AEY, Inc., the weapons company headed by 22-year-old Efraim E. Diveroli, had their $300 million weapons contract suspended by the federal government on Friday.
The federal government is investigating Diveroli, citing that Diveroli may have violated U.S. law by selling archaic Chinese-made ammunition to supply Afghan soldiers.
The government is also conducting a criminal investigation into the allegations that AEY Inc. misrepresented what they would provide the Afghan forces.
AEY, based in Miami, FL, said in their contract that it would supply ammunition manufactured in Hungary. However, an investigation by the Army found most of the bullets were made in China, which is a violation of the contract.
U.S. regulations ban companies from purchasing weapons or ammunition from a Chinese military company either directly or indirectly, according to U.S. military officials.
Pictures show that the ammunition was delivered in tattered cardboard boxes, wrapped in plastic. They also showed that the ammunition was corroded and made in China between 1962 and 1974.
Diveroli faces a fine and up to five years in prison. In addition, if AEY is found guilty of violating their contract, the company will be permanently barred from doing business with the U.S. government.
The House Oversight Committee plans to hold a hearing into the matter on April 17.
AEY Inc. was founded in 1999 by Michael Diveroli, Efram's father. Michael Diveroli now operates a police supply company down the street from AEY's office.
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