Army starts probe in fraudulent arms deal

WASHINGTON, April 27 (UPI) -- A fraud case involving a private arms dealer prompted a U.S. Army review of the process used to supply overseas forces with foreign arms, officials say.

Army officials initiated a review of procedures used to supply foreign-made arms to forces in Afghanistan and Iraq following allegations AEY Inc. of Miami Beach delivered Chinese rifle cartridges it claimed were Hungarian, The New York Times reported Sunday.

As part of a $298 million contract, AEY delivered more than 120 million rounds of ammunition to Afghanistan to forces fighting al-Qaida and the Taliban. The rounds came in flimsy cardboard boxes and official documents suggest they date from the 1960s.

Efraim Diveroli, 22, runs the company. He faces a felony charge of obtaining a false drivers license. Federal authorities say they suspect Diveroli of engaging in an international arms deal with suspects on a federal watch list and for corrupt practices in Albania.

U.S. law requires dealers to outline all parties involved in overseas arms shipments though a loophole exempts dealers under U.S. contract.

International arms analysts said the bids delivered by AEY, sometimes 10 percent of the market price, and the links to Albania should have tipped them off.

Army officials said they launched a broad review of contracting standards in response.