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Army Awarded AEY Contract After "Recommendation" From Firm's Financial Backer
When Army officials asked Ralph Merrill to provide a "performance evaluation" of arms dealer AEY, he gave the the firm a glowing review.
Well, of course did. He's the company's financial backer. And he's also one of the three other men indicted last week along with AEY's 22-year-old president, Efraim Diveroli.
"We have dealt with AEY Inc. for the last four years and have built an excellent business relationship with them. We have found them to be reliable, competent, efficient and honest," Merrill wrote in the evaluation in October 2006.
Army officials had reason to know that Merrill was tied to AEY. In March of 2006, Merrill wrote an email to a military official describing himself as AEY's vice president. In January 2007, he told Army officials that he'd set aside $1 million in case AEY needed extra capital.
A federal indictment describes Merrill as a "business associate of Efraim Diveroli, who provided financial and managerial assistance." Merill was involved in some of AEY's negotiations with subcontractors, the indictment said.
Nevertheless, Merrill's was among the three ostensibly independent performance evaluations the Army had on file for AEY when they awarded it a $300 million contract in Janury 2007. Merrill, who also runs a Utah-based weapons dealership called Vector Arms, had responded to the Army's request for information about Vector Arms' dealings with AEY.
That's all according to documents disclosed today at the House oversight committees hearing on AEY.
At the hearing, Rep. John Tierney (D-MA) grilled military officials about the review process: "Mr. Merrill had a conflict of interest. ...How can you get an unbiased and objective assessment of past performance from someone who has a financial interest in the contract?"
Mitchell Howell, from the Defense Department's Defense Contract Management Agency, responded that they agency is reviewing its procedures to prevent similar problems in the future.
Josh
Zachary
I commented about Ralph Merril in an earlier TPM MR post about Diveroli:
Ralph G. Merrill, 65, of Bountiful, Utah was arrested last week along with Diveroli and the others. Merrill reportedly financed Diveroli and provided management advice.
Ralph G. Merrill appears to be the owner of Vector Arms in North Salt Lake Utah. It was registered in Utah in 1993.
Vector Arms is "a manufacturer, distributor, and dealer of the following replica weapons: UZI*, H&K**, AK, and RPD. Also, accessories, parts, and service".
The Uzi Talk website details how Merrill got into the Uzi business.
Alexander "Rex" Podrinski, also arrested with Diveroli, reportedly was Merrill's store manager.
In an arms forum, someone mentioned that federal credits can be used to buy weapons from Vector
Arms but I'm not sure what that means.
The investigation has been ongoing for three years so there has to be more to this story.
BTW, Merrill recently auctioned off his 2004 Lamborghini on eBay.
--------------------------------------------------
Federal Register: April 10, 2007 (Volume 72, Number 68)]
DEPARTMENT OF THE INTERIOR
Fish and Wildlife Service
Applicant: Ralph G. Merrill, Bountiful, UT, PRT-148895.
The applicant requests a permit to import the sport-hunted trophy of one male bontebok (Damaliscus pygargus pygargus) culled from a
captive herd maintained under the management program of the Republic of South Africa, for the purpose of enhancement of the survival of the
species.
June 24, 2008 6:14 PM | Reply | Permalink
So, Efraim's company has been in business for at least 4 years, meaning Efraim was only 18 back then. Parents now have another source for nagging their lay-at-home high school graduates, "Why can't you get a $300 million dollar government contract like Efraim did?" To think that my 18 year old granddaughter's boyfriend doesn't have any job at all - talk about a slacker.
June 24, 2008 10:27 PM | Reply | Permalink
Efraim Diveroli made a personal mortgage loan in January 2007 to Camilo Aristizabal for $270,000.
Why was young Diveroli making mortgage loans?
June 24, 2008 11:26 PM | Reply | Permalink
C92,
Based on official records, it appears that Camilo Aristizabal may not have paid the $270k to Diveroli when the loan was due in 1/08. No release was filed by Diveroli nor was the property remortgaged.
Aristizabal, a Columbian, is the head of Ariscorp Global Investments which is involved in real estate and import/export.
He is a principal in A&S Strategies along with Alexandru Taranu, Julian Aristizabal, Farid Saba and Asher Abadi.
Aristizabal is also a principal in Magnum Energy, Magnum Commodities and Dumonde Holdings.
All of these companies were registered in the last 2-1/2 years.
June 25, 2008 6:58 AM | Reply | Permalink
In March, Lindsay Bernstein put together a good profile of David Packouz and Intelliterran dba DynaCore Industries.
Registered in 3/06, DynaCore claimed that the DoD, Afhgan police & army, Iraq army & police and Colombian army & police were customers. But I can't find any evidence that this is true.
June 25, 2008 7:35 AM | Reply | Permalink
C92,
Check out this Rinascita AEY story in Italian. I haven't translated it yet but it has lots of names in it like SAIC.
June 25, 2008 7:55 AM | Reply | Permalink
This gets curiouser and curiouser. Just on the surface numerous and basic Federal Acquisition Regulations (FAR) and Defense FAR's (DFAR) were ignored and broken, though this seems SOP under this DoD and Regime. It’s one thing to audit an existing contract due to manpower constraints, quite another to be able to issue a contract due to approval level requirements and chain of command. Since I’ve only dealt with FAR’s from a Prime or Subcontract purchasing basis, I don’t know the signatory level required of a $300,000,000 Prime, but I’d bet it wasn’t a G7!
June 25, 2008 1:37 PM | Reply | Permalink
Can't see the comments without posting my own comment today.
-- ARG
July 24, 2008 11:04 AM | Reply | Permalink