BuzzFeed
The Sheraton hotel in Sofia, Bulgaria, is a neoclassical colossus built during the Soviet era. The rear end of the building butts up on a 4th-century church and mossy Roman ruins, and it dwarfs the country’s adjoining presidential palace. Inside the hotel, a dark-eyed woman in a pantsuit invites guests to the erotic nightclub in the hotel basement. Skip the strip club, and there’s a hotel bar with a spacious lounge, where carpeting absorbs sound, and marble pillars reflect the light of the massive crystal chandeliers.
It is here that a short, heavyset, American arms dealer visiting from Fresno, Calif., held his business meetings. Bulgarian weapons dealers said that this man — 53-year-old Ara Dolarian — was likable and garrulous. He was often there on behalf of the U.S. government or its allies, shopping for weapons destined for America’s most difficult and dangerous foreign-policy tangles, such as Iraq and Afghanistan.
From 2006 until last year, Dolarian managed to get contracts affiliated with the U.S. government that ranged from less than $20,000 to $14 million.
One $588,000 Dolarian deal last year was for an operation still shrouded in secrecy. American commandos wanted dozens of Kalashnikov rifles, a handful of the massive, Soviet bloc machine guns nicknamed Dushkas to mount on trucks, some rocket-propelled grenade launchers, and hundreds of thousands of rounds of ammunition — a standard package for a foreign quick-reaction force that the U.S. could train and deploy, according to special forces veterans who perused the shopping list for BuzzFeed.
It isn’t clear what group the U.S. intended to arm with this contract, parts of which are apparently classified, though the timing fit with secret U.S. training programs for Syrian rebel forces. Intelligence agencies and the military declined to comment.
They also declined to comment on whether they knew certain pertinent facts about Dolarian: When his company landed the subcontract to buy these weapons, he was the subject of a federal criminal grand jury investigation for possibly violating U.S. arms-dealing laws and had been found by a civil court in California to have defrauded investors there.
Dolarian’s tale highlights how the U.S. relies on small but important defense-contracting bottom fish to arm some of the world’s most violent and unstable military forces.
The U.S. is famously the largest arms exporter in the world. Less well-known is that America also purchases massive amounts of foreign-made weapons, most of them manufactured in the former Soviet bloc. In an effort to build up and train friendly security services, the U.S. saturates some the most violent regions of the world with these arms but has little control over who ultimately gets them.
The Pentagon or U.S. intelligence agencies often issue contracts themselves for these weapons. But other times, American tax dollars go through a proxy, such as an Afghan government agency, which issues the contract but which is heavily funded and guided by the U.S. Dolarian was involved in both types of contracts.
While most coverage of the weapons trade tracks the multibillion-dollar deals in fighter jets, strategic missiles, or radar systems, most killing in modern wars is done with cheap rifles, machine guns, mortars, and other small arms.
Over the last decade, the U.S. has sent more than 700,000 weapons — the vast majority foreign-made small arms — to Afghanistan, where President Barack Obama has staked his strategy on training and arming the army and police. Likewise, in Iraq after the 2003 invasion, the U.S. disbanded the security forces only to rebuild and rearm new ones for eight years, sending over a million weapons by some estimates. The majority of these were Russian-designed small arms.
These are the types of arms that Dolarian, a man the state of California banned from selling certain financial securities, was given U.S. tax dollars to purchase.
This line of work has seen its share of scandal. In 2007, the Pentagon awarded a $300 million contract for Warsaw Pact ammunition to a company run by a 21-year-old Miami man, Efraim Diveroli, who had limited experience in the arms trade. The story of Diveroli, later convicted of fraud after his company sent decades-old, flawed ammunition to Afghanistan, is set to be made into Hollywood movie called Arms and the Dudes. Since that fiasco, the government has tried to use well-known, established defense contractors to equip Afghanistan’s forces, and procure this type of weaponry. But as the Dolarian tale shows, it doesn’t always work out that way.
Details about Dolarian’s career as an arms dealer were culled from court records, interviews, and documents. In response to a detailed letter laying out the contents of this article, Dolarian’s lawyer, Myron Smith, wrote, “I do not intend to provide a point by point response. Needless to say, I believe some of the information is inaccurate and some is false.”
Dolarian himself declined repeated requests for an interview. But in one brief phone conversation he made it clear that he sees the weapons business as nothing special: “The arms trade,” he said, “is no different than any commodity.”
Indeed, before he dealt in arms, Dolarian dealt in another commodity: pigs.
In the late 1990s and early 2000s, Dolarian was a financier based in Fresno, where he arranged investments for a variety of ventures. In 2001, a livestock business he had invested in started to founder. The company was supposed to supply 450 young pigs a week to a Northern California slaughterhouse catering to the Chinese-American community. But the company, run by a farmer who had agreed to provide the pigs, often failed to fulfill the weekly order. Dolarian’s company at the time, Dolarian Business Group, took over the contract, buying and delivering the pigs, according to court records.
“At the start of the contract, the quality of the pigs shipped was good,” a California state appellate judge would write years later, “but quality began to decline. Many of the pigs were overweight and blemished. Some arrived dead; others were condemned upon arrival as unfit for human consumption.”
In 2001 and 2002 in a separate pig-processing effort, according to court records, Dolarian encouraged a dentist named Dennis Shamlian to invest $190,000 in a company he controlled, Golden State Meat Products. Shamlian’s then-73- year-old mother, Roxie Shamlian, pulled $100,000 out of her savings account to invest with Dolarian.
The two didn’t get paid back, and by 2004 the case had worked its way through a California state civil court in Fresno, where a superior court judge ruled that Dolarian had committed “fraud and deceit upon his investors and creditors.”
Reached for a brief interview in July, Smith, Dolarian’s lawyer, said that there was no fraud and that Dolarian did not pocket money in the deal. He said it was just an honest investment that went bad and that borrowers who owed Dolarian money didn’t pay it back.
In his letter to BuzzFeed, Smith noted that the pig deals happened more than 10 years ago and said, “I believe that the purpose of using this old information is to cast my clients in a false light and cause the reader of the article to conclude that my clients are ‘bad’ people.”
In 2005, the state of California ordered Dolarian to “desist and refrain” from selling certain “unqualified” financial securities. The state found that “Dolarian and/or Dolarian Business Group” had not informed investors that Dolarian was the chief financial officer of one of the companies investors had loaned money to. The state also found that investors had not been paid what they were promised.
Dolarian’s lawyer wrote that the state’s order came “two years after Business Group ceased ANY business.”
It was in the mid-2000s, when the U.S. occupation of Iraq was bleeding billions, that Dolarian saw how lucrative government contracting could be, according to a former business associate of his who spoke on condition of anonymity. Under President George W. Bush, the Coalition Provisional Authority, which then oversaw Iraq, was issuing huge contracts.
“They were throwing money at anyone,” said the former associate of Dolarian, who watched his transformation.
The first arms deal Dolarian’s company did directly with the U.S. government came in 2006 with the Air Force, contracting records show. He delivered 30,000 rounds of AK-47 ammunition, plus 100,000 rounds of blank ammunition, presumably for training. The total price was just $18,000.
And then he solicited business around the world. The Dolarian name showed up bidding for a mortar contract in the Philippines, according to The Philippine Star. A 2008 WikiLeaks cable makes a reference to Dolarian pursuing business as part of a trade delegation to South Sudan.
Dolarian quipped recently that he was self-taught in the arms business, joking that there weren’t apprenticeships or vocational schools. “I don't believe those types of programs are available in the industry,” he said, wryly.
The former associate of his said, “He’s a really great talker. If you had one shot to get a deal done, and you could control him, you could send Dolarian. The guy knows how to get it done: when to pause; when not to pause; when to be quiet.”
In early 2010, according to the former Dolarian associate, money was tight. But then, one Thursday morning in March, Dolarian got an email. “Good morning,” said the email. “[Do] you have PKMs available in Bulgaria?” A PKM is a heavy-duty, Russian-style machine gun.
The email was from a major U.S. private security company called SOC, LLC, looking for Soviet bloc arms it could use in Iraq and Afghanistan to arm its guards. Like the more famous company Blackwater, SOC sent highly trained veteran soldiers to protect State Department officials around the world. It had a piece of a giant State Department contract called Worldwide Personal Protective Services. On top of that, two sources say, SOC had contracts in Afghanistan, where it protected CIA officers on undercover assignments, operating as bodyguards for the spies. SOC declined to comment for this story.
"These goods are now ready for dispatch," Dolarian emailed back, "pending licensing from both the United States and the Bulgaria. (sic)"
That email exchange, legal records show, blossomed into a contract with SOC worth $1,063,328 for guns from Bulgaria, to be shipped to Iraq and Afghanistan. SOC’s contracts were with the U.S. government; Dolarian was a subcontractor. Records from a case in U.S. district court in Fresno say he got a deposit of $531,664. The deal included at least a thousand AK-47s and 75 heavy machine guns, and over a million rounds of ammunition. In transactions such as this one, Dolarian, like most weapons dealers, would buy the weapons as inexpensively as possible to maximize his profit.
And these purchases of firepower were laid out on a banal invoice, as if it were the most normal thing in the world for one American company to buy from another American company enough Warsaw Pact weapons to arm an infantry battalion.
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Then things got even better for Dolarian’s business, with a far larger deal to ship guns to Afghanistan’s government. In August 2010, documents show, Dolarian Capital became a subcontractor to an arms dealing company called Turi Defense Group, to ship $14 million worth of weapons to the Afghanistan National Directorate of Security, the intelligence service that was heavily mentored and funded by the CIA.
Turi’s contract was with the NDS, but one source with knowledge of the deal said that the funding, as with much of Afghanistan’s budget, came from the U.S. And the U.S. embassy in Bulgaria would end up facilitating the arms purchase. Turi Defense declined to comment, as did the NDS and the CIA.
On this deal, Dolarian’s subcontract called for him to procure weapons including rocket-propelled grenades and launchers, ammunition, pistols, heavy machine guns, and sniper rifles, and it put him at the heart of President Obama’s Afghanistan strategy: a surge that would build up Afghan security forces to fight the Taliban. He had graduated, in just a decade, from selling pigs to selling guns.
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Several months after signing the Afghan deal, Dolarian Capital spent $1.2 million to buy a 3,000-square-foot home for Dolarian and his family, according to corporate records. “It is necessary,” according to a resolution of the board, “for the Corporation to provide to the President of Dolarian Capital Inc. a residence that provides a high level of security to the President and his family.” Dolarian himself signed the resolution to buy the estate.
Dolarian’s lawyer, in his letter to BuzzFeed, objected to an “implication” that “my client improperly took money from the Turi contract and used it personally. Such implication is actionable.”
In any event, to start getting the weapons, Dolarian headed out to Bulgaria.
The tour books call the expansive farmland around the ancient, central Bulgarian town of Kazanlak the Valley of Roses. Locals call it, more accurately, the Valley of Guns and Roses. Roses, because for centuries farmers have cultivated the fragrant pink damask rose here, to press it into rose oil. Guns, because this is where the arms manufacturer called Arsenal 2000 is based. It’s been an institution here since the days when the Russians helped break the back of the Ottoman Empire in the 1870s.
Spread over 4 square miles, Arsenal’s factory grounds are carefully guarded. Inside, the roads are shaded with trees that give it the feeling of a college campus. A 25-foot stone statue of a bearded Friedrich Engels, in the socialist realism style, still towers near the entrance.
Inside a company museum there’s a world map studded with pins to show where Arsenal’s guns have been sold — every continent except Antarctica, dozens of countries.
And in the marble showroom the goods are all on display for buyers who come from around the world to do deals. There are submachine guns called Shipkas, and huge ZU 23 fully automatic anti-aircraft guns that fire shells as big as dildos. Mortars for infantrymen, and thermobaric explosives that can kill anyone hiding in enclosed spaces, just from the blast waves. There are shoulder-mounted, rocket-propelled grenade launchers, and even grenade launchers with revolving barrels, that look like some kind of space-age commando weapon.
But what Arsenal is best known for is its production of the ubiquitous Kalashnikov rifle, the legendary AK. It has manufactured 2 million of these assault rifles. And they are some of the most rugged, long-lasting, finely machined AKs ever deployed, arms dealers say. Guns & Ammo magazine this January put one of the newer Arsenal models — built for the U.S. civilian market — on the cover, with the words “The Best AK Around?”
“Bulgaria, after Russia, has the best quality of AK 47,” said one veteran American arms dealer, “but also the most expensive.”
Dolarian was one of Arsenal’s recent customers. For the Afghan intelligence service, he ordered 500 PKMs. Hristo Ibouchev, Arsenal’s executive director, remembered Dolarian well: “Likable guy. He could pass for a very good businessman.”
“He knows how to talk,” another Bulgarian arms dealer, sitting in the Sheraton lounge, said admiringly.
Ibouchev, who attended an elite MBA program in New York, Paris, and London, refers to his guns and ammunition as “goods.” He said Dolarian made a down payment and was supposed to pay the rest. “As soon as we finished manufacturing, we said, ‘Sir, we are ready. Send the rest of your money and you can take your goods!'”
And that’s where things went bad, because, Ibouchev said, Dolarian didn’t send the rest of the money.