839: David Packouz | The Real-Life "War Dogs" Gun-Runner Part Two

28:08It's not awkward. It's not cheesy. It's all practical. Takes a couple minutes a day. And many of the guests on our show subscribe and contribute to the course. So come join us. You'll be in smart company where you belong. You can find the course at jordanharbinger.com slash course. And no, I don't want your credit card information. You're not going to get billed. There's not a ridiculous upsell. It's just something that I think does well for everybody and makes you appreciate the show just a little bit more. So enjoy. Now back to David Pakhouse. Look, I've been in North Korea. I've been to Albania.

28:38It was at the time the poorest country in Europe. Now I think it's Moldova. But like these are not places where when you're 40 and you have kids, you want to just be schlepping into and it's like, who are you going to meet? This gangster, this corrupt politician, this arms dealer, we're all going to meet in a warehouse in the middle of nowhere and inspect this product. right like no way it's a bad idea even if they're like no we're just going to do business it's just you're going to draw the short straw at some point right you're going to meet an f-frame yeah except for henry he manages to skate by somehow nothing seems to touch him but again he's a broker he's probably like i'm not inspecting the product yeah i'll meet you at the four seasons in geneva right i'm not going there you're coming here i'll get you a visa right i mean henry would would be on the ground really yeah yeah i mean to inspect the product i don't know I don't know about the delivery aspect, but he has been on the ground and the sources to be there.

29:31So, you know, he gets his hands dirty. Yikes. Yeah, that's a guy I'd love to talk to, although he'd never tell me anything. He wouldn't. Yeah, all the most interesting people are the ones who are like, I don't know what you're talking about, Jordan. No, we are merely an importer-exporter of textiles. Yeah, I mean, if he told you everything, he'd ruin his business. So maybe once he retires, if he ever does that. This is probably a ridiculous question. It feels like one, but is this stuff insured? Because it's three loads per week. What happens if some of it goes bad or isn't working or the plane doesn't make it?

30:01I mean, it seems like you should have that, but can you even insure that? I think there might be insurance that you could buy, but it would be extremely expensive. Yeah. And I know that at least as far as we were concerned, we did not insure anything. This all seems like a really fun and interesting business. And there's a lot of wheeling and dealing, which I would have loved in my 20s. I'm way, way too old for this kind of stuff right now. I don't know about you. Same. Yeah, no, I'm out of that business with no intentions of going back. I do picture you guys walking around with silk suits and metal briefcases and sunglasses.

30:33Just the straight up Nicolas Cage circa 1996 aesthetic period. That's exactly what we did. It wasn't silk. It was regular suits. But we did have, Yeah, we did have those cool shades and metal briefcases because we specifically tried to look like Nicolas Cage because that's who we were basing our look on. We wanted people to take us seriously. Maybe that wasn't the way to go. At the time, it works, though, right? Because everyone's like, oh, that guy, he looks like an arms dealer. All right, fine. More than anything, it was that we always carried documentation proving that we had active contracts.

31:10And once you show them that, and they're like, okay, I mean, regardless of how young these guys look, they're doing business, so you want to do business with them or not. How did you start to smell that Ephraim was going to screw you over? So after, of course, after the logistics issues were taken care of and we started delivering on a regular basis, three, four aircraft a week started going into Afghanistan. And I had more or less taken care of all the issues. And the only things I really needed to do was more or less just like babysit the logistics companies and make sure that the receiving contracting officer in Afghanistan signed off on the documents.

31:54So my workload went way down because I had already set everything up. And I stopped coming into the office as much because I didn't have to do my job. and he started complaining and he's like, Hey, you know, uh, he goes to, I remember I was staying at the office late one night where everyone else had left. I still had some stuff I had to do. And Efron comes into my office and he says, Hey, you know, um, a lot of the guys around the office are complaining that you're, uh, not pulling your weight. At this point we had about, about like 15 people working for us. Uh, we had started just us two, but like after we won the$300 million dollar contract, he decided to spend two grand a month on an office.

32:35Now that was when we actually moved out of his apartment. You're like a WeWork selling AK-47s and missiles. Yeah, pretty much. So he comes into my office and he's like, a lot of the guys around the office are like, you know, saying that you're not pulling your weight around here. And I'm like, what are you talking about? Well, what guys are saying that? Because I'm doing what I need to do. And, you know, I don't know what you're talking about. He's like, yeah, you know, because you're not coming into the office that much. I'm like, well, I'm taking care of what I need to do, right? You know, this is my job is to babysit the Afghan contract.

33:06And that's what I'm doing. And things are smooth. So what's the problem? And he's like, yeah, but you know, you're not like helping out with our other contracts that we're going for. And I said, well, I told first of all, I told you not to go for those contracts, because he was like chasing literally every fucking thing. He was chasing, you know,$2 million contracts, you know, a half a million dollar contract. I'm like, dude, why are you wasting your time with that? We got a$300 million contract. Let's concentrate on delivering this successfully and pulling as much profit out of that we can out of this.

33:36And then that's going to make us the vast majority of the money. We're more than getting distracted by going after a whole bunch of tiny contracts that we might not even win. But he's like, hey, man, we're on a roll. Everything's money. I'm going for it all. So you take care of the Afghan contract. You leave the rest to me. I'm like, okay. I mean, that's what you want to do. So he started chasing all these other contracts. And a lot of them, as these things tend to do, got to be a bit of a logistical headache. And he's running around like crazy, screaming at everyone in the office to do this, that, and the other.

34:11And I'm like, listen, we have a deal by deal basis. I'm responsible for the deals I work on. That's what I'm getting paid on. So if you decide to do other contracts, I'm not getting paid on that. Why should I work on that. He's like, yeah, but if the company goes bankrupt, then the Afghan contract gets destroyed too. You got to make sure that the company is taken care of. I said, well, in that case, are you willing to give me a percentage of the company instead of just the contracts I work on? He's like, oh, come on, come on. Don't be ridiculous. I want you to work for free. Yeah, that's exactly it.

34:51He wanted me to work for free. I said, well, in that case, If you don't give me a piece of the company, then I'm not going to do it. And he's like, well, how about this? I'll give you 1 % of the company. Instead of the massive amount you're going to get from the$300 million. Yeah. I'm like, well, we have a deal as for the Afghan contract. It was supposed to get 25 % of the profit initially. So I was like, well, 95 % of the money that the company is going to make is going to come from the Afghan contract. So I think I'll just stick with our deal on the Afghan contract rather than going to 1 % of the company.

35:23Yeah, for all the headaches. Yeah, exactly. And he's like, well, that's my offer. Take it or leave it. And I said, what's, are you not going to pay me what we agreed on in the Afghan contract? And he's like, you're in breach of contract. You're not doing your job. I'm like, I am not in breach of contract. I'm doing my job. And if you're not going to pay me what you agreed on, I'll see you in court. And so then I left and that was the end of that. And I sued him. I was getting my lawyer all lined up and everything. And two months later, the feds raided his office. I was already, you know, long gone by that point, two months out of the company.

36:02But one of the secretaries in the office called me up and she's like, hey, because I was on good terms with everybody. I was considered the nice guy and he was the asshole. Right. So like when people would have problems with him, they would come to me and complain about him, you know. So I was on good, I remained on good terms with them. I'm still good friends with some of the people I worked with back then. And so one of the secretaries calls me up and she's like, hey, I just want you to know that the feds just raided the office. And they told us all to step away from our computers and they told us to leave.

36:34And they're gathering up everyone's computer and they're packing up all the files, all the filing cabinets, and they're taking it all. And I'm like, oh, shit, we're fucked. And so I called up Alex, who is still in Albania, supervising the repackaging job in Albania. And I told him what happened. I'm like, hey, you know, just FYI, the feds just raided Ephraim's office. So Alex calls up Ephraim. A new guy named Danny answers the phone. Danny is the guy that Ephraim replaced me with once I left. He ended up screwing Danny over too. Oh, I'm so surprised to hear that. Yeah. And he ended up screwing the guy he replaced Danny with as well.

37:12I mean, it's just like a never ending succession of people that he promises the world to and then screws over. So, and he's, but I just heard that recently that he just recently got into some big lawsuit with somebody. So he's, he's still doing the same thing. I see the same guy. So Danny answers the phone. You know, Alex wanted, you know, want to feel him out, see what was going on. And so Alex is like, hey, Danny, I need some documents for shipment that's coming in today, that's going to be leaving today to Afghanistan. I need these and these documents. Can you send them over to me? And Alex told me that he hears Danny cover the phone, the mouthpiece of the phone, and he still can hear Danny talking.

37:52And he's like telling Ephraim, hey, it's Alex. He says he needs these documents. What should I tell him? and he hears Ephraim saying, oh, don't tell him anything. Just tell him that there was a bomb threat. Yeah, yeah, there's a bomb threat. So we had to leave the office and so we can't get the documents. But as soon as they clear things up, we'll get it to him right away. So don't worry about anything. And so Danny gets on the phone and repeats exactly what Ephraim told him. And Alex is thinking, why are they lying to me? Why are they lying to him? Who cares? I mean, just, hey, we got raided.

38:22Like, it's not good, but we're gonna, whatever. We'll figure it out. So in Alex's mind, I don't know the real reason, but in Alex's mind, Alex is thinking, well, maybe Ephraim is thinking that he's going to throw him under the bus. Oh, yeah. Good point. Ephraim is going to claim he had no idea about the Chinese ammo. This was all Alex's idea. Alex was the guy who was supervising everything. Alex is the only one who knew about the Chinese ammo, and it's all Alex's fault. And Ephraim was totally innocent. And so that's what Alex is thinking. and Alex is like, there's no way I'm fucking going down for this motherfucker.

38:56Alex wasn't even getting paid such other, he was getting paid a straight salary. He wasn't getting a commission or anything. He was getting paid a straight salary and it wasn't even a particularly high salary. So Alex is like, you know what? This is not worth it. I'm out of here. And he's on the next flight home. And so Alex and I both hire lawyers and our lawyers, the first thing they tell us is, go look through your emails and look for the keywords of what you're worried about. Make sure there's no evidence in there. Smoking gun emails saying cover up all the Chinese documents. Yeah, God. Exactly.

39:29Well, they're like, well, you know, if there is smoking gun evidence, we should know about it. You know, so why don't you gather all the things that you think could be damaging and send it over? And so we both look through our emails and we realize how much smoking gun there is. We were not careful at all, unfortunately. I mean, I think in the beginning, Ephraim was like, hey, you know, we should only do talk by phone, you know. But then after like a few days, we were all so frazzled. And like, we had to like, we were all on different time zones. So we had to, you know, get time sensitive information to people who might be asleep, and we were super tired.

40:09So eventually, someone just started, you know, writing, hey, you know, do this, this, and make sure you repackage the app, make sure there's no Chinese documentation. And that came out there. And we were all copied on these emails. So there was literally rock solid evidence that we were aware of the whole situation at the time. And our lawyers said, hey, you know, this evidence is pretty strong against you. It's not like Ephraim is going to pay for your legal defense. So if you're going to fight them in court, you're going to need, do you have like a few hundred K? Because that's what you're going to need.

40:43And I didn't have a few hundred K because Ephraim didn't give me a penny. And Alex sure didn't have a few hundred K. He wasn't getting paid very much. So really our only option was to cooperate. And the government told us that they're like, hey, you know, if you guys cooperate, we don't think that you're not really a target. So we're not even going to charge you. we're really just going forever. You know, we're like, great, because, you know, he tried to screw us over. So we owe him nothing. We're not making any money off this whole thing. So why should we go down for it? And six months go by, and nothing happens.

41:19And we're like, okay, well, maybe they decided not to pursue this case, you know, because they don't always bring charges with every investigation they do. About six months later, I think it was in, it was March, I remember it was March 27th of 2008. So literally 15 years ago, almost to the day, the New York Times published this front page article about us. They had both mine and Ephraim's mug shots on the front page. We did not look good. And it was right next to a big picture of a rusty looking ammunition. And the New York Times said that we were delivering low quality, defective ammunition to the Afghanis, and we were putting all the soldiers in danger, you know, and that this was It was all George Bush's fault because he hired these two stoner idiots to do this$300 million contract.

42:07So that was like the whole narrative. And the reason they got that picture on the front cover was because Ephraim had bought, I think it was 30 ,000 rounds of Bulgarian. It wasn't even the Chinese stuff. It was Bulgarian ammo. He had bought it sight unseen because he had gotten like a super, super good deal, like even better than the Albanian deal. It was like literally like, I think like maybe 20 % the cost of the Albanian ammo. Oh, wow. Yeah. So it was super cheap, practically free. And, but he didn't have, it was a small quantity, like very small, like 30 ,000 rounds and, you know, 2.7 million rounds fit in an aircraft.

42:42So that, you know, it was something that we were already shipping grenades from Bulgaria. So we figured we'll buy these rounds if, if we didn't have time to inspect it. Yeah. If it's good, we'll make some money on it. Good margins. If it's bad, the government will just reject it. And, you know, it's not such a big loss because it was so cheap and we had room on the plane anyway. So Ephraim decided to go for that. And when it got to Afghanistan, the government inspected it and it turned out to be total shit. And they rejected it. And they're like, we're not paying you for this. We're not giving this to any soldiers.

43:13And so the U.S. Army had nowhere to put that 30 ,000 rounds. So they just put it to the side of the airport runway where they had unloaded it and they just left it there. Oh, and that's the photo the New York Times takes. It's this rusty, moldy, out in the weather for months at a time, even though it's already 20 years old or 40 years old ammunition. Oh, man. Exactly. So that's the ammo that the New York Times saw because all the other ammo was already issued to the troops. I don't think they went very deep into Afghanistan. Probably not a safe thing to do. So they just asked the local people, hey, can you show us some of the stuff that AUIs delivered?

43:54And they were like, yeah, that's some of the stuff they delivered. And so they took pictures of that and they extrapolated and said, oh, this is the sum of the stuff that they delivered, implying that this is all the stuff that we're delivering. And so that became a huge political scandal. And there were hearings in Congress. You can look this up on YouTube. There's like, I think it was Henry Waxman, who was like one of the lead congressional people at the time, like has, you know, is talking about us on the floor of Congress. And they said that Congress contacted us and said that they wanted us to testify in front of Congress.

44:30And our lawyers said, well, if you make them testify, they're just going to plead the fifth because they're under criminal investigation. So Congress said, well, on second thought, we're not going to bother with that. So we didn't end up testifying in front of Congress. And the U.S. Army was like, whoa, we had no idea about any of this. We're taking the contract away, even though it came out later in court that they were informed by the Justice Department who were doing the investigation. As soon as they raided the office, the Justice Department found handwritten notes on Diveroli's desk. One of the to-do items was repackage Chinese ammo.

45:09so that kind of tipped them off and um the uh justice department knew what was going on and they told the army that this came out in court later they sent the army an email saying hey this ammo is is chinese uh it may be illegal uh you should probably stop taking delivery on this and the army said they needed it yeah the army the army said well this is mission critical supplies and we're going to continue taking delivery on it unless we get a letter from the Attorney General of the United States requesting that we stop taking delivery on it. And the Attorney General never sent that letter. Why they never sent the letter, I don't know.

45:47You know, maybe they made the political calculation that, hey, as long as there isn't a political stink about this, let's just keep it quiet and continue taking delivery. Maybe they didn't care. I don't know. But they only started caring once the New York Times published that article. And suddenly the army pretended like they were shocked and appalled. Right. And they had no idea the whole time. And then they immediately canceled the contract with AEY and they put it out for open bid. And then the Justice Department brought charges against us right after that, like a week later. Nothing like a good public humiliation to get the government to take action.

46:26And by the way, this is when people crap on journalists, this is why good journalism is so important, by the way. It's not the focus of this conversation, but it's like, really, the only thing keeping a lot of this stuff in check is articles like that. Even though the photo is a little disingenuous, this kind of deal would be the least of our concerns if people weren't worried about getting exposed. I mean, you see that in countries with no free media. It's just a mess. That's very true. I fully support free journalism and the freedom of the press and freedom of speech. I do wish that journalists would be less disingenuous.

46:58That's the internet, man. Click farm crap. Yeah. It obviously did a lot of harm to us. Not that we were totally innocent or anything like that, but it definitely skewed the story. And once one publication publishes something, none of the other journalists bother to check whether it's true or not. They're just like, oh, as reported in the New York Times, this and this happened. And it's the gospel truth from then on, even if there's counter evidence to it. So what do they charge you with? Just that one specific act of fraud, which was repackaging the ammunition? Is that it? So the way they work is, and this is kind of speaks to how the justice system works in the United States, was they said to us, you know, first they had told us they weren't going to charge us with anything, right?

47:42And when we initially agreed to cooperate, they're like, oh, you're cooperating, you're not even a target, we're not going to even charge you. But then once it got into the newspapers, they're like, oh, you know, we need to charge you because you're too closely associated with the actual, you know, acts of, you know, that we're charging DeVaroli with. So we can't just let you go and charge him only. The initial thing that they charged us with was they said, you know, you deliver 71 aircraft loads of this Chinese ammunition. And each aircraft load had a document, right, that stated what was in the aircraft.

48:19I know where this is going. Right. So like it states, you know, what, what the type of ammunition is in the aircraft, the quantity of the ammunition, the year it was manufactured, and the place of origin. And under place of origin, you guys put Albania, and you knew that the real place of origin was China. And not only did you put this false information on the document, you actively covered it up, you had a whole repackaging operation to hide the fact that it was Chinese origin. and then you lied on the documents. So each time you lied on this document, and you submitted it to the government, Ephraim signed the document, but I'm the one who was submitting it all to the government.

48:59So I was liable. You submitted a document that you knew was false to the government. And each one of these documents is an act of fraud. That's terrifying. Yeah. And you did the 71 times. So we're going to charge you with 71 acts of fraud. And each of these acts of fraud could get you five years in prison. So you can get 355 years in prison, or you can plead guilty, and they use their discretion as prosecutors to combine those 71 acts into one. I'm scared for you right now, even though I already know the outcome is different, because you had kids at this point, right? Which makes it 100 times scarier.

49:37Yeah. My daughter had just been born. She was actually born like a month after that we won the contract. My God. Oh, man. And yeah, my daughter was one years old at the time. And so they're like, if you plead guilty, then, you know, we'll combine it to one act so you can get maximum five years. And because you plead guilty, we'll tell the judge, you know, it's not up to us what sentence you get, but the judge, you know, we'll tell the judge who's going to give you the sentence that you should get on the low end of the range. So, you know, maximum you could get legally is five years, but, you know, we're going to recommend the judge to give you one year or even less, You know, who knows, maybe you'll only get probation.

50:14So let me think about that. You know, I could, you know, get probation or 355 years in prison. And even if I do win the case, you know, if I fight them in court, I need a few hundred thousand dollars to fight that even have a fighting chance, because you use a public defender, or as the private lawyers love calling them a public pretender. Yeah, that's not fair, though. The public defenders are usually better than these private lawyers, but whatever. Well, not to shit on public defenders. Yeah, they're busy. With the private lawyers, yeah, exactly. This is another issue with the system. The public defenders often have one to 200 cases they're working on at any one time.

50:53Prosecutors have five or 10. So the level of distraction and focus between the prosecutor side and the public or defenders, it's just not equal. Right. You're lucky if your public defender even knows your name, let alone the details of your case. You know, skill wise, though, it's not fair to say public defenders don't know what they're doing. They're way more experienced a lot of the time than the other guys. But yeah, the level of focus that you're going to get. I mean, do you get better service in first class on an airplane or do you or an economy? It's not because the flight attendant in first class knows the job better.

51:24Yeah, I 100 % agree. I'm not saying that the public defenders don't have their hearts in the right place and aren't skilled. That's not what I'm saying. I'm saying that the system is stacked against them. It's true. I just like to stand up for those types of attorneys because they're way more idealistic and frankly— I think you have to be. Yeah, and I went to law school with a bunch of those people, and they were the best people in law school. The a-holes like me became podcasters or went into private practice. Right, right. Look, I completely believe it. I think you have to be idealistic to be a public defender.

51:59But from a defendant's point of view. Yeah, you get more attention. Yeah, the chance of going to prison for 355 years, I wouldn't feel comfortable being case, you know, 199 on a public defender's, you know, caseload. And if I wanted to get a private defender, then it costs$200 ,000 to$300 ,000, which I didn't have. so it wasn't really much of a choice even if i had the money i probably would have made the same choice but i didn't even have the money so you know i didn't have the money so i didn't even really have a choice but uh of course i pled guilty and um eventually efrem pled guilty as well alex pled guilty as well and ralph did a plea guilty actually he went to court and he ended up losing oh yeah so he got ralph got sentenced to four years you know because he fought them yeah well at least it wasn't 355 years but um but he spent all like every penny he had he spent defending himself in court i think he spent like a million dollars plus oh geez yeah and um i got very very lucky i i you know went back to school i started working at a non-profit i you know tried to i was gonna say good move man as possible what are you what are you doing now sir are you still in the arms business.

53:14Actually, I work at an orphanage for no money. It was actually a food bank, but yes. I wasn't even that far off. Yeah. And it's like, uh, I go to church every day, even though I'm Jewish and I go to synagogue and also, yeah, like I sweep the streets outside the school as a hobby. You know, when, when you have that kind of, uh, when you have years of prison hanging over your head, you're going to do anything that you think even gives me a slight chance. So, you know, I told myself, there's no way I'm going to miss out years of my daughter's life for this. For Ephraim Diveroli of all people. No, thank you.

53:47Exactly. Exactly. This is the Jordan Harbinger Show with our guest, David Pakows. We'll be right back. If you like this episode of the show, I invite you to do what other smart and considerate listeners do, which is take a moment and support our amazing sponsors. All the deals, discount codes and ways to support the show are at jordanharbinger.com slash deals. You can also always search for any sponsor using the AI chatbot on the website at jordanharbinger.com slash AI. Thanks so much for supporting those who support the show. Now for the rest of my conversation with David Pakows. So how did they catch Efrem, man?

54:23I mean, he doesn't seem like a guy who learns from his mistakes. So I assume he's just like busy selling rockets and missiles and guns. Yeah. So Efrem, Efrem probably, if I had to guess, he probably would have gotten maybe a year in prison just because he was the ringleader. He pled guilty. So they also reduced his counts down to one, just like mine. But when he signed his plea agreement, the way it works, you plead guilty, you sign a plea agreement admitting to all your crimes and promise not to do any more crimes. And then the government promises, the prosecutors promise to give a positive recommendation to the judge saying this guy's been cooperative and he feels really bad and he's a changed person.

55:06He'd be a good citizen from now on. So, you know, go easy on him, judge. But part of that agreement is you can't commit any more crimes before your sentence because if you commit more crimes, you know, the judge isn't gonna, like, they can't tell the judge, hey, you know, go easy on him. Ephraim got four years. So what other crimes did this moron frickin' commit after he pleased? This is like Billy McFarland from Fyre Fest. Like, hey man, just stay out of trouble for one second. Cool, I'm gonna go scam people with fake mid-ball tickets. Be right back. Pretty much, yeah. It is pretty entertaining, at least for me.

55:37I'm sure not for Ephraim. But so what happened was they told him to stay out of the arms business while he was awaiting sentencing. But of course, he couldn't do that. Created some shell companies being run by like one of his new employees that he promised the world to who he replaced Dan with. Right. But of course, he's a control freak. So he couldn't let his employees do all the talking. when it got down to it he was trying to sell these um these magazines these high capacity magazines uh to some gun dealer in central florida in the orlando area and when it got real close to making this deal efram wanted to negotiate and so he insisted that his employee put him on the phone as a you know as a as a consultant right and he gets on the phone and the guy he's talking to who's a gun dealer in Central Florida, realizes who he is, and he Googles him, and he realizes, hey, you know, this guy is in a lot of trouble right now.

56:38What if he, I assume this is what he was thinking. I don't know for sure, but I assume he was thinking, what if he's trying to entrap me into doing something illegal? That's a reasonable assumption, actually. Yeah, a very, very reasonable assumption. This is pretty much how these things work. and so he calls up so he's nervous and he calls up the atf wow not wouldn't be my first call but okay i'd just be like yeah i don't know if i'd go to the feds but you know whatever you know the atf are the people who are responsible for licensing gun dealers oh so he's probably yeah look how good of a dealer i am i'm proactive exactly like i'm being you know clean cut here yeah you know i don't want to get in any trouble i want to make sure i'm not breaking any laws or regulations.

57:21So advise me what to do on this ATF. And the ATF is like, oh, that's so interesting that this guy wants to do business with you. Why don't you keep on talking to him? And why don't you introduce one of our undercover agents as your partner? And so the undercover agent gets on the phone with him and he says to Ephraim, you know, I'd love to do this deal with you, but I really, you know, I'm the kind of guy who really has to meet someone in person and shake their hand and look them in the eye before I could do a deal. Okay. Why don't you come up to Orlando and we'll shake on it and do this deal.

57:52And Ephraim's like, yeah, I totally understand. I'm like that kind of, I'm that kind of guy too, you know, so sure I'll be up there, you know, you know, this weekend, uh, you know, we'll shake on it and, you know, uh, do this deal. And so Ephraim goes up to Orlando, which breaks his, the conditions of his, of his, Oh, probation. Yeah. Or his bail or whatever. His bail. Exactly. And, you know, he was not allowed to leave the Miami-Dade County. And so he goes to Orlando, which is, it breaks the conditions. And he meets this undercover ATF agent and the agent tells him, Hey, you know, I just picked up this cool new HK handgun.

58:29It's the newest thing on the market. Check this out. And Ephraim's like, Oh, I heard about that. That's so cool. I've been wanting to try those out. Hey, give me that. Let's go to a range let's go shooting and and he like picks up the you know the atf hands him the gun he's like let's go shooting and then he tells the atf agent he's like what can i say you know once a gun runner always a gun runner am i right yikes and then right after that right right after that the atf agent slaps cuffs on him and he says you're under arrest you're a felon in possession of a firearm because he already pled guilty, which makes him officially a felon.

59:07And if you're a felon, if you're in possession of a firearm, you can get up to 10 years in prison. So they arrested him. They told the judge, hey, this guy's a flight risk because he already didn't respect the conditions of the bail he's on. So why should we give him bail for this? And the judge agreed. And so they kept him in county jail, actually, in central Florida for like a year. Oh, wow. While like Ralph's trial was getting worked out. And eventually, I think after a year, he got sentenced. He hired the best lawyers in Miami. He spent, I heard from somebody spent like$2 million on his lawyers over the course of like three years.

59:48Oh my God, that's insane. I mean, these guys were expensive. I mean, Roy Black's firm, and he's like one of the most famous lawyers in Miami. I think he doesn't even like talk to you unless you put down a million dollar retainer. Wow. Okay. Yeah, for real. And he got the best lawyers in Miami. I mean, he could have gotten 15 years total, five for the fraud charge and 10 for the gun charge. But he, his lawyers convinced the judge to give him a combined sentence of four years. Man, it's so classic, right? Like he can't help screwing people over, screws over the guy, gets the New York Times piece written.

1:00:22That's what exposes everything, gets him in trouble. Hey, you can't do this. Well, nobody's going to tell me what to do. there's no consequences that I'm going to ever face. And it's just like Shakespearean in that the gun is also his undoing at the end of the day, right? Yeah. It's straight out of a movie. The whole once a gun runner always, it's just like, you know, he's got his movie Hollywood line right at that critical point. It's like almost made for the screen. Yeah. It's like watching Below with Johnny Depp where they're like, man, I feel so bad. We have to arrest this guy. And he's like, where's my knife, right?

1:00:53It's like the same thing. Yeah. Do you think if you'd made all that money in that deal that you would have actually quit being an arms dealer or would you just keep going? I mean, in Law and Wall Street, we say golden handcuffs. You're like, I'm done after this. And then you're like, except I've got this sweet boat and this house in Nantucket and my wife likes sending the kids to the super private, expensive private schools. Maybe I'll work for a few more years. I mean, you're not going to quit if you made 15, 20, whatever million on a deal. You're just not going to. I would have to agree with you.

1:01:21I mean, my plan was always to quit. my plan was five to 10 million. That was my number. You know, like I thought above 5 million, I'm probably set for life as long as I don't spend ridiculous money. And, you know, 10 million, I'll be really set. And I could, you know, maybe use half a million and start jumpstart a music career. That was my dream. Because I'm a musician, I play guitar, I'm a singer, I write songs. And, you know, I realized that you need money to have any sort of promotion and to get out there. And And so my dream was I was going to make a few million dollars and use some of that money to jumpstart a music career.

1:01:59But in reality, when I think about it, I'm like, I don't know, man. You know, like if I had made$10 million and I had$50 million coming, if I just stuck out one more year, would I really not stick out one more year and make another$50 million? Yeah, I mean, and then once you make that$50 million, are you going to not stick another year and make another$100 million? You know, it's just like it never ends. So I have to say that in retrospect, I'm actually really happy with how things ended up going. I had a real kick in the ass, and it really, really showed me what was important in life and set me on a much better path, which I'm much happier on now.

1:02:37Do you mind if I ask how much you actually made as an arms dealer? It's embarrassing to say. Good. Then people won't do it. Come on. That's the point. Well, I mean, I would have made a lot if I hadn't been screwed over. But in the end, I actually only pulled out, and this is so embarrassing to say, but I only pulled out about$30 ,000 out of the whole thing. Oh, my God. You would have been better off working at Chipotle or something like that. I would have. I would have. And the reason for that was it wasn't that I didn't make any money. It was that Ephraim insisted on rolling the money I made into the next deal.

1:03:11So he was like, hey, I'm using my money to fund this. so why don't you know you're making money on this contract so why don't we use some of your money to fund this so he kept them he never let me pull the money out which should have been an obvious clue that he never really intended to pay me but uh he kept them running you know rolling the money into the next deal to the next deal to the next deal so by the time that he ended up screwing me that was like yeah no it makes sense i mean i wouldn't even be that embarrassed about it yeah you were literally like a kid. And also you were being taken advantage of by somebody who manipulated the governments of multiple countries.

1:03:48It's not like it was hardly you getting fleeced when you should know better. 2020 hindsight, of course, like, oh, he wanted me to do this. That was the first red flag. I don't know, man. I wouldn't be so hard on yourself. Well, I mean, I'm over it. 15 years, we'll do that. Yeah, of course. Look, what are you doing now? Because actually, I want to know what you're doing now and if any arms dealer skills overlap with it. But also, I think what you're doing now is awesome. Thank you. Thank you. It's actually an interesting story of how I got into my current business. Well, I'll give you the slightly longer version because I know what you're talking about, which I'll get to.

1:04:28But the first – so what happened was the way I got into my current business is I was under this actually led directly from that from the whole war dog story i was under house arrest i got seven months of house arrest which is a breeze i mean i have no complaints about that gosh even now and now in the days i'm basically under house arrest right now i got two little kids in doordash exactly that's fine sign me up yeah yeah it's a million times better than prison sure that's for sure uh so i was staying home for seven months and uh i was playing a lot of guitar and I really missed playing with the drummer because the drums give the music the energy.

1:05:06You know, you dance to a beat, but I obviously couldn't go to the studio because I couldn't leave my house and no drummer was going to, you know. I'm under house arrest. I can't make the meeting. Yeah. Okay, that's a valid excuse. And of course, no drummer, you know, I had a few friends who were drummers, but they weren't going to like pack up their entire drum set into a van and bring it over my apartment and there's barely any room in my apartment at the time for a drum set. And even if we did, it would wake up the entire neighborhood. So it wasn't exactly something I could do. So I bought a drum machine, which is like, for those who don't know, it's like an electronic device that is a tabletop thing.

1:05:41It has a bunch of buttons. Each button makes a different drum sound. You could tap the buttons to make a beat, and it plays it over and over in a loop. And then, you know, so I'd make beats, and I'd play my guitar to it. But every time, you know, you could make different beats on it. But every time I wanted to change the beat on the drum machine, like when you go from like verse to chorus, the beat changes, I'd have to stop playing my guitar, press a button on the machine, and go back to playing my guitar. Exactly. It interrupted the flow of the music. So I thought, man, I really need like a hands-free drum machine, a drum machine in the form of a guitar pedal, like, you know, something I could tap with my foot.

1:06:17So guitar pedals are a common device that guitarists use to create effects on their guitars. So when you change the sound of a guitar from clean to distorted, most of the time you're hitting a guitar pedal and it changes the sound. So I thought, I need to combine a drum machine and a guitar pedal. And I went online to look for it, and I couldn't find anything. I asked my musician friends, and they were like, never seen anything like that. But if you find it, let me know, because I want one too. That sounds super cool. And so I thought, nobody's making it. Everybody wants it. This is going to be my ticket to redemption here.

1:06:52And so it took me three years, but eventually I got a working prototype. It's called the Beat Buddy. This thing is, as Gizmodo says, a genius idea. Yeah. I love that line. I mean, yeah, you could die not on that one. Exactly. It's a pedal that you could press with your foot. It goes on the floor and it moves according to the beat. and when you tap it, it does like a drum fill. If you hold down the pedal, it does a transition. When you let go, it goes to the next part. So you can go from like verse to chorus back to different parts and you could also plug in, it also has a thing, you can plug in more buttons to have more capabilities.

1:07:34Oh, very cool. Like MIDI control and whatnot. Exactly. It's got full MIDI control. So yeah, so that was my first product. came out in 2014 and it became a very big success in the musical world. I've had some of my musical idols ended up buying it. It was super cool. Really? That's frigging cool. That must have felt great. Yeah, it was amazing. So one of my favorite bands that I grew up learning to play guitar was Alice in Chains. Oh, I love Alice in Chains too, man. Definitely. People are going to be like, what? Jordan likes Alice in Chains. Yeah, it's going to surprise a lot of people. Yeah. Yeah.

1:08:11So Mikey Nez, the bassist of Alice in Chains, came up to me at our second trade show in 2015. And he was like, oh, you make the Beat Buddy. And I'm like, yeah. And he's like, yeah, I just bought one two months ago. I've been writing all my new music with it. Wow. And I was like, dude, I learned to play guitar listening to your music. Yeah, that's super cool. It's so freaking cool. So cool. I guess you're much smarter than they made you look in the movie. Do you get that all the time? Well, thank you. I appreciate it. People have said that. I also get that I'm much more handsome than they portray me in the movie.

1:08:45I say I have way better hair. I'll leave that up for debate. Yeah. I like that line. Only Hollywood could give me a full head of hair. That's right. But yeah, thank you. I do appreciate that. I mean, you know, the movie, they changed a lot. I love the invention. I was actually talking about the other one that is going to change the world. You know, the guitar thing is cool, but this, stand back, everyone. Yeah, yeah, yeah. So this is what I actually am really excited about now. The reason I mentioned that was because that was my first invention. And since then, I've come out with six other products, musical products.

1:09:24I don't know if we have time to get into them, but just a very short one. This is the simplest one. It's a product that organizes your cables. It's called the cable. XLR cable winding. How does that not exist already? Yeah, that's amazing. I was playing some shows and I had like seven cables and it was taking me forever to wrap it around my arm. And I was like, I just need like a freaking cable, you know, a wheel and boom. That's one of those that's so, cause you go, how does, wait, that doesn't exist. Okay. And you make it and immediately everyone needs it. Who uses that? Exactly. So that's, that's our simple version.

1:09:56We also came out with the world's most advanced looper pedal for the musicians. They'll know what I'm talking about. A looper pedal. That's a, it's a common thing, but we came out with, it's like almost like a, like a digital audio workstation in a looper pedal. It's like a hybrid of a, of like pro tools or, or logic. We can link to the singular sound site in the show notes as well, but show me the Insta floss, man. That's where I'm like, where I don't want to floss my teeth again after this interview. The Insta floss, as you mentioned, is the first product that is not music related. I came up with this with my brother and we were eating mango and, you know, mango gets all those fibers stuck in your teeth.

1:10:34And so we were flossing our teeth afterwards. And we're like, man, this is such a pain in the ass. I wish we had a machine that could floss our teeth for us. Yeah, no kidding. Because everybody hates to floss. So we started batting around ideas. And eventually, we came up with this. It's called the InstaFloss. And it's like a improved version of a Waterpik water flosser. The difference between this and a Waterpik, a Waterpik is a single jet of water that you have to trace your gum line, both the top and the bottom and the inside, which is very difficult to do from behind your teeth. And you also have to keep it at an exact 90 degree angle to the tooth.

1:11:09So what we did was we created this like H-shaped manifold, and it has 12 jets of water instead of one, and they shoot from the sides. So all you have to do is bite, and this turns as well. So all you have to do is bite in over here, and you're done. In 10 seconds, you just sweep it across. I know people are like, wait, is Jordan kidding about this? First of all, you have to send me one of those. Of course. I will absolutely use it every single day because I floss. I hate doing it. I do it every night. I try to do it in the morning, but I'm too effing lazy because I just woke up. It just looks way better and way more efficient.

1:11:45I want one for my kid. You probably don't have kid sizes yet. Not yet, but we are going to make that. I'm thinking like, oh, what if we don't need to throw plastic string in the toilet, which you're not supposed to do, or in the garbage anymore every night and drool on my dirty fingers. Of course, I wash my hands, but I'm still shoving my fingers in my mouth, right? Like, it's the whole thing. Instead, I have this device that actually does it even better and works in 10 seconds instead of five minutes or however long it takes me to floss while I'm watching YouTube. Exactly. Really good. I'm definitely, I'm not kidding.

1:12:15I'm emailing you my mailing address after this because I want one of those things. Yeah, please do. I'd be happy to send you one. Thank you very much. Incredible story. Thanks so much for coming on the show, man. I hope we sell enough InstaFloss to have made this worth your time. I think we probably will. I hope so too. I hope so too. Yeah, thank you. Yeah, anyone who wants to see it can go to instafloss.com. It's like Instagram, but floss, instafloss.com. And you can see, we have a video showing how it works and you could also order it. We're actually in the middle of producing it right now, the first production run.

1:12:46And we are going to deliver the first units to customers in June. David, thank you very much, man. really appreciate it. My pleasure. My pleasure. Thank you. I've got some thoughts on this episode, but before we get into that, here's a preview of my conversation with an expert who spent more than two decades rooting out the counterfeit goods and services that fuel a trillion dollar industry that only benefits petty crooks and organized crime networks. It's not just handbags or designer clothes. Alcohol, makeup, even cancer medication are just the tip of the iceberg of what gets counterfeited. Here's a quick listen.

1:13:21Anything and everything is counterfeit, from automobile parts, cancer medication, alcohol, kids' cough syrup. I mean, anything that somebody can fake to make money, they're going to do it. I mean, we found human feces, rat feces, and carcinogens in some of the counterfeit makeup. It's really, really scary. I mean, people can actually die or really get harmed over this stuff. The general public thinks, oh, it's poor people just trying to get by, trying to make a living. But somewhere down the chain, a criminal organization is involved in that counterfeit item. The sales of counterfeit goods is actually listed in Al Qaeda's training manual on a quick and easy way to raise revenue for operational purposes.

1:13:58Because why? It's a crime that's completely worth doing for them where they can make huge amounts of money. And then let's look at the human impact. Where are these goods made? Chinese kids in these factories in the middle of nowhere. There was an investigator online who said he was about to do a raid with the police and he heard children's music and he thought, oh wow they have child care for their workers and then when they came in they found a bunch of kids at sewing machines handcuffed to the machines and he said the smell was unbearable because they weren't allowed to go to the bathroom the common perception oh it's poor people just trying to get by or trying to make a living it's really not the case i mean this stuff's tied to organized crime criminal cartels i mean there's a whole big picture behind this stuff you will see law enforcement do seizures where they're pulling three million cash out of someone's house and that's all the proceeds from counterfeit goods.

1:14:46When you're buying that item, you are contributing to that child labor. You're contributing to that terrorist organization. That is where the money is going, undoubtedly. Even if you don't care that the Gucci bag you got for just 20 bucks can't be spotted as a knockoff by the snootiest in your circle of friends, hear why the trillion-dollar counterfeiting industry should concern you. Check out episode 308 of The Jordan Harbinger Show with Chris Buckner. A lot here, but I don't want to make the episode any longer than two parts with my giant clothes. This kind of business is a feast or famine sales cycle because you can bid on 100 contracts, you can lose all of them, and you get one that's like$100 million and that's your income for the whole year.

1:15:27Of course, of course, you're only getting a percentage of that. And it's like any sales cycle for any big B2B company, although they made way less money doing this than they would have if they were not cutting corners everywhere. As you probably heard or picked out from the show, the Albanian ammo turned out to be Chinese. Albania is a crazy place, man. I've been there. Really great people, cool food, everything. But they had a dictator named Enver Hoja and he pulled out of the Soviet Union or at least the agreement with the Soviet Union. And he was convinced that the West was going to invade and the Soviets were going to invade.

1:15:59So he built something like 800 ,000 bunkers throughout the country. And you can still see them. They're filled with garbage and water and dirt, and they'll be in the middle of a farm field and along every road, and they cost as much as an apartment to build because they were really, really fortified and had a communication system in them and everything. Absolutely wild. These bunkers are, again, they're still there. There's gun emplacements and places where you can shoot out of. He expected total war, right? Every man, woman, and probably child in the country to be fighting the Soviets and or the West at the same time, NATO at the same time.

1:16:31So just a really interesting factoid about, well, unchecked kooky power in a dictatorship like Albania. And that's where they had gotten that ammunition. And it turned out to be from China. And oops, the consequences thereof. I love stories like this. If you guys know anyone I should talk to who's the subject of a book or wrote a book or a subject of a movie, then definitely suggest it to me, especially if you're able to introduce me to them. Big part of the show is fan guest suggestions. I always appreciate it. And I hope you enjoyed this conversation as much as I enjoyed it as well. I thought it was a trip.

1:17:03All things David Pakhouse will be in the show notes at jordanharbinger.com or ask the AI chatbot. Transcripts in the show notes, advertisers, deals, discount codes, ways to support the show, all at jordanharbinger.com slash deals. Please consider supporting those who support the show. I'm at jordanharbinger on Twitter and Instagram. You can also connect with me on LinkedIn. And speaking of connection, the best things that have ever happened to me in my life and business have come through my network. And I'm teaching you how to build the same type of network for yourself in our six-minute networking course.

1:17:33It's 100 % free. It's not schmoozy. It's not gross. It's free on the Thinkific platform at jordanharbinger.com slash course. It really just takes a few minutes a day. I spend like two minutes a day doing this stuff. Maybe not even that. I wish I knew this stuff 20 years ago. It's changed my entire life, my business, everything. Dig that well before you get thirsty, folks. Build those relationships before you need them. jordanharbinger.com slash course. This show is created in association with podcast one. My team is Jen Harbinger, Jace Sanderson, Robert Fogerty, Millie Ocampo, Ian Baird, and Gabriel Mizrahi.

1:18:05Remember, we rise by lifting others. The fee for this show is you share it with friends when you find something useful or interesting. The greatest compliment you can really give us is to share the show with people you care about. So if you know somebody who'd be interested in a story like this, loved the movie War Dogs, read the book, aspiring arms dealer, maybe share this episode with them. In the meantime, I hope you apply what you hear on the show so you can live what you learn. And we'll see you next time.

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1:19:35Get 20 % off by going to vitalproteins.com and entering promo code Jordan at checkout. This episode is sponsored in part by Conspirituality Podcast. You know how I'm always talking about critical thinking and spotting manipulation? Well, there's a podcast that's all about dismantling new age cults, wellness grifters, and conspiracy mad yogis, basically the wild overlap of spirituality and misinformation. It's called the Conspiratuality Podcast. The hosts, a journalist, cult researcher, and a philosophical skeptic, dive deep into how this stuff spreads, from Project 2025 and the Heritage Foundation's dystopian vision of the future to how former leftists get pulled into far-right conspiracies.

1:20:12An interesting episode to check out is called Speaking Truth to Goop, where Jen Gunter breaks down the pseudoscience behind the wellness industry in a way that is super entertaining and eye-opening. It's sharp, funny, and makes you a lot harder to fool, which if you listen to the show, you know I'm all about that. From exploring cults to analyzing our cultural and political landscape, the Conspirituality Podcast will help you stay informed against misinformation and resist fear tactics. Find Conspirituality on Apple Podcasts, Spotify, and wherever you get your podcasts.