Fresno native Ara Dolarian goes from artist to arms dealer
John Ellis and Pablo Lopez, The Fresno Bee
By John Ellis and Pablo Lopez, The Fresno Bee
McClatchy-Tribune Information Services
Aug. 17--Paul Zylka was being a good neighbor when he introduced himself to the new tenants in the adjacent northwest Fresno office. When he asked about their business, the reply was "importer-exporters."
It wasn't until a military-grade ammunition shipment showed up in the West Shaw Avenue office complex parking lot that Zylka realized just what Dolarian Capital was importing and exporting.
His neighbors, it turned out, were international arms dealers.
"I thought they were doing tea," Zylka said. "I was freaked out, totally freaked out, by the entire situation."
That day, Zylka started trying to learn more about his office neighbor. But he never discovered that much about the company and its owner, Fresno native Ara Dolarian, 53.
For years, it seems that Dolarian operated below the radar in Fresno. Police Chief Jerry Dyer, for instance, said this month that he never had heard of Dolarian. Others, specifically in north Fresno, know of Dolarian and his chosen profession, though it didn't seem to raise eyebrows or end up in the rumor mill.
That changed late last month when the website Buzzfeed ran a lengthy profile on Dolarian and the world of international arms dealing. The story detailed several Dolarian weapons and ammunition deals, specifically focusing on his dealings with a Bulgarian arms-manufacturing operation.
Now, a Bee investigation has traced Dolarian's life from aspiring artist to struggling financier to international arms dealer with a million-dollar home and a company website that advertises Soviet T-72 tanks, rocket launchers, assault and infantry rifles, rocket-propelled grenades and used Russian pistols.
Court records state Dolarian has been dealing arms for most likely a decade. His company found enough success to buy a $165,000Mercedes Benz S63 sedan -- a car Dolarian wouldn't let anybody else drive, one of his associates says in a federal court deposition -- and the $1.2 million home in northwest Fresno.
"Arms dealing can be very lucrative, depending on how it is structured," , a national security consultant and senior fellow at the International Assessment and Strategy Center, said in an email interview.
Dolarian's attorney, Myron Smith, said last week that Dolarian was traveling out of the country and couldn't be reached for comment, but was due back Thursday. Smith didn't return messages left Thursday.
Smith said in an interview this month "the deals that (Dolarian) did were profitable. He did deals. The company made money."
There have been challenges, too. Dolarian has sued -- and been sued -- over arms deals allegedly gone bad. One of those cases still is pending in U.S. District Court in Fresno.
The executive director of a Bulgarian arms manufacturing company told Buzzfeed that he no longer will deal with Dolarian.
"I don't speak to him," Hristo Ibouchev, executive director of the arms manufacturer Arsenal 2000, told Buzzfeed. "He has been very unprofessional. The type of person we try to avoid."
Farah wrote that arms dealing "is a fairly vicious and ruthless world ... it can be a very risky business, with betrayal often at hand."
Dolarian also is under federal criminal investigation for violating arms trafficking laws, according to court documents and federal law enforcement sources. The investigation is ongoing. No charges have been filed.
The risk can go beyond financial and legal issues. "Moving in on other people's turf is a good way to get killed," Farah said.
It's all a long way from Dolarian's beginnings as a Fresno kid who grew up with a peace-activist mother and a father who was both an artist and educator. "Little Ara" is named after his father, who was at one time chairman of the Art Department at California State University, Fresno.
The elder Dolarian died in May 1999 at age 70. Rose Dolarian -- wife of the elder Dolarian and Ara's mother -- once served as president of the Fresno chapter of the Women's International League for Peace and Freedom.
At the height of the Vietnam War, Rose Dolarian, now 79, was a peace activist alongside well-known Fresno community activist Ellie Bluestein.
"I don't think his mother would be too happy about that," Bluestein said of Ara Dolarian's profession. (Ironically, court documents indicate Rose Dolarian was a Dolarian Capital board member when it was cutting weapons deals.)
Ara Dolarian initially followed his father into the art world. He was a sculptor who one summer studied at the prestigious Skowhegan School of Painting and Sculpture in Maine and whose work with steel and other metals was featured at Sacramento State, Fresno State and the California State Fair in the 1980s.
"I have tried other things, but this is all that interests me," Dolarian, then 23, said in a 1984 story in The Bee. "I don't want to 'be an artist.' I just want to make sculptures."
One of his big influences was David Bottini, a Bay Area sculptor who taught at Fresno State in the 1980s and 1990s and now lives in San Jose.
"He was a friendly, jovial guy and decent artist," Bottini said of Dolarian in an telephone interview.
Like Bluestein, Bottini didn't know Dolarian had become an arms dealer, but said it didn't surprise him. As an artist, Dolarian went against the grain, choosing to shy away from conceptual art, which was in vogue at the time.
"He was always willing to take a risk," said Bottini, 69.
At some point, Dolarian gave up sculpting.
"It's hard to make a living as an artist," Bottini said. "If you create something outstanding, there's little cultural support in Fresno, because it's too rural, too provincial. Not that many people would appreciate it, like they would in a big city like San Francisco."
Dolarian eventually became a financier. Along with the new occupation came a string of legal entanglements, including a pig deal in the early 2000s.
Selling 'junk pigs'
The pig deal dates to May 2000, when Iowa-based Mid Prairie Products agreed to supply Modesto-based Yosemite Meat and Locker Service up to 450 high-quality roaster pigs per week for five years.
In court documents, Yosemite Meat says that it paid Mid Prairie$234,000 "for the purpose of further developing Mid Prairie's herd and assuring a sufficient supply of roaster pigs."
But in February 2001, a financially strapped Mid Prairie turned over the Yosemite Meat contract to Dolarian Business Group, which purchased pigs to add to the Mid Prairie herd and supply the Yosemite Meat contract, the documents state.
Still, Mid Prairie could only deliver less than 20% of the promised pigs.
"At the start of the contract, the quality of the pigs shipped was good, but quality began to decline," the documents say. "Many of the pigs were overweight and blemished. Some arrived dead; others were condemned upon arrival as unfit for human consumption."
In a meeting that year, Dolarian assured Yosemite Meat officials that he had purchased pigs at auction to supply the contract.
Auction pigs are lower-quality pigs, known in the business as "junk pigs." Because the junk pigs were unacceptable, Yosemite Meat rescinded the contract in May 2001 and demanded return of most of its money.
Dolarian and Mid Prairie refused to pay. Soon, Mid Prairie filed for bankruptcy. After Yosemite Meat and Mid Prairie settled in bankruptcy court, Yosemite Meat sued Dolarian in Stanislaus County Superior Court, which found that Mid Prairie had breached its contract with Yosemite Meat and had legally given the Yosemite Meat contract to Dolarian, making Dolarian liable for $185,706. He appealed the judgment and lost in the 5th District Court of Appeal in Fresno. It's unclear whether Dolarian paid the judgment.
More deals gone bad
In another court case, Dolarian in 2001 offered friends and acquaintances opportunities to invest in several ventures, including his Golden State Meat Products Inc., which also is known as Golden State Products Inc., according to court records.
Dolarian didn't repay his investors as promised, Judge Stephen Kane ruled in a Fresno County Superior Court civil case. Kane, who now sits on the 5th District Court of Appeal, ruled that Dolarian "made representations that were false and misleading."
That included Dolarian saying investors' money was protected by collateral, Dolarian Business Group had zero debt and that the projected sales were predicted to be in excess of $50 million.
In fact, Dolarian Business Group was taking investors' money when its corporate status had been suspended by the California Tax Board 2001, Kane said.
The final judgment was made in March 2006. Since then, Dolarian has repaid only some of the money, said Clovis attorney Robert Bergstrom, who represents one of the victims in the case.
"I don't think he doesn't want to pay his debt," Bergstrom said this month. "I think he is unable to pay it."
Bergstrom said he has met Dolarian in court and finds him to be friendly and cordial. He said Dolarian is a businessman who "is trying to succeed" but like many others, he has taken risks that hurt him financially.
In court papers, Dolarian's attorney Smith disputed that his client committed fraud.
In still another lawsuit, Dolarian owes an investor from a failed scheme more than a decade ago.
Gary Dunlap said in his Fresno County Superior Court complaint that he loaned Dolarian $210,000 to help him with a business venture. Dolarian promised to pay 20% per annum and promised to return his money on seven-day demand, court records say. When Dunlap didn't didn't get his money back, he sued Dolarian for breach of contract in 2002.
In July 2003, Judge Donald S. Black ordered Dolarian to pay Dunlap $242,204. Court records say that as of July this year, Dolarian hadn't paid the judgment.
By 2005, the state Department of Corporations barred Dolarian and Dolarian Business Group from selling securities in California. By that time, Dolarian already had formed Dolarian Capital.
New venture: arms
Just when Dolarian Capital got into the arms business is unclear.
A Dolarian deposition in a federal lawsuit indicates it was in 2007, the same year the company got out of the financing business.
But in a deposition within Dunlap's lawsuit, Dolarian says he had been selling military weapons before June 2005, court records show.
"I don't think you understand what I do," Dolarian tells Dunlap's attorney, Rodney Levin, in the June 17, 2005, deposition.
"I get a contract, a Department of Defense award for finished goods," Dolarian says. "Like, for example, yesterday a client came to us for -- to finance 15,591 AK-47s. We will buy and sell those AK-47s for the client under the award with the Department of Defense to generate a revenue."
When Levin asks which government Dolarian is talking about, Dolarian says: "United States."
It was a deal that was headed south that convinced Dolarian to move from financing businesses to brokering arms deals.
At the time, one of Dolarian's clients was a Sacramento firm that had a federal government contract to retrofit vehicles into mobile command centers. But a dispute arose and the company was unable to complete the contract. Dolarian stepped in and finished it.
A deposition Dolarian gave in a 2011 federal lawsuit involving Dolarian Capital shows that there was no formal training that prepared him for what was ahead.
"What training did you have in 2007 to prepare you for the arms brokering business?" an attorney asks Dolarian.
"Since there is no school, none," Dolarian replies.
"Did you apprentice with anybody?"
"I don't believe those types of programs are available in the industry."
"Did you attend any seminar or instructional program?"
"On how to be in the arms trade?"
"No. Good idea, but no."
"So is it fair to say you're self-taught?"
"Fair to say."
But Farah -- the national security consultant, who also co-authored a book on famed Russian arms dealer Viktor Bout -- said there are some necessities to enter the arms trade: connections and, usually, cash.
It also appears that Dolarian's entry into the arms-dealing world couldn't have come at a more opportune time -- right when the U.S. was fighting wars in Iraq and Afghanistan
Smith, Dolarian's attorney, said in an interview that he doesn't know how many deals Dolarian has cut, but said the arms industry was in overdrive during the height of the Iraq and Afghanistan conflicts.
As Iraq wound down, so did the amount of business, Smith said. Now, it is declining even more as Afghanistan follows suit.
Smith said Dolarian has done both direct government contracting and also acted as a supplier to others that had government contracts.
Dolarian Capital, he said, has the required licenses and approvals from the federal Department of Justice, the state Department of Justice and the U.S. State Department to deal arms. The State Department license, Smith said, was given its annual renewal in June.
Dolarian's arms dealing is, Smith said, "to the best of my knowledge, 100% legal."
The way Smith sees it, Dolarian is "small potatoes" in the arms dealer world. Farah, the national security consultant, doesn't agree.
"I have not heard of Dolarian, but if he is handling deals worth hundreds of thousands or millions of dollars and traveling abroad, he is not mom and pop," Farah said in an email. "He is in the big leagues."
To move past the small retail level, Farah said, an arms dealer has to have "contacts in the market and some protection. ... Dolarian appears to have had significant U.S. protection, so he was likely dealing in areas where he had U.S.-provided contacts for his purchases."
Setting up shop
At some point after getting into the arms business, Dolarian moved into the nondescript office complex on Shaw Avenue, just a short distance west of Blackstone Avenue.
Zylka, the neighboring tenant, noticed that a fenced area inside the Dolarian office soon appeared. Then a gun safe. The walls were adorned with giant maps of different parts of the world. Television sets were everywhere.
To Zylka, it seemed like the people inside just sat around a lot.
Then, about six months after Dolarian Capital moved in, the military-grade ammo shipment showed up.
When Zylka inquired about the shipment, people inside the Dolarian Capital offices told him it was mistakenly delivered there instead of another location. It would be gone by the next day, they told Zylka. And it was.
Not long after, another 150 cases of ammunition showed up, and the Dolarian workers lugged them into the office.
"It was kind of a surreal thing," Zylka said. "You felt like you were in the middle of 'Breaking Bad.' "
Then one day, Dolarian Capital was gone.
"When they left," Zylka said, "they just walked out the door."
But Dolarian wasn't out of business. Dolarian Capital is still in business, Smith said. The company's website advertises guns, ammunition, mortars and rocket launchers, among other items.
The business address, according to state records, is an office building farther west on Shaw Avenue, between Palm and Fruit avenues. Smith's office is in that building. The company's website lists a mailing address on West Avenue north of Ashlan Avenue, a small office complex. Two tenants there had never heard of Dolarian Capital.
Over the years, Dolarian has closed several arms deals, Smith said. Many have been lucrative. One of those cited in the Buzzfeed article was with Turi Defense Group.
According to the Buzzfeed article, in August 2010Dolarian Capital became a subcontractor to Turi, a Las Vegas-based global risk management consultancy firm. Dolarian was to ship $14 million worth of weapons to the Afghanistan National Directorate of Security, the Buzzfeed story says, citing documents.
The Buzzfeed story then says that "several months after signing the Afghan deal," Dolarian Capital bought the $1.2 million home in northwest Fresno.
Dolarian is not only the owner of Dolarian Capital -- he is the sole shareholder. As such, Smith said, he reaped all the profits from the arms deals. Though a few have gone sour and resulted in legal action, Smith said there were many others that were enormously successful.
That is why Smith is unhappy about what he feels is a suggestion in the Buzzfeed article that Dolarian misused money from the Turi deal to buy the home.
Located on Sierra Avenue near the Van Ness Extension, the 3,600-square-foot, seven-bedroom home is now in the hands of a separate limited liability company.
"Did he perform the contract and make money?" Smith asked of the Turi deal. "Yes."
As with Dolarian's previous financing business, his arms dealing company has found itself caught up in court -- both state and federal.
In 2011, Dolarian Capital sued a private security firm, SOC, in U.S. District Court in Fresno, alleging it breached a weapons contract.
Dolarian says it agreed to sell SOC guns and ammunition, which it bought from manufacturers in Bulgaria and other Eastern European countries, and ship them to Afghanistan and Iraq, where SOC had contracts to provide security at U.S. government facilities.
SOC made a partial payment of close to $1.1 million, but then canceled the contract and demanded its money back, Dolarian alleged. At the time, Dolarian said it already purchased the weapons for the contract and was storing them in a warehouse.
In 2013, SOC countersued, seeking its money and claiming that Dolarian Capital breached the contract by not delivering any weapons or ammunition SOC had purchased, according to court documents.
The countersuit went even further, claiming Ara Dolarian "was not and had never" registered with the State Department as an arms broker. "Brokering arms without registration is a violation of U.S. law," SOC said in its lawsuit.
This month, Dolarian and SOC settled. Terms of the agreement are confidential, Smith said, but court documents say each side will pay its own legal expenses.
Later in 2011, Dolarian sued General Defense Corp. in U.S. District Court in Florida, seeking the return of almost $1.1 million. The company's website says it provides defense, aerospace and other products and services to the U.S. government "and its allies."
According to Dolarian's lawsuit, it was to purchase Bulgarian-made weapons from General Defense and have them sent to the Afghanistan Ministry of Defense "pursuant to a U.S. Government contract."
After Dolarian paid almost $1.1 million to General Defense, the suit says, Ara Dolarian went to Bulgaria to arrange the weapons shipment, only to find that General Defense had a counterfeit "export license," which is needed to take weapons out of a country.
General Defense countersued, saying Dolarian Capital never got a valid export license to take one weapons order -- 2,290 AK-47s and 75 machine guns known as PKMs -- out of Bulgaria, and illegally tried to cancel a second order for 5,000 AK-47s and 500 PKMs.
A year after being filed, Dolarian's lawsuit fell apart when its four attorneys -- two from Washington, D.C., one from Florida and the fourth from Los Angeles -- quit, saying they were owed more than $415,000 in legal fees and that they and Dolarian Capital had "developed irreconcilable differences" on the case.
"They did not provide any of the goods and did not return the money," Dolarian Capital attorney Smith said of General Defense Corp.
As for the attorney fees, Smith said they were "less than $20,000 relating to the General Defense case." The attorneys, he said, "decided to walk away from their client."
The most recent case finds Dolarian Capital sued last November by Sterling Cross Defense Systems Inc., a Canadian company that "acquires various military assets" for the Defense Department.
Sterling alleges in its lawsuit -- filed in U.S. District Court in Fresno -- that it paid Dolarian Capital a $300,000 deposit for an unspecified weapons purchase and a few months later "it became apparent that (Dolarian was) unable or unwilling to deliver the assets, for whatever reason."
Dolarian's attorney Smith wrote in a subsequent court document that Sterling had entered into a contract with DynCorp -- a private military contractor -- for an unspecified delivery to Ramstein Air Force Base in Germany.
A few weeks ago, Dolarian countersued. Smith declined to comment because the lawsuit is still in its early stages, but in his countersuit he wrote that Sterling never provided the required documentation so that Dolarian Capital could get the required export licenses from the State Department and the Bulgarian Export Committee.
The next hearing in the case is scheduled Monday before U.S. Magistrate Judge Gary Austin.
All of the legal challenges and now media profiles have combined to put Dolarian -- who toiled for decades in relative obscurity as artist, financier and international arms dealer -- into the spotlight.
Said Bottini, the Bay Area sculptor and Dolarian's artistic mentor: "Now he's probably the most famous student I ever had."