more financing. So a lot of companies, they don't want to deal with it.

It's just not worth it for them.

Yeah, it's not worth it. They already have their— they have enough, enough demand in the private sector that they don't want to deal with the hassles of the government sector. So actually, one of the, uh, services that we provide at War Dogs Academy that which we can get to later, um, is we offer a complete end-to-end service for companies.

Oh, wow.

You know, so, so we have a course to teach entrepreneurs who want to do things on their own.

Yeah.

Uh, but for obviously a higher price, we have like an in-house team that will do this B2B service for companies. We've already had quite a few companies use these services.

Yeah.

And it just, it makes sense for them because yes, it's more money up front, but they don't have the learning curve. So they don't have to waste all that, those months of learning and setting things up and making mistakes and learning the hard way. Because, and you know, they just hit the ground running. There's oftentimes companies come to us when there's, they see a government opportunity. Yeah. That has a hard deadline in like 2 weeks.

Yeah.

And they're like, we don't have time to learn this shit. You guys do this for us. And through that process, we'll train our staff to do the next one.

So that's, are they all like, and I'll get back to the story in a second, but like like, you know, you mentioned an example like hypnotherapy. Yeah. Um, are all of them listed as an opportunity, or like, was that like something the government said, hey, we're looking for this?

Yes. Okay. So, so by law, the vast majority of contracts, they have to post on SAM.gov. Got it. Right? SAM.gov. Yeah. Uh, and except for like the CIA's black budget, that they keep secret. They don't tell you what they're spending, those like $50 billion or whatever it is that they're spending. Get lost somewhere, you know. It's probably because it goes into cash to people we don't want to be seeing paying cash.

Yeah.

So the CIA has its own, you know, discretionary black budget.

Yeah.

But most of the government has to publish publicly what they are buying, and it has to be open market competition.

But they— so, but they have to say— so, so someone in the government said, hey, we want hypnotherapy for—

correct.

Okay. And then someone's able to go and say, oh, I could do that. Yes, exactly.

So they're probably— if I had— I don't know the details of that particular contract, but if I had to guess, is maybe like the VA, right? They provide medical services to veterans.

Yeah.

But, you know, some, some like, uh, doctor is like, you know, would be really helpful with this PTSD is, you know, I've seen in the literature that hypnotherapy can help to a certain extent in these kind of situations, right? So, and we'll end up saving money rather than putting them on drugs. Right. You know, they'll be like, okay, well, that makes sense to use hypnotherapy services for, for these particular cases. And they'll be like, in order to get those, we have to go through the contracting officer who will bid it out and see. And that's how those hypnotherapy contracts get there. Gotcha. And, and it'll— it's like that for everything. It's like that for fuel. It's like that for weapons. It's like that for fighter jets.

So your first deal was the fuel?

Yes.

How did that come to be?

So, uh, I started— I knew nothing about fuel. I'd never done a fuel contract. I didn't know how the whole— the system worked. Work. Apparently there are these, um, uh, distributors for propane, right? This was a propane contract, and there are these, uh, regional distributors. And I was looking for something to be delivered to Wyoming to an Air Force base. Yeah. And you have to quote a delivered price. So I had to not only find the source of supply, I also had to find the logistics, right? Uh, the, the transportation.

Yeah.

And it was that combination which, you know, you can find a good source but bad logistics price, and you know, you're not going to be competitive. So I was looking in the region, and I kept— I, uh, just do— did a Google search, right, for all the propane distributors, started calling them all up, started getting prices. Some of them refused to give me— they're like, oh yeah, we're bidding on that contract too, I'm not going to give you a price. But a bunch of them were like, yeah, no problem, right? They didn't— weren't bidding on the contract or were unaware of it or something. And, uh, then I prices from fuel transportation companies, built up a spreadsheet, you know, and did the best combination and found a pretty good competitive price, filled out all the paperwork. Then Ephraim got on the phone with my suppliers, and he was— I'll give him credit— he was an amazing negotiator. Yeah, right. Amazing. So good, he negotiated me out of all the money he owed me. Didn't negotiate that. But yeah, but yeah, he was a He was a very talented negotiator. Pain in the ass to do business with, partially because he's such a good negotiator. But he negotiated them down to their last rock bottom using every trick in the book. And we won the contract and we were splitting the money 50/50 for these contracts 'cause I would do pretty much all the work and he would come at the last second, do the negotiations and make sure I filled out all the government paperwork correctly and do everything under his company's name. So that was our deal is we were splitting things 50/50. And so after all was said and done, we each made about $8,000.

Okay.

For the first contract, for like 3 weeks of work. Okay. So I was pretty happy.

Yeah.

I was like, you know, this is a good start. Yeah. You know, this was obviously a zero past performance kind of contract and then we could go for other ones. So that was my first contract. Yeah. And then I started working on some other Fuel contracts, but then he came to me and he's like, hey, you know, I won this contract for like, uh, rare gun parts. And he's like, and I won the contract, I know it's going to be profitable, but I don't have time to work on it. So why don't you work on delivering this contract and, and, you know, we'll split it 50/50 because most of the work is in the delivery. Because he, he knew the industry well enough that he bid it at— he knew that this particular contract, yeah, no one was going to bid on it. Yeah, because it was 130 different gun parts for, for, uh, gun systems that were not being manufactured anymore. They were like all antiques, right? And this was going to the Special Forces who need these kind of systems to train the operatives in the field. Because you don't— when you're a Special Forces guy in whatever place, or, you know, around the world, you don't know what kind of gun system you're gonna encounter, and you need to know how to use like a Luger from the— from World War II, right? Communist-era stuff. So they, they trained them on all these things, right? So Ephraim knew that this was such a pain in the— and they wanted like 3 units of each part, you know, like low quantity, high amount of different types.

Yeah.

So it's gonna be a big pain in the butt.

Yeah.

Now the, the, the, the, you know, the— there is a publication of all the federal firearms licenses holders, right? Uh, and so you can get— you can download that spreadsheet. It's like 70,000 businesses. Yeah. Uh, with their phone numbers and emails. And some of them— a lot of them don't have emails listed. But, uh, he, he's like— he's like, here's the— here's the spreadsheet, 70,000 businesses. Yeah, start calling all of them. You know, he's like, that's why he didn't want to do it.

Yeah.

You know, and start getting prices from all of them for all these different gun parts. And so it was a very— it was a long slog.

Very tedious.

Very tedious. But it took me a few months to fulfill that contract. But we had very high margins because we were like tripling our money on some of these parts because, you know, he bid it at a very high price. And these gun dealers were thrilled to get rid of these parts that have been collecting dust, you know, for who knows how many decades. So they were happy to sell it at a low price. And so that was my first entry into the the gun.

Like, big contract.

I ended up making about— I think we, we each made in the low 20s. It was about like $21,000, $22,000. Gotcha. Then that took me like a couple months to finish.

Yeah.

So, you know, I was like getting my feet, my feet wet. And, and then I worked on a bunch of contracts that I lost because it's very common, right? When you're— I tell all our students at War Dogs Academy, if this is a casino, right? Right now, it's a— it's, it's not a casino casino where it's completely up to chance. You're not paying— well, you're paying with your time, with your time, your effort, right? Um, now it's not completely up to chance. If you actually know an industry well, you could know how competitive you are, right? And the more, you know, the more experience you have, the higher your, your, uh, odds go. But it's a— it is a casino in the sense that no matter how much work you put in, there's always a chance you're going to lose because you don't know what your competitors are bidding it at, right? It's illegal for the government to tell you what your competitors are bidding it at, obviously, because otherwise it's all the way raised to the bottom. Exactly, exactly. And then you would know what price you need to come in at, right? And you can beat your competitors that way. So the government wants everyone to give their true lowest price, right? And that's why it's illegal for them to tell you what the what the bid prices are. So, so yeah, I bid on a bunch of— I bid on contracts for like SUVs going to the State Department in Pakistan. I lost that. I bid on for like MREs, meals ready to eat for the Army. I lost that. And like each of these contracts took me like a, like a few weeks of work because they were large contracts I was going for. And it was very disheartening, you know.

I can imagine.

Yeah, it was, it was very disheartening. But, you know, I knew it was like the just part of the, of the business.

Yeah.

And then after a few of those, uh, Ephraim saw the contract for the Afghan, uh, army that was what, you know, got into the movie and kind of made us infamous. Yeah. Uh, and so I started working on that. So within about 8 months of starting, uh, I started working on the Afghan contract. So it was relatively early, you know, in my career as a government contractor. That I started working on the Afghan contract.

So is that— was that one contract in Afghan?

So yeah, so that was a single contract. Ephraim had won already a bunch of much smaller contracts to Iraq for similar types of equipment. Yeah, for similar munitions.

When you say smaller, like what were some of the bigger ones at that time?

So, okay, so his biggest contract that he had ever won, uh, I think was about $14 million. Wow. So yeah, and that was for munitions to Iraq.

Were you involved with those?

No, I wasn't. He had won that before I started working with him. He was, he was delivering them. It was like a piece-by-piece delivery. It wasn't like all at once. Yeah, right. So he was in the middle of delivering when I was starting to work with him. So he had already had the past performance for these types of items. He had lots of past performance, right? So his company was eligible to bid on the highest possible level for contracts of like Warsaw Pact munitions, right? The, uh, the former Soviet Republic, uh, uh, format of munitions, right? For the AK-47, etc. Uh, so he knew when he saw this, this, uh, solicitation come out for the Afghan contract, he knew that he was eligible to bid on it. Yeah, even though the contract was enormous. Yeah, like he'd never seen numbers like this.

Well, how big was it?

So it was, I think, uh, it was about 130 million AK-47 rounds. Wow. It was about like, I think, 30 or 40 light machine gun rounds, 1.1 million grenades, about 30,000 anti-aircraft rockets, 70,000 like mortars. It was enormous.

All in one contract?

All in one contract.

Wow.

So in, in Iraq, what they had done is they had split the, the, the the needs, I guess, what they then— what they needed, uh, into a bunch of small contracts. And they kind of give a little piece to this company, a little piece of that company. And it became a logistical nightmare, right? You know, they— like, it was just— became a big clusterfuck, right? And so they decided for Afghanistan, they were like, you know what, we don't want to deal with all like 50 different companies. We're going to just do one company. They take care of everything. We have one point of contact. That's why it was so big.

Gotcha.

Because they decided not to split it up because they had a bad experience in Iraq. So they decided to put this all into one contract. And, uh, and Ephraim knew that we were eligible to bid on it.

Yeah.

And so he was like, we, we have the past performance, we have the connections, uh, you know, we gotta go for this. He says, he's like, he's like, okay, forget all the other stuff you're working on. You're working on this one 100% of the time. And he told me, he's like, you know, I know we were working 50/50, but it's only fair because this is my bread and butter. I already have a bunch of good connections. You're kind of filling in the gaps. You know, we'll do 75/25. And I was like, yeah, sure. I don't care.

Yeah, it's huge.

I'm going to cry all the way to the bank. You know, it's not going to be—

And you guys were sourcing anti-aircraft missiles. Like, where do you even— how do you even have those kind of connections?

Yeah.

Like, where do you get those?

Yeah, it kind of blew my mind too. It's like, where do you— you know, you would be surprised that— that the defense industry is very similar to pretty much every other industry. Really?

Yeah. You don't need like a license to buy? You do. You do.

So that's the one difference is that you need licensing.

Right?

Now, it's not that hard to get it.

Yeah.

Right? You just need to apply. And you know, like, so depending on the kind of business you're trying to do, right? Yeah. So for international business, right, if you're trying to sell from— you know, uh, Albania to Iraq or Afghanistan, right? If you're not going through the federal government, you need a, um, a State Department broker's license.

Yeah, right.

And you need to apply to the State Department for every single deal. Once you have the license, that allows you to apply for individual deal licenses, right? Gotcha. So you need to do that. Um, and for like, if you're importing, uh, these kind of materials into the United States, let's say you're importing ammunition into the U.S., uh, let's say to sell to the shooting sports market, which is a multi-billion dollar industry in the United States, um, you need a, um, a federal firearms license.

Gotcha. Right.

Uh, you know, specifically an importer's license. And for that, they will— you know, you, you need to— it takes a few months to get these licenses. You need to like register your fingerprints with the FBI. You need to have a, a office, like a commercial office with a gun safe. They come, they send a you know, a, uh, a, um, an agent to go and, and inspect your, your office, right? You know, so there is a process.

Yeah.

But it's, uh, you're not going to get a federal firearms license if you're a convicted felon, so I can't get one anymore.

Yeah, right.

But as long as you meet the basic criteria and you do the applications and you do them in time, takes a few months, but you can get the licenses. So Ephraim, at the time Uh, he was, uh, I think he was 20 years old at this time, and so he had these licenses.

Yeah, right.

Uh, I think he might have got the federal firearms license under his dad's name. I don't remember whether you have to be 18 or 21. Um, but, but then, like, before we won the Afghan contract, he had turned 21. Gotcha. He just transferred everything to his—

How long did it take to win that contract?

So we started working on it in August of 2006, and, uh, we worked on it for like good, like 2-3 months. Yeah. Uh, you know, until we submitted the, the offer. And then we didn't hear back from them for like another 2 months, and we thought, oh, we for sure lost it.

Yeah.

And then they contacted us right before the end of the year, and they were like, okay, we need to do like 5 different audits on your company. You know, like, and they do audits on your company if they, if you're in the final running. Yeah. Right. So we're like, holy shit, they're actually thinking about giving this contract.

And how big was it at that time?

So our— so we were by far the lowest bidder.

Yeah.

And our— we came in just under $300 million.

Wow. Yeah. Do you know what the next one was like?

How do you— Yeah, we do know. And I know because I was informed illegally by one of the contracting officers It was a few months, like a month after we won the contract, I was talking to one of the contracting officers on the phone and they kind of do this scene in the movie where they tell us.

Yeah.

And Jonah gets super mad. Yeah. And so that is based on a real occurrence.

Yeah.

But it didn't happen the way they show it in the movie. In real life, it was over the phone because it was illegal for him to tell me. He wasn't going to say it in front of all his colleagues. Yeah. Like, like they show in the movie.

Yeah.

Yeah, so he actually told me, I was talking to him over the phone because, so what was happening, the reason he told me this was because at the time we were having trouble getting overflight permits. So when you're transporting military goods, you need to get a license, it's called an overflight permit, from every country that you fly your goods over, even if you don't land there.

Okay.

So if you're flying over Greece, you need to get from the Greek government permission to fly your aircraft with all that ammo and stuff over their airspace. So I think they were like, uh, I forgot the exact number, but like something like 12 countries between like Albania and Afghanistan that we had to fly over. And so we had to get the licenses from every single one, and some of them were not giving us the licenses. They were like just being, you know, uh, that's such a pain.

It was really against foreign governments and trying to get licenses.

It was a big pain.

Yeah.

And, uh, so I was talking— I was, uh, the contracting officers, uh, you know, the U.S. contracting officers were kind of hounding us to get the goods delivered because, um, Afghanistan has a fighting season, right?

They—

because during the winter nobody fights because the mountain passes are all filled up with snow. So when the spring comes and all the snow melts, then they all start fighting again.

Yeah.

So it was like getting March-April time, so the snow was melting, and our Afghan allies were starting to run out of ammo.

Wow.

And they're like, hey guys, when are you gonna deliver? We need the ammo, you know.

Yeah.

Um, and we're like, uh, we haven't gotten all the overflight permits yet.

Yeah. What would happen if you just flew over?

Uh, well, the aircraft wouldn't do it, you know. Like, we hire a logistics company because the—

and they don't— they can't get those licenses? You have to do it?

We have to. Well, they try to.

Yeah.

And when they don't get it, they say, hey, we didn't get it for this, this, and this country, can you help us out?

Gotcha.

That's, that's how that works. Okay. And if, if we had flown an aircraft without the licensing over someone's airspace, they could in theory, you know, scramble their fighter jets and force you down and confiscate your cargo and the aircraft. Oh, which is why no aircraft company is gonna fly their aircraft without all the proper licensing, because they don't want to risk losing their plane, right? Um, so I was telling— the contracting officer was on the phone, you know, like getting very antsy about our delivery schedule, and I told him, hey, you know, we're having trouble with these overflight permits. And he's like, oh, you know, maybe I could help you out with that. He's like, you know, we'll get the, um, the, uh, defense attaché in our embassies to talk to their counterparts in the government and see what's going on. And he's like, because we really want to help you guys out, you guys were just so competitive. And I said, really? How competitive?

Yeah.

He's like, well, you know, I'm not really supposed to tell you this, but, uh, between you and me, you guys came in 52 under the nearest competition. I'm like, holy shit, $52 million. And, and he's like, yeah, but don't, don't tell anyone. Of course, I hang up the phone and tell Ephraim, and he was furious. You're like, fuck, motherfuckers, we could have made another $50 mil. You know, yeah, I don't know about that. Maybe they gave us the contract because we were so much lower, right? So like, you know, of course in Ephraim's mind, we could have come in $1 under the next guys and they would have given us the contract, which may not— yeah, it may not have happened.

There's no way. Projected margin on the contract at that point?

We bid the contract at a 9% margin because Ephraim was like, everyone's probably bidding 10%. We got to undercut them at 9%. But then Ephraim, as I said, he was a very good negotiator. So once we won the contract, he called up all our sources and said, hey guys, you know, I got a better price over here. You guys want to revise your bid? You know, and did that whole game, as you have experience with. And he played them off against each other and we ended up having an average of a 20% margin.

Wow.

Yeah. Holy shit. We were set to make about $60 million from it.

Wow. Yeah. What did that feel like when—

man, I thought I was set for life. That's, that's, that's what I thought. I was like, you know, I had my whole future planned out. You know, I was planning on finishing this Afghan because I, to be honest, I hated working with Ephraim. Yeah, he was just a pain in the ass to work with just in general as a person. Yeah, and I was like, I'm gonna do this Afghan contract, I'm gonna make my— I was set to make $15 million. Yeah, I'm like, that, I'm good with that. Yeah, you know, I don't need to stress myself out, you know. After that, I'm gonna go and, and, uh, finance, uh, you know, uh, my own music career. I'll go become a rock star, you know. That was my plan. Yeah, you know, because I'm a musician, I'm a singer-songwriter. Yeah, anyone's curious, you can check out my music on Spotify, you can search my name. Um, So I was like, you know, with $15 mil, I'm pretty set. I could spend $1 million on marketing and give myself a good shot at being like, you know, you know, pretty big.

You know, how confident were you that you guys were going to actually execute on this thing?

Now, I was nervous, you know, I was definitely nervous because there were just so many moving parts. Yeah. And, and there was just a lot of things going on at the time. So like one thing that we're dealing with right in the beginning was right after we won the contract, uh, oil prices spiked. Ah, so, and we had bid the contract all air freight delivery, right? Which is like 80% of the cost is oil, right? The fuel, yeah, right? And so when oil prices spiked, air freight prices spiked. And now a responsible established company like General Dynamics, one of the people we were competing against, you know, one of these Fortune 500 companies that we beat the beat for the contract. When they bid on something like this, they hedge. They use an oil hedge, right? Right. You know, so that if the oil prices go up, that, you know, like, their kind of insurance pays out and they don't— they're not in a bad situation. Ephraim didn't roll like that, right? He didn't— he didn't like buying insurance because that cut into his margins, right? So he was like, yeah, we'll be fine, we'll be fine. We were not fine, you know? And we— the oil went up so high that we were gonna lose money on this contract. Wow, that's how much of the whole value. It was really transportation. Yeah, yeah, because, okay, so I'll give you the, the numbers. We were paying at the time, we were paying about 4 cents a round to the Albanians, and we were paying 5 cents a round for transportation.

Oh wow.

And we were selling it to the government for 10.5 cents a round. So we're making a penny and a half per round, right? And but like 5 cents out of that was transportation.

Fuel goes up 20%, you're in the —exactly, we're already in the red.

So we were like, holy shit, we can't deliver. What do you do? Yeah, we can't. Now, we could still deliver. So there were 30 different items on the contract. Only like 2 of them were like high volume, low value, like the AK-47 ammo. The other stuff was like grenades, which the amount— like, a grenade is $25 a grenade. And we're paying maybe like $0.20 in shipping. So there was a way— Yeah, it doesn't really make a difference. —enough margin for that. So we could deliver 80% to 90% of the value of the contract profitably. But from the Army's perspective, you better deliver all of it because they need to supply their soldiers. What happens if you don't? So it depends. So they— if you don't deliver successfully, they can cancel your contract for cause, they call it. Yeah. And that is a big black mark on your record. And in all future contracts that you're bidding on, it has the potential for— to interfere with you winning more contracts. It's not a guarantee that you won't win any contracts, but any contracting officer that is doing their due diligence— is gonna look into the contractor, or at least they should be. They don't always, but they should be. And, you know, it may give them second thoughts if they see a series of contracts that were canceled. Right. So, yeah, so we were scrambling at the time. We were like, shit, we're gonna be fucked, you know? We're not gonna be able to deliver. They're gonna cancel our contract. We're gonna be screwed. And we were looking for all different ways. We were looking for alternative transportation methods. Maybe we'll do— to like this, you know, deliver to Pakistan by ship and then try to do it by truck into Afghanistan. But then everyone told us that's a terrible idea because, you know, the route between Karachi and Kabul is like— is, uh, is like— it's like, um, controlled by a bunch of warlords who would love nothing more than a large caravan of ammunition coming through their territory that they can take. You know, they would love that. And so we were like, okay, we— and we also tried to by train through Russia, but Russia— we weren't on good terms with Russia at the time. They had just supplied the Iranians some nuclear technology and got themselves on a banned list. So, you know, we were kind of like, you know, fighting with the Russians, and so the Russians weren't giving us like transportation licenses. So it turned out our only option was to deliver by air freight. And, uh, we, we realized that the, that the ammo that, that was, uh we sourced in Albania was packaged in these heavy wooden crates. It was in this— these metal tins, which was like vacuum sealed. They call them sardine cans. Yeah. And then the sardine cans are put in these heavy wooden crates. Right. And the wooden crates are not really necessary. Right, right.

They probably had a lot of cost and they add a lot of weight.

Yeah. It's— and air freight is all about weight. Right. So we realized, hey, you know, if we get rid of this, uh, these wooden crates, maybe we can, uh, save enough money to make this profitable again. So that's when we, you know, uh, sent someone over to Albania to inspect it. And, uh, turned out the, the weight— the weight of the crates was quite high. And once we got rid of the weight of the crates, it became profitable again.

So you guys just sent someone to Albania, like, yeah, go get an estimate of how much these crates weigh?

Yes, exactly. Well, originally we were going to get the Albanians to do it, but then Efrem was like, we can't trust the Albanians, you know, we need to do this ourselves. Yeah, he didn't want me to— in the movie I go to Albania, right? But he didn't want me to go because I was like dealing with like 11 different countries for the other sources of supply. And I was also like handling everything on the government side with Rock Island Arsenal in Illinois, who were the contracting officers, right? And so he wanted me to stay in Miami and like kind of like arrange the whole— like manage the whole contract, right? And so we hired one of my best friends, a guy named Alex who had just gotten out of the French military, uh, to go— he was looking for a job, and so we hired him to go do the Albanian inspections. When he was there and he did the inspection, he calls me up and he's like, hey, you know that there's like Chinese markings on all the crates? And I'm like, what are you talking about? He's like— I'm like, this is Albanian ammo. And he's like, no, no, there's Chinese. I'm like, like, are you sure it's not Korean? He's like, dude, I can tell Chinese. And I tell Ephraim, and Ephraim's like have him send me some pictures. I want to make sure he's not an idiot. Yeah, which was a very idiotic thing for him to do in the long term because then there was evidence, emailed evidence that it was— that we knew about everything. Exactly, exactly. So Alex emails him, you know, pictures of the crates, and we knew right away it was Chinese. Oh my God. And this was a problem for us because, uh, in our contract with the U.S. Army, it specifically said said no Chinese ammunition can be delivered under this contract, right, either directly or indirectly. And the reason they put that in there was because there's an arms embargo against China, right, that was put in place in 1989 after the Tiananmen Square massacre. And, um, but our contract didn't specify that, that ammunition that violates the terms of the embargo, right, is not allowed. It just said no Chinese, period, right, right. So this ammunition that was in Albania was sent to Albania '70s before the embargo even existed. Okay, so this ammunition didn't actually violate the terms of the embargo, right? It just violated the terms of our commercial contract with the Army because they wrote the contract very broadly, right? You know, more broadly than the embargo. Yeah. So we were faced with a choice at the time. We were thinking, well, maybe we should ask the Army to give us a waiver. We're like, hey guys, you kind of wrote the contract too broad, you know. You guys wrote this in reference to the embargo. This doesn't violate the terms of the embargo. Can you give us a waiver? Waiver, right? And in retrospect, they would have done it. Yeah, yeah. Um, but at the time, we didn't— we were thinking, well, what if they say something like, well, you know, it's not really fair that we give you this waiver because, you know, General Dynamics, who was very upset, you know, they filed like a, uh, protest with the Army that we won because they were expecting to win this contract. General Dynamics, you know, had to bid on this contract responsibly, right? You know, knowing that they can't bid on this stuff because that was the terms of the contract. It's not fair that we give you a waiver. So, right, we're gonna cancel your contract and put it out for bid again. That's what we thought they would say. And we're like, we don't want to lose a $300 million contract, right? So we're like, you know what, why don't we not tell them about it? Yeah, they don't know, won't hurt them. Well, let's just, you know, repackage the ammunition to get rid of all the evidence that it's Chinese. Because the only evidence was on the crates. On the crates. So, well, the obvious evidence was on the crates. There was Chinese markings on the crates. There was also, uh, documents with Chinese markings inside the sardine cans. So we had to get rid of the sardine cans as well. The sardine cans also had markings on them, right? But we had to do a complete repack. Wow. So, um, and how many rounds? It was, uh, in total about 150 million. Yeah, yeah, uh, it was, it was enormous. It was enormous, uh, and each, like, it was, um, each aircraft had about, uh could fit after the repack, so we could fit more in there because it was more tightly repacked. Um, we could fit about a little under 3 million rounds. Wow. Yeah, and there's 45 tons. So, so yeah, so, uh, we're shipping 3 million at a time into Afghanistan, 150, you know. So it was like, um, and, and then I think later they, they increased the amount, uh, but by, uh, I think it was by either another 50 or 100 million later. Wow. But it— but initially it was 150 million. Yeah. So, so they, uh, so we realized we had to do a complete repack, and we got permission from the Army to do that. We told them it was so we could inspect it and, and stuff. They're like, yeah, good idea, inspect it, you know. And, uh, but it was on record that we— and it was by email, there was email evidence that we knew. Yeah. Why we were repacking. Oh my God. You know, there was, there was email evidence for everything.

And that's kind of what you guys just decided. All right, we're gonna go repack 150 million rounds of ammo. Yeah. What was that process actually like?

So we had Alex find— well, we knew we needed— we wanted to repackage it into a, uh, configuration that was as light as possible to save on the air freight. So we decided to go with these like thick double-walled corrugated plastic box— uh, not plastic, cardboard boxes. Gotcha. And which were strong enough to hold the ammo, but they were as light as you could possibly make cardboard boxes. So we had to go source cardboard boxes.

That's got to be expensive.

So for that, a lot cheaper than the, than the, uh, than the air freight, right? A lot cheaper. So we decided that the best way to go about this was to find a local manufacturer in Albania. So Alex found a box manufacturer owned by a guy named Costa Trebiska. And we figured, hey, if we're buying the boxes, he already owns a factory, might as well ask him to see if he could provide the labor to do the repackaging. Yeah. And so we got a quote from him and I think it was about $100 grand to do the entire thing. Okay. He used his people and we were going to save about $3 million in air freight costs. Yeah. So it was a no-brainer. No-brainer.

No-brainer. You guys are probably like, oh, this is actually a win. Oh, it was an enormous win.

We were like, we just pocketed $2.9 million because of this, you know? So And we, you know, avoid that potential problem of the Chinese— at least we thought we would avoid the potential problem of the Chinese origin. So we signed a contract with the box guy, with Costa, to provide the boxes, provide the labor. And we started shipping it from the bunkers where they were stored. They were stored— so in the movie, they show the stuff being stored in this enormous warehouse. Yeah, yeah. And it's all like, it's like you see a fighter jet next to a tank next to like— that's not how they stored it. Okay, right. In, in real life, most of it was stored underground in bunkers. Okay. Because, uh, the reason— Albania has this interesting history of why they have so much ammo and why it's all Chinese. Um, during the Cold War, they were run by this crazy dictator who was like in some ways worth worse than North Korea. Wow. You know, like he was like that isolationist, and he was like a communist diehard, and he thought that the guys in Moscow were a bunch of corrupt assholes who weren't true communists. And so he pulled out of his, like, alliance with the Soviet Union and made an alliance with the Chinese. And he thought the Soviets tend not to like that, right? Like, intend to invade people who pull out, like they did in Czechoslovakia and other places, right? So he thought he was going to get invaded by the Soviets. And he also thought, because he's a true communist, that he'd get invaded by NATO, by the West. He thought the world's two superpowers were going to invade him. Yeah. And so, uh, he His strategy was to create a massive network of underground bunkers all over the, all over the country and fill them with ammo and weapons so that they'd be safe from bombardment. Yeah, right. And, and his strategy was what he called total war, where every man, woman, and child in the country becomes a soldier and they all fight to the death. Wow. That was his, his plan. Wow. And so to support that, he got his new besties, the Chinese, to supply him with a massive amount of ammo and weapons. Weapons. And when the Chinese were thrilled because they got like a foothold in Europe, they got, you know, all their intelligence officers to be based out of Albania. Yeah, you know, they got like a, uh, I don't know if they had a port there or they got use of the port. Um, so yeah, they had like their own reasons why they were thrilled to supply the Albanians with free weapons and ammo, right? Um, but because of that, Albania became one of the most armed places on Earth per capita. Like, when, when their economy collapsed in the '90s their medium of exchange was ammunition. Like, that you would buy, wow, like eggs or, you know, milk in the morning with a crate of ammo. Wow. Yeah, before they like reestablished their paper money system. That's how armed it was.

Okay, so they just had a shitload of—

that shitload of ammo. And at the time, they were trying to join NATO. They're in NATO now, but they were in 2007, they were trying to join NATO, and one of NATO's requirements was that they get rid of all their old Soviet ammo because it's not compatible with the NATO system. They don't like that sitting there, you know. They wanted, you know, if you're in the alliance, you need to use the alliance's weapon systems, like the M16, not the AK-47. So they were, uh, they were required to destroy all that stuff, which they were gonna have to pay for to get destroyed. They started destroying some of it, um, and in it, actually, that whole process turned into a huge scandal over there. They had enormous, uh, explosion at a place called Gerdak. Okay. Because there was, uh, people think that we were involved with it. We have nothing to do with it. Uh, it was another American company called Southern Ammunition that had the contract to, uh, oversee the destruction of a lot of their munitions. And, uh, they were subcontracting with the Albanians just like we were. And the, their subcontractors, they were like, had like kids taking apart tank shells smoking cigarettes. Yeah. You know, so it was not good. Professional. Yeah, not professional. It turned— it blew up. It killed a whole bunch of people. It became a big political scandal. Um, but, uh, nothing to do with us. Just saying that because I get a lot of hate from Albanians online, you know, for being part of that, but it had nothing to do with us. Gotcha. Um, and, uh, but anyway, we were, uh, uh, we were, you know, hired— Kosa to do the repackaging. Um, And, uh, but then Ephraim of course wanted to make more money, as he always did, and he tried to renegotiate with the Albanians to get a lower price on the repackaging. Not on the repackaging, on the actual sale of the ammo. Okay. And they said, we know you're hiring these other guys to do the repackaging, why don't you give us that contract so we could make money on repackaging, right? Then we'll give you a discount on the ammo. Yeah, because that way it's a win-win, right? And Ephraim's like, yeah, sure, fuck that guy. I don't need— I'm not tied to him. He's fired. You're hired. Let's do this. Yeah. That guy calls me up. Costa calls me up and he's like, hey, I understand it's business, but, uh, I got stuck with $20 grand worth of boxes. Yeah. Can you at least buy them? Yeah, right. And I'm like, yeah, that makes sense. Sure. Yeah, buy them. Of course. And I tell Ephraim, and Ephraim's like, oh, I talked to the new guys. They don't— they already bought their boxes. They don't want deal with this guy. And I'm like, well, so I tell Ephraim, like, just pay the guy $20 grand. Yeah, you know, he just paid all of his money on these bottles. Yeah, yeah, you know, we kind of left him, you know, out in the cold. Anything to do. And he's like, nah, we don't need to do that. And I'm like, we should really do that. Yeah, he knows everything. Oh my God. And Ephraim's, nah, what's he gonna do? Fuck that guy, I guarantee he's a nobody, he's not gonna do anything. I'm like, Ephraim, that's a really bad idea. $20,000 insurance, $20 grand, we have a $300 million contract. And, and I was like, I was thinking, man, maybe I should pay him because we can get it. And but like, I, I've been— so my agreement with Ephraim was that, you know, I was working on commission only. I wasn't getting any salary. I was living off the $100 grand that I had at the beginning. Yeah. And that was dwindling. At this point, I had like $25, $30 grand left. Right. And Ephraim still hadn't paid me for any of the contracts we had done together because every time at the end of a contract, contract, he— we were already working on a new contract, right? And he would be like, you know, I'm using my money to finance these deals, right? Because like when you're selling items to the government, they only pay you 30 days after you deliver, right? So you have to pay the supplier in advance and then pay the shipping company in advance, right? Wait 30 days after you deliver to get the money from the government. And he's like, I'm putting all my money into this, it's only fair you put your money into it. Yeah, you just made a bunch of money on this propane contract, on this gun parts contract, why don't we roll it into the next thing? Yeah. You know, he kept on rolling my— and I was like an idiot. I was like, you know, I'm like, yeah, that makes sense. It's only fair. You're doing your thing. I'll do my part, you know? And I'm like, you know, fair is fair. And so like, I was down to like my last $25,000, $30,000. Yeah. This guy is like, hey, you owe me $25,000, $20,000. And I'm like, I'm not comfortable, like, putting your last money at my last penny. I still had to pay rent and, you know, like a child I had to support. Right. And so I'm like, well, I told him, I'm like, this is a very bad idea. You should pay the guy. Yeah, I can't pay him myself. I would if I could, but 'But you should pay him, 'cause, you know, this is a contract with you, with our company.' Right. 'And he knows everything, so it's worth it as insurance.' And he's like, 'Nah, fuck that guy. Don't worry about him.' And I'm like, 'Okay, well, I said, listen, I tried.' So he really should have paid him, because that guy got really mad, and he called up The New York Times and told them about what we were doing. Wow. And he called up the FBI and told them what we were doing. And his biggest mistake is he called up the local Albanian press And he told them that— probably true— that the local Albanian politicians were getting kickbacks from our deal, which is a big problem in Albania. Corruption is like the number one political issue there. Now, we weren't paying the Albanians directly. We were paying through a Swiss arms dealer guy. In the movie, he's played by Bradley Cooper. Gotcha. Right? Yeah. And in real life, he's based on a real guy. His real name is Henri Thomane. Not Henry Gerard, as they call him in the movie. But in real life, he was a lot more clean-cut than Bradley portrayed. Bradley has this, like, rough character. He's, like, all bloodshot and, like, unshaven. And, you know, in real life, he looked more like a Swiss banker, right? You know, like, very well-kept, very soft-spoken, you know. And he's, like, the real deal. This guy's been in the business for, like, 30 years, and, and, like, he has connections everywhere. He was, like, best friends with the Prime Minister of Albania's son. Son, which is how he made this deal. He connected us with the Albanian government. We were paying everything through Henry. Henry was paying the Albanians. He was increasing the— I imagine. I don't know. I don't— it would be illegal for me to know that, right? Because it's illegal to pay foreign, uh, uh, officials bribes, uh, as a U.S.

citizen. Whether he was or he wasn't, it doesn't matter.

It doesn't matter. I was paying him. That's all I needed to know. But Costa told the Albanian press that these guys were getting— I don't know if he knew or if he was guessing. Yeah, but he said that, and that got in. It became a big scandal in Albania. Ah, and like a week later, Costa ended up dead. Wow. Yeah, is that in the movie? Uh, so in the movie they say that, um, that the driver ended up disappearing. Yeah, in real life there was no driver. Okay, uh, in real life it was the box guy who got killed, right? Um, now they made it look like an accident. Yeah, very suspicious accident. He was— they found him face down in the dirt in some field. Yeah, where he had been run over by his own car, and there was no other cars there. Yes. So like, what happened there? Of course, the government, the Albanian government, classified it as an accident, right? Right. Gotcha. And they closed the investigation, and that was that. It was But I don't think anyone really thinks it was an accident, you know. Yeah, I think that most people think it was because it happened like a week or two after the, uh, you know, the Albanian press published their articles that made the Albanians— Albanian politicians look really bad. And it came out later the Albanian politicians were in league with the Albanian mob who were getting a piece of the action. Um, and so yeah, I mean, like, when Ephraim, uh, negotiated with the Albanians, he was negotiating with a guy named Deliorgi. Okay, and later on, Deliorgi went to prison for being involved in the Girdak explosion and also being like part of organized crime in Albania. Gotcha. So there was some connection between the Albanian politicians and organized crime in Albania. Uh, now we were paying Henry, so we weren't directly, you know, connected, but, um, but yeah, so that— they're the, the mob's involvement makes Costa's death even more suspicious. So you guys get this stuff repackaged.

Does it get sent out there? Like, what are the next steps here?

So after it gets repackaged, um, it— we, uh, hired a, um, a transportation company. They used IL-76 aircraft. It's the old Soviet, uh, um, cargo aircraft. They could fit 45, 48, if you're really stretching, tons per aircraft load. And, uh, just loaded aboard the aircraft. We got all our overflight perm— so we actually got all the overflight permits except like Uzbekistan. Yeah. And was it Turkmenistan? I always confuse those two countries. I should look it up. Yeah. But, uh, either Uzbekistan or Turkmenistan. And, um, and, uh, uh, we— they refused to give it to us because like Putin had just visited, or they were going to give it to us and then Putin visited like for a state visit, and then they canceled the— they canceled the, the thing. We're like, what the fuck? You know, like, the Putin is interfering with our contract. Yeah, like, what's going on? And then I realized that these guys have a, um— it was Turkmenistan. It was Turkmenistan because there was the Turkmenistan National Airline. I realized they have a national airline and they provide— they provide cargo services. So I got a quote from them. Ah, and they were actually surprisingly pretty competitive. Yeah.. And so we hired them, and as soon as we hired them, they got the overflight. That's smart. Yeah. And then we started rolling. We started, uh, getting like 3 to 4 aircraft loads every week into Afghanistan, and we're just— the money was rolling, everything was going great. And, you know, I was finally able to— I was like working 18-hour days for like, like months. Yeah. You know, at a scratch. Yeah. And finally things were going like clockwork. All I had to do was was, you know, fill out the paperwork, you know, make sure that the, you know, everything was done on time, coordinate between, you know, Alex on the ground in Albania and the guy on the ground in, in Kabul and the people in, uh, the contracting officer in Rock Island Arsenal in Illinois to make sure all the paperwork moved right, you know. And, uh, and, and that was pretty much it. I was able to manage the entire contract in just a few hours a day, and I was finally able to like get some sleep and go to the gym and relax a little. And so I was— I started coming into the office a little bit less. Yeah. I wasn't there all day and all night. Yeah. And at this point, we had like about 15 people working for us. Ephraim had like a little boiler room where he was selling stuff on the commercial market, uh, to like the shooting sports industry. And so, um, so one day Ephraim comes into my office and he's like, he says to me, like all the rest of the employees had gone out for the day, and he says to me, he's like, you know, a lot of the guys around the office, they're telling me that you're not pulling weight around here.

Oh God.

And I'm like, what are you talking about? The contract's going great. Yeah, we're delivering 4 aircraft loads a week. The money's rolling. You know, we've solved all the problems. You know, what's the problem? He's like, yeah, yeah, the Afghan contract's going great, but our— but we've got some contracts in Iraq that are really struggling, and you're not helping with those. And I said, but I'm— I work on a commission basis. I'm not one of your employees. Yeah, you know, um, you want to give me a piece of those contracts? I'll work on them. He's like, oh, don't be crazy. I mean, you didn't help us win those contracts. Why should I give you a piece of them? Them. I'm like, then why should I help you with them? Yeah. And he's like, well, because, you know, if those contracts go down, the entire company could go down. That could take the Afghan contract with it. And I'm like, so you got to help— what, you got to watch out for the company? I'm like, well, you want to give me a piece of the company then? Yeah. And he says, you know what, David, he's like, I'll tell you what, I own 100% of AUI and I always plan to keep it that way, but you're my best friend and you're also a big part of why AUI is where we are today. And so I wouldn't make this offer to anyone else, but for you, I'm gonna tell you what, I'm gonna make— give you a very generous $100,000 a year executive salary and 1% of AEY. And I'm like, well, you know, the Afghan contract, I get 25% of that. That's the best. That's gonna make us like 90% of the money we're gonna make over the next few years. Yeah. And I'm set to make $15 million from it, so I appreciate your $100 grand salary, but I'll stick with my $15 million. Yeah, right. Thank you very much.

But no, clear and obvious. Yeah, yeah.

And he says to me, he's like, well, how about zero? Because that's the only offer on the table. Of the $15 million? Yeah, yeah. He's like, he's like, how about— he's like, you either take the 1% of AUI and $100 grand a year, or I'm giving you nothing. And I'm like, we have an agreement. He's like, well, that's the only offer on the table. Are you kidding me? Yeah, that's what he says to me. And I'm like, well, go fuck yourself, I'll see you in court. Oh my God. And I walk out, and that was the last day I worked at AEY. Wow. Yeah, that's fucking insane.

Yeah, yeah. So you walk out, you're done with him. Yeah.

When do you get hit with the news? So yeah, so I, I was super depressed for like a good, like, 2-3 weeks after that. Like, as I was, like, on my last bit of money. So he just said, you're not getting your $15 million.

Yeah, you either get $100 grand a year or 1% or nothing.

That's what he said.

Yeah. And you guys had agreed on the—

yeah, yeah, we even had a written, a handwritten contract. It was not an official lawyer-written agreement. We had a handwritten contract that, uh, he had signed, and that was in my apartment building. This is actually true. It was in my— because he would come over my apartment. We lived in the same building. Yeah. And he would come over my apartment, and we'd work late into the night. And my contract was on my table. We had just signed it. I was planning on— I tried to scan it. My scanner was broken. Yeah. And I was planning on getting my scanner fixed. A few days later, before I had scanned it, my contract disappeared. Are you kidding me? Yeah. And I was like— like, did the cleaning lady throw it out? I think he was the only guy in my apartment, you know. So like, what the fuck just happened there? Scumbag. Now of course I couldn't prove anything, but he was really the only person who had access to my apartment at the time, and it mysteriously disappeared. And then, and then a few days later, he hits me with the— this whole, oh, you know, like, you're getting zero. Wow. So yeah, so like, I am 99% sure that it was him. He did it on purpose. Yeah, you know, uh, I prove it. I didn't see him steal it, you know.

But, uh, but like, did you have time to sue him, or did the, did the, the legal issues come into play?

So, so what happened after I left was, um, I was getting ready to sue him. We, you know, like, my, my lawyer was talking to his lawyer, and, um, we were, uh, you know, he was— he, he gave me— he's like, you know what, I'll give you $300K right now to buy you out. Yeah, and I'm like, 300, you owe me like $15 million. Yeah, you know. Yeah. And my lawyer says, look, you know, do you have a bunch of money saved up? Because if you sue him, you're gonna need a few hundred K to sue him. Yeah. And I'm like, I don't really have a few hundred K to sue him. Yeah, because, you know, to pay the lawyer fees, maybe you can get a lawyer to do it on contingency, but most lawyers want at least partial contingency. So he's like, you don't even have enough money to sue him, right? So, you know, you could get $300K now or maybe nothing later, right? And who knows how— and even if you win I knew he had secret offshore accounts in the Seychelles Islands because he had, like, he had mentioned it. Yeah, good luck collecting. Yeah, exactly. I knew, and he's the kind of guy to hide his money, right? You know, considering how he did business. Yeah. So I was like, you know, even if I win, I may not collect. So let me just take the $300K now. At least I won't be out on the street. I'll be able to support my kid, right? You know, I had a 1-year-old daughter at the time, right? And I'll be able to, you know, move on with my life and do something else. I won't be set for life like I expecting, but at least I won't be broke and homeless on the street. Lesson learned. So exactly, I learned a lot. And so I was like, um, you know what, I'll do— I'll take the $300K buyout, right? We were, we were, you know, he wanted to stretch it over a course of a few years. I was like, you're fucking nuts, give it to me now. You know, like, as soon as you agree to something, he asks for more and more. Yeah, yeah, his whole philosophy was you negotiate down the number as much as you can, and then you stretch out the payment terms as long as you can. That's what he did in the contract. Yeah, that's exactly Exactly. And that's what he did to me. And so, you know, we were fighting, fighting. It went— the fighting went on for like a good like month and a half. And finally we got it to a point where we both agreed. I was set to sign the contract and get the payment the next day. Yeah. I get a call from the— from one of the secretaries at the office. I was on good terms with everyone at the office. He was like the asshole boss. I was the nice guy, right? And he would walk into the office and like start screaming at everybody. I don't pay you motherfuckers to talk to each other. Get on your computers, make me some fucking money. You know, like he would like literally do that. Everyone hated him, but you know, they put up with him. Uh, he was just like one of those kinds of bosses. And, um, and so the, the, the secretary calls me up and she's like, hey David, I just want to let you know, but, uh, the feds just raided the office. Oh my God. They told everyone to step away from their computers and leave. They kicked us all out, and they're boxing up all the filing cabinets, and they're taking all the documentation and taking all our computers. And we're like— I'm like, holy crap, we're fucked. We're fucked. That's it. It's the end. Wow. And I'm like, I'm fucked. And so I call up a defense attorney, and he tells me, well, why don't you go into your emails and see what kind of evidence they have against you? And that's when I realized there's quite a bit of it. There's the images that Alex sends over from Albania. You know, there is— there was some— so we had an investor, a guy named Ralph. In the movie, he's portrayed as this Jewish laundromat owner. In real life, his name was Ralph, but in real life, his— what he was, a Mormon, and he owned a machine gun factory in Utah. Like, it was very little reality there in the character. But Ralph had sent us an email because he was involved in like like, you know, the management of the project. He had like— he had a million and a half of his own money invested. And so Ralph had sent us an email with like step-by-step instructions of how to sand Chinese markings off wooden crates with like pictures of step 1, step 2, where he had tried it out himself. I don't know, did he get pulled into the lawsuit? He did. He did. Well, not the lawsuit. Well, he sued Ephraim because Ephraim ended up stealing all Ralph's money too. Oh wow. Yeah, like not only did Ralph— did Ephraim not give Ralph the profit he owed him. Yeah, he never paid him back his principal investment. He literally stole $1.5 million from him.

Did Ralph get in trouble for telling you guys how to sand?

He did. Ralph ended up doing, I think, 3.5 years. Oh my God. Yeah. Wow. Yeah, yeah. Wow. Because he fought them. If he had pled guilty, he probably wouldn't have done time. Gotcha. But he decided to, to fight it.

How did you even afford a lawyer at that time?

That's a good question. So, so the first thing my lawyer tells me is go check out the evidence, and I come back to him with all these emails, and he's like, okay, this evidence is pretty, you know, pretty, pretty tight, tight. You know, there you have a low chance. Maybe we could get it thrown on a tech— out on a technicality, but there's no guarantee. And anyway, if you fight him in court, you're gonna need about like $200 to $300 grand, right? Do you have that money? And oh, he— he goes to me before saying this, he goes, he's like, I, I don't want to make it light of the situation, but, uh, as they say in my business, is, how much justice can you afford?

Yeah.

And I'm like, how much justice can I afford? Not much. You know, I have like $20 grand left in my name. And he's like, oof, that's gonna be barely enough to plead guilty. Oh my God. You know, and he's like, he's like, you know, I, I can take you through the whole guilty plea process, but that's gonna take about $30 grand. Wow. So I had to like borrow money to plead guilty. Yeah, please guilty. I had to go into debt. And so, and you need a lawyer when you're pleading guilty just so the prosecutors don't fuck you, right, in the plea agreement, right? So the way it works when you plead guilty is you, you sign a plea agreement, right? It's a contract with, with the prosecutors where you lay out all the things you admit to. Yeah. And the prosecutors agree to, in writing, to ask the judge to go easy on you. Right. You know, so there is depending, and they also agree to get rid of all the other charges and combine it. So they make a special agreement with you, right? So they charged us with 71 acts of fraud. They're like, you know, if you plead guilty, we'll combine it into one. So the max you can get is 5. We'll tell the judge to go easy on you. So maybe you'll get one, maybe just probation, up to the judge, right? So I was like, okay, let me think about this. You know, I didn't really have a choice because I didn't even have the money to fight it. Even if I did want to take that chance. But yeah, but it's bad, bad, you know, it's a bad bet to make. Yeah. So, so I pled guilty. Eventually Efraim pled guilty as well because he tried to fight him for a while, but then he realized he was gonna lose, right? And so he, he pled guilty. And but part of the plea agreement, of course, is that you commit no further crimes, right? Because if you commit— before you get sentenced, right? If you commit another crime then the prosecutors can't tell the judge, hey, he's— Go easy on him. Yeah, go easy on him. He's, you know, he's— He's avoiding the agreement. Exactly, you know, you avoid the agreement. You can't say, they can't tell the judge he's gonna be a good citizen from now on if you go out there and committing more crimes. Of course. So I was scared shitless, of course, as is very reasonable, and I went back to school, like, you know, went back to doing massage therapy, 'cause they said I can't do government contracting, and, I got a job working at a food bank because my lawyer told me it looks good to the judge to work for a nonprofit. So that was my life. I was like just keeping my nose clean, as they say, as much as I could. Ephraim didn't roll like that. So Ephraim, they told him you can't do government contracting, you can't be in the arms business. Did he get a similar plea deal?

Deal?

He did, yeah. So he got a similar—

they— wow. So you guys got the same plea deal even though he owned the company and was like—

so the one difference between our plea deals was that they pro— I assume— I don't— I'm, I, I, I'm not, uh, aware of, you know, the discussions between his lawyers and the prosecutors, but I imagine they would have suggested to the judge a higher sentence than me, right? But it would still be within that Yeah, it would still be that one count. That was the deal, you know, that they would reduce it down to one count. So the most he can get was 5 years, right? And because of the plea deal, you know, not 5 years anyway. Yeah, maybe. Yeah, right, right, right, right. So, so they— so yeah, so he got the similar deal. So Ephraim decides that, you know, he's, he's invincible, and he has one of his latest minions, you know, who was working for him, start a company under his own name, not under his his name. Yeah, so you could do business through this other guy's business. And, um, and through this other guy's business, he tries to do a deal with, um, with this, uh, gun dealer in like, uh, Central Florida. Yeah, right. And, uh, it was to import like magazines from Korea and like put their brand on, on it so that he could sell it in the, in the— it was a completely legitimate deal, you know.

It's not allowed to be doing it.

He's just not allowed to be doing is trying to do it through this other guy. The gun dealer, you know, realizes who he is at some point in their negotiations and realizes this guy is in trouble, right? He just pled guilty, you know. So he calls up the ATF, right? Yeah, the Alcohol Tobacco Firearms Administration, and says, hey, I got this— they're the ones who give you the federal firearms license. They ATF. And so he calls up the ATF and he says, hey, I got this guy trying to do this deal with me, you know, he was just convicted on this other gun-related charge, which, you know, he probably thought that Ephraim was trying to entrap him into something to get like a reduction on his sentence, I assume. I don't know what he was thinking. It's a reasonable assumption, right? So he asked the gun guy— the gun dealer asked the ATF, what should I do about this? Yeah. ATF says very interesting. Why don't you introduce one of our undercover agents as your business partner to him? So he— so the— so he introduces the undercover agent to Ephraim. Undercover agent tells Ephraim, you know, I'm the kind of guy who, you know, needs to look you in the eye and shake your hand to do a deal, you know. Uh, why don't you come up to Orlando so we could meet and finalize this deal? And Ephraim, you know, he's like, oh yeah, I'm that kind of guy too. It's how men do business, you know, you know. And he's like, yeah, I'll be up there next weekend. The ATF agent knew that part of Ephraim's bond— because he was, you know, out, you know, awaiting sentencing, out on bond— part of the bond agreement is that he's not allowed to leave the Southern District. Ah, so the ATF guy insisted that he break that, you know, go to Central Florida. So Ephraim gets in his car, drives up to Orlando, ATF agent meets him. ATF agent also knows Ephraim's now a convicted felon, right? So it's illegal for Ephraim to be in possession of a firearm, right? It's also illegal for you to hand a convicted felon a firearm, right? So what does the ATF guy do? He pops the hood, the trunk of his car, and he says to Ephraim, check out that gun I brought. I got the latest HK on the hand, on the market. And Ephraim says, oh, I heard about that thing. That thing is so cool. Let me see it. Picks it up. Let's go to the range and fire a few rounds, because what can I say? Once a gunrunner, always a gunrunner, am I right? And the ATF agent takes out his cuffs, slaps them on his wrist. He's like, you're a felon in possession of a firearm. Oh my God. So he got a firearm possession felony, which you can get up to 10 years in prison for. Wow. Plus he invalidated the plea agreement for his fraud charge, which he could get up to 5 years in prison. So combined, he could have gotten 15 years, but he hired the best lawyers in Miami, spent like a couple million, I heard.

Did he get the millions from that contract?

So he kept all the money. So he actually got the profits? Yes, because the government pays you as you deliver.

And they didn't take the money back after?

Like, so what happened was, was, uh, so they sentenced— he could have gotten 15 years in prison. They ended up— he negotiated with the best lawyers, he ended up negotiating down to 4 years. Yeah, for the— for both charges. Now, the way fraud charges work is when you commit fraud, um, you get your punishment, you know, your prison time, but you also have to make restitution to the victim. Right now, restitution, right, goes on how much the victim lost, right? Now, the Army didn't lose, right? Anything. Right. Right. In fact, they saved 50— or they would have saved $52 million if they hadn't canceled our contract. Right. So how are they going to say, oh, Ephraim, you need to pay the losses to the victim if they not only didn't lose, but they made? Right. So the only losses the Army could claim was the cost of canceling the contract and putting it out for bid to, to replace the source, uh, to replace the contractor. Right. They claimed that cost them $350,000. That's what they claimed. Yeah. So that was the fine that he had to pay. Wow. So he made all that money? He made all that money. Now, they canceled the contract, I think, at the point where he had delivered about $70 million. Yeah. About. OK. So he didn't deliver the full $300 million. Right. But he was averaging about 20% margin on $70 million. Wow. He still made money. So he's still— so he made, you know, about $14 million on that contract, you know, plus all the other money he made. So I think he walked away from it with about like $20-ish million. What a crazy story.

I understand now why they made a movie about it. Now I get it. Now I get it. That's incredible. Yeah. So how are you, uh, how is life post all this stuff now?

Like, so yeah, I mean, I, I feel very lucky, I should say. I'll be the first person to say I feel extremely fortunate. I didn't make a penny from it, which obviously I'm not happy about. I would have liked to make $20 million myself, but you know, that's life. At least I didn't go to prison. Yeah, uh, I got sentenced to 7 months of house arrest, which is, you know, nothing. It's a little slap on the wrist. I feel very fortunate for that. Um, and for me, that's where I'd rather not have the $20 million, you know, and yeah, you know, my freedom, you know. Um, you, you can make more money, you can never make more time. 100%, like, so, uh, so I was, I was very happy with how it ended. I would have—

are you allowed to do government contracting?

So I am now. Okay, that's how you're able to do what you're doing now. So I just got off the banned list. I was banned from government contracting for 15 years. Wow. And it just expired. Oh, congratulations. Yeah, thank you, thank you, thank you. Back in action. Yeah, yeah. Well, I mean, I got into a whole bunch of other businesses, uh, in the meantime, in the last 15 years. Yeah. Um, so the first business I got into, uh, was actually while I was under house arrest. And it was the inspiration. What? That's quick. Yeah, well, it was kind of— it turned— it was, um, one of those things where it was like, uh, the worst thing turned out to be the best thing for you. Yeah, you know. Yeah, yeah. So while I was under house arrest, I had— it wasn't like a COVID-style lockdown, like people could visit me, I just couldn't leave my apartment, right? I had like the ankle tracking thing, you know, a government-mandated babysitter, you know, who would call me up and yell at me if, you know, the ankle thing told him I was out of my apartment, right? I was under house arrest, and, um, as I said, like, you know, I— none of my musician friends wanted to bring their drum set over, so I got a drum machine. Yeah. And but every time I wanted the, um, the beat to change, like when I would go from like verse to chorus, right, song, I'd have to stop playing my guitar, press a button on the machine to change the beat, go back to playing my guitar. Right. Interrupted the flow of the music. Yeah. So I thought, I need a drum machine on the floor in a pedal format so I could control it hands-free with my foot while I play. Yeah. And I was sure someone made like something like this. I'm like, this is such an obvious idea. Yeah. So I went online to try to buy it, but I couldn't find it anywhere. Ah. And I told my musician friends about it, like to see if they'd heard of anything like this. And they're like, I've never seen anything like it, but if you find it, let me know. I want to get one too. That sounds super cool. Yeah. So I was— I realized if everyone wants it, nobody's making it. Yeah. This is like a huge opportunity. So, uh, so to make a long story short, it took me about 3 years, but, uh, I made it. It's my first product, it was— it's called the Beat Buddy, like a buddy that plays the beat. It's, uh, the world's first guitar pedal drum machine. Ah, and it allows you to control a drum beat hands-free while you play your instrument.

Create the beat, and then if you can create like a beat for the, for the verse and the chorus, you can swap between them as you're playing.

Correct. So the way it works is— so it has a bunch of different, uh, functions, but like to change from verse to chorus, yeah, you hold the pedal down. It does like a transition beat as long as you hold the pedal down. When you let go it goes to the other beat.

Did you have to build software for that too? Yes.

Yeah, so it was, um, uh, there was a lot— it was a multi, uh, engineering field project. It doesn't sound very easy because it's hardware, it's software, it's firmware. Yeah. Um, so it's a guitar pedal, but it's kind of like a computer inside a guitar, right? Because the MIDI drum machine— so it's a computer. Um, and, uh, it has, uh, you know, I need an electrical engineer to design the PCB board. I need— yeah. A firmware engineer to make the software that goes on the, on the device. I needed a regular software engineer to make like the Windows and Mac software to put the content onto the unit, right? So you can put your own content on the BeatBuddy. Like, you can make your own beats on like GarageBand or whatever software you're using, right, and put it in the BeatBuddy to customize your beats. It comes out of the box, it comes with an enormous amount of beats and drum sets. That's cool, you know, that comes right out of there. But you could also put your own their own stuff on there. And we have like an online forum where our customers, you know, share the content they make for the BeatBuddy. So there's constantly— there's constantly new stuff coming out. Wow. So yeah, it's like a whole ecosystem. Yeah. How long were you on house arrest? Uh, so I was under house arrest for like 7 months, but it took me like 3 years to actually make a fully functional prototype.

Did that business become something substantial for you?

Yeah, yeah. No, I've sold many millions of dollars worth of BeatBuddies over the years. Yeah, it's a multi-million dollar business.

If you hadn't been on house arrest, you probably never would have made that. That's true.

That's more down your, your alley of passion. Exactly, exactly. And I, I'm a lot more proud of it, I should say, you know, like, because it's, uh, first of all, it's something new. It's not like as glamorous as Hollywood makes arms dealing. It's really, you're really just a transportation guy, you know, you're just moving it from buying from point A, you know, but one guy selling it to another, you know, moving it, you know, it's, it's a logistics thing.

So then by the time you've you've kind of made that product, is that around the time when you got to speak with Rolling Stone and have that interview?

3 years? So no, so it was actually, it was, um, so Rolling Stone, uh, they contacted me in 2008. Oh, okay. Yeah, they can't be— when the New York Times article came out, they contacted me and they made a deal with my lawyer that they wouldn't publish anything until all my legal jeopardy was done. So they were able to do the interviews while I was under, you know, house arrest and all that. So the Rolling Stone article came out in 2011, uh, actually while I was, uh, it was shortly after I got off house arrest. I was still under probation.

Gotcha.

Because I remember my probation officer— yeah, I had to like check in, go into his office once a week or something, you know, after I got off house arrest. My probation officer, I came into his office one day and he has the Rolling Stone issue on and he's like, what is this, pack house? He's like, you talking about how we do our business around here? And I'm like, uh, you know, that's, that's journalism. And he's like, he's like, and he like starts looking nervous and he's like, you're not going to tell them how like, you know, the probation office works, right? Like, I don't think anyone cares. Yeah, exactly. Yeah, yeah. So yeah, I mean, you know, it's probation officers, they're like, uh I think they, they feel like it's their professional duty to be dicks. Yeah, you know, it kind of is their duty. Yeah, yeah, exactly.

So you get this article published in Rolling Stone. Yes. Um, is it— how long of an article is it?

It was actually one of the longest articles they've ever published because they kept on— they kept on investigating for the entire 3 years. Yeah, you know, so like, so they didn't just— into— so Guy Lawson, the, the author, uh, the journalist who did this article, uh, he didn't just interview me, he also interviewed Ephraim for a little bit. Ephraim cut him off after like the second or third interview because, uh, Ephraim wanted to do his own thing as he always does. Yeah. But he also interviewed Alex, who was our guy on the ground in Albania. He also interviewed a bunch of, uh, off the— some on the record, some off the record, like people who worked in the government. Ah, so he got their perspective as well. Yeah. And he also— and because Ralph ended up going to trial, right? And, uh, through the trial process, there's a lot of discovery, a lot of, uh— that's actually how we discovered, uh, that, uh, the U.S. Army knew about the Chinese stuff the entire time. Ah, because they were in, uh— well, but even before we delivered around, the State Department, they have an embassy in Albania. They know the history of Albania. They know all that stuff is Chinese. Of course they knew. Yeah, they didn't care. In fact, they told us Specifically, they're like, yeah, this is a great deal for everybody. It helps the Albanians get rid of their stuff, helps the FBI.

There was no New York Times article.

They would have let it go. They would have let it go. So after the Justice Department raided the office in August, they sent— this, this came out in Ralph's trial— they sent an email to, uh, the U.S. Army informing them this stuff is Chinese, that you may want to stop taking delivery on it. The Army writes back to the Justice Department that, uh, that this ammunition is critical to the mission in Afghanistan, and if they— if the Justice Department insists on the Army stopping to take delivery, they'll need a letter from the Attorney General of the United States, who's the head of the Justice Department. Yeah, that letter never came. Wow. So the Army kept on taking delivery. Wow. For the next 6 months.

Is that with the $70 million of the contract, you mean?

Yes, exactly. That's how he kept on delivering. Wow. So it was another 6, 7 months before the New York Times article came out. The Army kept on taking delivery and paying for stuff they absolutely knew, documented, you know, that was, was Chinese. Yeah, they kept on paying for it, didn't say a thing. New York Times article comes out in like March of 2008, and like 2 days later the Army puts out its press release. We had no idea what was happening. We were shocked and appalled. You know, we're canceling the contract. Yeah. And all that. So, wow. Yeah. And then like a few days after that, the Justice Department brought charges against us. Wow. Yeah. And then so very obvious, the New York Times was the reason they did all right.

Yeah. Really? Because of the box manufacturer?

Yeah. And that's how the New York Times found out. Yes. Should have— yeah, should have paid the box guy. Should have paid the box guy.

So you get this article published. Is it— it's big. It's a big article. You're getting a lot of publicity. Yeah. What happened happens to you then? Are you getting inquiries? Like, how did the movie deal come out?

Right, so after the, the Rolling Stone article was published, um, the director of The Hangover movies— yeah, uh, Todd Phillips— he read it and he thought it was an awesome story. He was like, I can make a movie out of this. Yeah. And, uh, he was in the middle of, of filming Hangover 2 at the time. Okay. And so he optioned the rights to the meaning he puts down like $20,000, $30,000 or something and gives it to the— so he optioned the rights to the article, right? The article? To the article. Okay. And that gives him like 2 or 3 years to like start production on the movie. Otherwise, he loses the rights to make a story based on the article. Now, that had nothing to do with me because that's a piece of journalism, right? Which I didn't get paid a penny for, you know. And they didn't really need to pay me a penny, right? Because according to the First Amendment, freedom of speech, you can make a work of art about any public figure that you want, right? And you don't have to pay them for it. You don't have to get their permission for it. And because my name was in the media, in newspapers, uh, then I was officially considered a public figure. So Hollywood could have made this movie about me and said anything they said, anything they want, whether it was true or not. Yeah. And not given me a penny, and that would be totally legal. But they wanted to market it as based on the true story, so they decided to buy my life rights, they call it. Ah, so they gave me, you know, something similar to what they gave the, the, uh, the author of the article, uh, like, you know, option my life rights. And, and what do the life rights get them? It just gets them my cooperation. That's gotcha. That's it. Not permission of anything. They don't need it, you know, but it's just the, uh, the— my cooperation in, uh, in the making, being involved, and being involved. Exactly, like talking to the screenwriter, reviewing their screenplays, you know, giving them feedback.

Was that from easy work for me?

So he was in prison at the time. Okay. And so it was difficult for them to deal with him, and they didn't want to anyway because he was a well-known, you know, habitual liar. And, uh, and also very well known to be very hard to do business with. So they didn't really want him involved, and they figured that if they had me, they didn't really need him. He ended up suing them after he got out of prison for stealing his story, even though it had nothing. He published his own book called "Once a Gunrunner," based on the line he gave the undercover ATF guy, "Once a gunrunner, always a gunner." But it's a pretty funny book, I'll give him that. It's a funny book. It's not true. You read it? Of course I read it. Yeah. I mean, he wrote very nasty things about me. Really? Yes, very nasty. Pretty much minimized all the work I did, saying— of course he would say that because I was suing him— saying I barely did any work, I was just pretending, all this stuff. And he put a bunch of nasty stuff in there, stuff that he— actually, so one thing was actually kind of funny that he put in there that I'll mention at this point, because I just thought it was so funny. There was this one story, and it was just— I had totally forgotten that this had happened. We— while we were working, this was, like, maybe, like, a month before we had won the Afghan contract, and, He— we were, we were like, uh, we had gone out to like party at some club and we didn't party that much, you know, not like they show in the movie, you know, but like, uh, we're mostly work. We were like workaholics. Occasionally we'd go out and party. We liked actually doing karaoke. I mean, okay, I'm a decent singer, he can't sing a note, but he would put on a great show and everyone loves a great show. So he, he, uh, we were driving in his, in his car. He had an Audi A6 back then. I had an A4. So we didn't have matching Porsches like they show in the movie. We had, you know, somewhat matching Audis. And, um, he sees these two girls, right, like walking down the— this is like 3 in the morning, you know. And he like rolls his window down like a creep, you know. And he's like, hey ladies, how's it going? And they're— and they're actually friendly, like, hey, you know. And he's like, hey, you ladies need a ride somewhere? And they're like, oh yeah, sure, you know. And they get into the back of his car, right? And he's like, oh, why don't we go to my place and you guys, you ladies like some blow? You want to do some blow? He's like, why don't you go back to my place? And they're like, okay. And, and it was like this Black girl and this Asian girl, right? And, um, uh, the, uh, we go to his apartment and he's like, he lays out some coke on the— he loved coke. Yeah, he was, he pretty much loved everything, but like, he, he especially loved coke. Yeah, he cut some lines on the table, he's blowing some, he's like doing some some Coke, uh, with the Black girl. He starts dancing with the Black girl. I'm like talking to the Asian girl, and the Asian girl, you know, um, I think she was less drunk than the Black girls, you know, like, uh, we were just talking. Yeah. And she asks— she had this like weird voice, right? Oh, and you might not know where this is going. And she asks— yeah, I was like, whatever, you know. I mean, she, she looked good, you know, she was fine, you know. And, and, and— but she had this weird voice. And she asked me like, um, I have a question for you. What— how do you feel about trans people? And I said, well, I have nothing against trans people, you know. I fully support everyone being what they want to be, but I'm not personally attracted to— if that's what you're asking. I'm like, why? Are you trans? Is that why you're asking? And she's like, hang on one second. She goes to the— she was like— the Black girl was making out with him, right? Yeah. And she grabs her friend and she's like, we have to go. And they go, uh, they, they like walk and, and, uh, and like, um, they're, they're— and like Ephraim's like, hey, what's going on? What's going on? Right? Uh, you know, they, they're like going out the door, right? And, and, and, uh, uh, I, I said, I'm like, why are you guys like girls? Like, actually trans? Yeah. The Black girl like turns to us and then in a deep voice says, see you later, boy. And Ephraim's face turns white and he's like, "Oh!" And he goes to me and he looks at me, he's like, "We are never telling anybody about this." And you wrote about it in the book? And he wrote about it in his— I totally like forgot about this story. And then he wrote about it in his book, but of course he changed it so I was making out with the Black girl. I guess it like bothered him enough. He had to like, you know, like give himself some coverage there or something, you know? Like, I totally would have forgotten that story except he had wrote it. So he did stuff like that, you know, like he— so, you know, it was a very, um, it was a, it was a pretty fun— I found it pretty funny. But, but it is funny that he switched the two of you. Yeah, yeah, yeah, yeah. It's funny that he felt the need to do that. Like, he felt like, you know, like uncomfortable enough that he had to like give himself coverage for that, as if I, I was— I wasn't gonna say tell anyone about that, you know, except that he wrote about it, you know. Um, so funny. Yeah. So yeah, I mean, it was, it was bizarre. So yeah, so his book called Once a Gunrunner, it's like 90% bullshit and like 10% truth. Yeah. All to make him look way better, of course, you know. I'm sure. And in fact, the guy he wrote it— so he wrote it while he was in prison. Yeah. And he can't write himself, so he had a screen— a ghostwriter, a guy named Matt Cox. Yeah. Matt Cox got out of prison. He was in prison for like mortgage fraud. He got out of prison a year or two ago, and, uh, he started his own podcast called Inside True Crime, and he's actually doing pretty well. I was on his podcast. Oh, cool. And, um, and, uh, of course, Ephraim, uh, uh, uh, did not pay Matt a penny of the money he promised Matt for writing that book. So he screwed— so Matt told me that while he was writing Ephraim's book in prison, uh, Ephraim was, you know, telling him all the stories and he was bragging. And then I fucked this guy out of the money in this way, and then I fucked that guy in that way, and I tricked him. I said this, but that really meant that in the contract. I wrote it that way so I could screw him this way. He was very proud of himself, right? And, and Matt says, uh, to Ephraim, he's like, Ephraim, you can't just keep on like burning all your bridges, man, you know? And Ephraim looks at Matt and says, Matt, there's a lot of bridges out there. And Matt told me, he's like, and the second he said that, I knew I wasn't getting paid a penny for this book. I knew I was going to be one more bridge he was going to burn.

He's just a pathological—

He's a pathological liar. He's a sociopath. I mean, I think I'm not a mental health professional, But everything I know about sociopathy, he exhibits in spades. He, like, he can't— he has zero empathy for anyone else. Yeah, like, he does. I think he's physically incapable.

I couldn't imagine having my best friend work on something. Yeah, for that long. Yeah, where we got through the shit together. Yeah, and then said, hey, you could either take this tiny, tiny fraction of it. Yeah, or nothing. Yeah, I mean, that is— that, that's a sociopath.

Yeah, he's completely a sociopath. Yeah, and it's not just me. He screwed the next— the guy he replaced me with, he screwed him. The guy who replaced that guy with, he screwed him. He screwed Matt, who wrote the book about him screwing everyone.

Yeah, I mean, it's like, is he allowed to do government contracts?

Uh, I think he gets off the banned list in next year, I believe. So yeah, so he'll be, he'll be back at it. So you started War Dog Academy? So, oh right, so, so yeah, so I, I created the Beat Buddy, which was my first invention. And, uh, just to go chronologically, I'll get to War Dogs Academy. Uh, I created BeatBuddy, and that led to a bunch of other musical inventions. For the musicians in the audience, I created the world's best looper pedal. It's called the Aros Looper. Um, and a few other products for my company Singular Sound. That's my music tech company that we make the BeatBuddy, the Aros, a few other products. Um, and then, but I, I co-founded that company with one of my brothers because I needed someone I could trust. Yeah. But my brother, who's an amazing business guy and really amazing manager, he's not a musician, and he was kind of tired of working in the niche industry of the music industry, which is a small segment of the market. So he kept on trying to brainstorm ideas with me for a non-musical product, for a more general market product. And we came— actually, we were getting high at my place, and we got the munchies. And we ate some mango and we had the fiber stuck in our teeth. Yeah. And we were like, my brother asked me for some floss to get rid of the fibers. And we're both flossing in my bathroom. And he's like, and I tell him like, man, this is such a pain in the ass. If we could invent a product that could floss your teeth for you, everybody will buy that. Everybody wants it. Everyone hates to floss. Everyone knows they need to floss. He looks at me, he's like, we have to create that. We have to. And so we start brainstorming. And it took us a few years, but eventually we came up with a product called Instafloss. Okay. And it's an advanced water flosser. So like a Waterpik, which uses a single water jet. You have to trace your gum line. Yeah, right, right. Top, bottom, and on the inside, which is very difficult. Right. Most people, they splatter all over the place. Makes a big mess, takes time. You have to get some skill to like, so you angle it correctly. Yeah. So we created a device called Instafloss where it uses 12 water jets in like an H-shaped configuration. You just bite into it and you slide the thing along your teeth. And it just gives you a perfect floss in 10 seconds. That's cool. So Instafloss. Instafloss. Yeah, check that out. Is it on the market? It's on the market. On Amazon? Uh, it's not on Amazon this second, uh, because we don't have enough, uh, inventory for it. But we, we were actually out of stock for the last 6 months, so, uh, because we had some issues with, uh, some manufacturing supply chain issues. But yeah, but we're actually about to get a new production in the next couple weeks. Uh, so yeah, Instafloss.

Interesting. Yeah, yeah.

So that's been going really, really well. Um, our first non-musical product, so that's very exciting. Cool. And, um, and, uh, uh, then, but one, one thing I— one new business I just started, and then I'll end with War Dogs Academy because it's more relevant to the story. But, um, one new business I recently started, literally just a month ago, is because we've been coming out with all these products. And these products get reviewed by like various influencers, especially on YouTube. YouTube is a big go-to for people doing research on products. Yeah. Uh, not just musical products, but any kind of product people look. And one thing we realized is that, um, people's opinions are formed half from watching the video and half from reading the comments on the video, right? Because people are like, oh, does this guy getting a affiliate's commission? Did he get paid for this review? People look at the comments section to get the real unbiased truth, right? Now, the thing is, is because we have a lot of influencers reviewing our products, a lot of these videos, they live on YouTube forever, right? And now let's say someone types in BeatBuddy into YouTube, right? What shows up at the top isn't the most recent video. Usually it's the video that's most popular, and those videos are sometimes a few years old, and sometimes the order of the search results changes depending on the— their internal algorithm of YouTube. So if you want to be part of that conversation in the comments, you know, and, and it's very important that you do because sometimes we see people spread misinformation about our product, like, oh, I tried this and it didn't do that. I'm like, you're confusing it with our competitor's product, you know, or, you know, or some— they'll be like, oh, this thing has this problem. Oh, we fixed that 5 years ago. You know what I mean? So like, there's a lot of misinformation, a lot of old information. And so we found it's very important to close these sales and to maintain— be on top of our brand reputation is to look at all these videos. You have to sort the comments to the most recent, go down until you start seeing the comments you've already seen. It's a big pain in the butt. Like, our social media managers take a lot of time to do this. So we, for our own internal use, we built a tool called Comments Compass. Okay. And what that is, is you take the URL from YouTube, you have, you know, your own portal in commentscompass.com and you just take the URL from YouTube. You put all the ones you want to track into your account. And any time there's a new comment on that YouTube video, it puts it all in your feed. And we also implemented an AI system so you could sort it to see like all the questions first or negative comments first. So we have like an AI system to sort the sentiment of the comments as well. So it makes social media managers' lives a lot easier, saves them— Comment Compass. Comment Compass. Yeah. Commentcompass.com. Yeah. It's, uh, been a huge lifesaver for our own social media managers and our companies. And we realized, you know, if it's good for us, I mean, everyone has this problem, right? So, you know, so we're starting with YouTube. Our plan is to expand to other platforms as the thing grows. Yeah, but, uh, but yeah, we're commoncompass.com. That's cool. So yeah, so that's our latest thing, uh, we just released that like a month ago. But, um, but to War Dogs Academy, um, uh, the way that one started was about a year ago. This is actually relatively recent, about a year ago. Oh well, let me go back a little further. Uh, when the movie came out, the movie came out in 2016, right? And at the time I was full in on Singular Sound. I was just doing my music tech stuff. We hadn't even thought of Instafloss yet, so I was just doing Singular Sound products. And, and, but every— after the movie came out, I started getting hundreds and hundreds of messages on like Instagram and Facebook. Yeah, Twitter. People will say, hey, teach me how to do government contracting, right? You can keep 90% of the profits, just teach me, I'm desperate. You know, like, yeah, you know, like, like literally hundreds of people, if not more than a thousand. I was like I'm like, well, first of all, I'm not allowed to do government contracting. Second of all, my information might be a little— be outdated. I haven't done it in like, you know, 7 years, right? Um, so, uh, you know, I wasn't comfortable. So I always just send people a message, you know, here, you could teach yourself at this link. Yeah. Uh, and good luck. Yeah. And then about a year ago, I got a message that was slightly different, and it was these two guys, a guy named Logan and And they told me, you know, about 6 years ago, we were dead broke. We were 21 years old 6 years ago. We were dead broke. We were working picking bananas on a farm in Australia because they had— they were touring Thailand doing the usual backpacking thing. They ran out of money. They found that— they heard that Australia pays pretty decent wages for agricultural labor. Yeah. And so they went to Australia to try to save up some money so they can continue backpacking. Yeah. The farm had a movie night. Yeah. And the movie they showed was War Dogs. And they thought to themselves, man, these guys are our age. If they could do it, why can't we do it? Right. And so they got obsessed with government contracting. And they taught themselves the entire business. They made a whole bunch of mistakes. It took them a few years to really dial it in. Right. But 6 years later, they have a multimillion-dollar business. Wow. They ended up specializing not in weapons or ammunition. Yeah. They ended up doing— doing laundry services, as I mentioned before. But they have a multimillion-dollar business. They're flying all over the world to go inspect their operations in different Army bases. You know, they— and they are super grateful. They're like, we just wanted to reach out and say thank you. If it wasn't for the inspiration of War Dogs, we would have never done this. And I thought to myself, these guys have taught themselves the business, which is not an easy thing to do. I mean, I learned from Ephraim. Ephraim learned from his uncle. You know? It's not easy to teach yourself this business. It's very compli— even some big companies don't want to deal with it, you know. So it's not easy to teach yourself. I'm like, and they're as up to date as you can. They have multi-million dollar active contracts right now, right, right? So they, they, their information is not outdated. So I said, hey guys, why don't— I have hundreds of people asking me to teach them this business. Why don't we do something where we could teach people how to do government contracts? And that's how we started War Dogs Academy. Ah, that makes a lot of sense. Yeah. And so one thing people always ask ask me, and we've seen comments on, on like Instagram, whoa, if it's so much, so such a big money-making thing, why are you teaching anyone else this? You know, why don't you do it all yourself? And they don't understand that the government puts out 30,000 contracts every single day. Wow. Every single day, 30,000. Wow. You can't even look at it all. You can't even look at the titles of all of them, you know, let alone read them.

What are some like government contract opportunities that are interesting that maybe people wouldn't think of that people are able to fulfill on?

You know, the government is the single— the US government is the single biggest customer in the entire world. Yeah. They spend $7 trillion, with a T, dollars a year. Yeah. Right? Crazy. It's insane. It's bigger than the vast majority of companies combined. Right. You know? Yeah. And so they buy— Everything, right? They buy everything. They have millions of employees that they have to support. They have military bases and, and diplomatic bases all over the world that they have to support. And all these, this stat, these millions of people who are on the government payroll, they need everything, just like all of us. We need clothing and food and entertainment and medical services and laundry services and landscaping services and janitorial services, and so do they. And so they put out everything, literally everything they buy. They buy— they're in real estate, they're in fuel, they're in obviously the whole range of military stuff, which nobody else does except for them. But, but they not just military stuff, they buy everything that civilian companies buy. Right. So we've had— I mean, as I mentioned, my partners won laundry services contracts. We've had students win landscaping contracts. We recently had a student win a $2.6 million security services contract. Wow. Right? And this was his— this was his first con— the first big contract he won. Wow. He'd been doing— he started War Dogs Academy 6 months ago. Wow. And he actually didn't win any contracts for like 4 months straight. Yeah. And he was about to give up. Yeah. And then he won this contract that set him up for life. Wow. So yeah, he's super, super great. Incredible. It's incredible. So you got to teach people how to do this.

Sort through, find interesting opportunities, how to apply, how to put deals together.

There is, there is a few different stages of the process. I mean, we have, um, we have it in, uh, video format because we know that, that people learn it easier that way. But we also have it in PDF format, and we have a, um, we have a whole system set up. So, um, the, er, the first part of it is the course, right? That's about 18 hours of video content. Where you learn the entire system and how to apply and how to register your government, your, your company with the government, how to apply, how to find out what set-asides are applicable to you. So the government has certain what they call set-asides, like, for example, if you are a veteran, right, or a disabled veteran or a woman, or you live in an environmentally disadvantaged, economically disadvantaged zone, there's different set-asides that they have. Certain contracts are only going to these people. Gotcha. So the first process, when you set up your company and register with the government, you want to give yourself the biggest chance of winning. You find all the set-asides that you are qualified for, you apply for them. There's different programs. So we go through all that, right? And then we, you know, go through a pro— the process of how to find suppliers, how to deal— what's— how to maximize your chance of success with suppliers, different methods of that. And, uh, of course, how to fill out the, uh, the solicitation, which is his own art. But one thing that we found is one of the most important components of War Dogs Academy for the beginning entrepreneur is our community, right? So we don't just have a course, we also have like a forum. Yeah. Where all of our students can go and, uh, talk to each other, make business connections, network. Um, but we also have live question and answer sessions, uh, once or twice a week. Yeah. And we have— and we hired a few retired government contracting officers to work for us. That's great. And to do these sessions. So people who used to work for the government deciding who wins the contracts, now they work for us and they help our students. Amazing. To win contracts.

Sounds like a really interesting, like, thing to explore. You know, there's so many people out there that are trying to figure out what to do to make money.

Yeah.

Everyone's talking about e-commerce or social media marketing or you know, content creation, but not really many people are talking about government contracting.

It's, it's practically— it's shockingly— for the amount of opportunity out there, for the amount of money that goes through it, I am shocked at how few people know about it.

I'm gonna look more into it because, yeah, you never know what kind of thing you're a specialist in or what kind of connections you might have that you can piece together. A friend of mine got into, um, it wasn't necessarily arms dealing, but he was doing like bulletproof vests and helmets and And he, funny enough, he was a student in my— I used to have an e-com education business before I started Zendrop. He was a student of mine, and the guy, I want to say he made like $40 million. Wow. Right when the Ukraine war started. Supplying like helmets.

And I was like, what are you talking—

he's like trying to figure out where to invest in stuff. I'm like, what do you mean, $40 million on this?

Yeah, I was shocked. Yeah, but it's really interesting. I had a lot of people reaching out to me when the Ukraine war started. I'm sure. But I was not I was not at the time. Yeah, I wasn't able to. Yeah. So that was quite a bunch of opportunities that I did not get to work on. Yeah. But, you know, that's— it's— it is what it is. And yeah, if you— if you are— if you do decide to get into government contracting and you want a shortcut, as I mentioned before, we have a B2B offering where we have our staff do all the registration process and all the bidding process for you. And all you have to do is supply the goods or services at a competitive rate that can win the contract, and everything else is done. Sounds amazing.

Yeah. Well, this was an incredible conversation, probably the most interesting story I've heard in person. Thank you. Really cool, you know, being a fan of the movie, to be able to hear your side of it and, and, you know, kind of dive into your world a bit. So really appreciate you coming on and sharing.

Yeah, my pleasure. Thank you for having me.

Absolutely.