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Geek cons US out of US$20m with bogus software to stop al-Qaeda

None | Feb. 22, 2011

The codes led to dead ends in connection with a 2006 terrorism plot in Britain. And they were used by counterterrorism officials to respond to a bogus Somali terrorism plot on the day of President Barack Obama's inauguration, according to previously undisclosed documents.

"Dennis would always say, 'My technology is real, and it's worth a fortune,"' recounted Steve Crisman, a filmmaker who oversaw business operations for Montgomery and a partner until a few years ago. "In the end, I'm convinced it wasn't real."

Government officials, with billions of dollars in new counterterrorism financing after September 11, eagerly embraced the promise of new tools against militants.

CIA officials, though, came to believe that Montgomery's technology was fake in 2003, but their conclusions apparently were not relayed to the military's Special Operations Command, which had contracted with his firm. In 2006, FBI investigators were told by co-workers of Montgomery that he had repeatedly doctored test results at presentations for government officials. But Montgomery still landed more business.

In 2009, the Air Force approved a $US3 million deal for his technology, even though a contracting officer acknowledged that other agencies were skeptical about the software, according to emails obtained by The New York Times.

Hints of fraud by Montgomery, previously raised by Bloomberg and Playboy, provide a cautionary tale about the pitfalls of government contracting. A Pentagon study in January found that it had paid $US285 billion in three years to more than 120 contractors accused of fraud or wrongdoing.

"We've seen so many folks with a really great idea, who truly believe their technology is a breakthrough, but it turns out not to be," said Gen. Victor E. Renuart Jr. of the Air Force, who retired last year as the commander of the military's Northern Command. "In this complex intelligence world," he said, "they can't deliver on what they say". Montgomery is not saying much these days.

Montgomery described himself a few years ago in a sworn court statement as a patriotic scientist who gave the government his software "to stop terrorist attacks and save American lives". His alliance with the government, at least, would prove a boon to a small company, eTreppid Technologies, that he helped found in 1998.

He and his partner — a Nevada investor, Warren Trepp, who had been a top trader for the junk-bond king Michael Milken — hoped to colourise movies by using a technology Montgomery claimed he had invented that identified patterns and isolated images. Hollywood had little interest, but in 2002, the company found other customers.

With the help of Rep. Jim Gibbons, a Republican who would become Nevada's governor and was a longtime friend of Trepp's, the company won the attention of intelligence officials in Washington. It did so with a remarkable claim: Montgomery had found coded messages hidden in broadcasts by Al Jazeera, and his technology could decipher them to identify specific threats.


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