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

None | Feb. 22, 2011
Fraud

The litigation worried intelligence officials. The Bush administration declared that some classified details about the use of Montgomery's software were a "state secret" that could cause grave harm if disclosed in court. In 2008, the government spent three days "scrubbing" the home computers of Montgomery's lawyer of all references to the technology. And this past fall, federal judges in Montana and Nevada who are overseeing several of the lawsuits issued protective orders shielding certain classified material.

The secrecy was so great that at a deposition Montgomery gave in November, two government officials showed up to monitor the questioning but refused to give their full names or the agencies they worked for.

Years of legal wrangling did not deter Montgomery from passing supposed intelligence to the government, according to intelligence officials, including an assertion in 2006 that his software was able to identify some of the men suspected of trying to plant liquid bombs on planes in Britain — a claim immediately disputed by US intelligence officials. And he soon found a new backer: Edra Blixseth, a onetime billionaire who with her former husband had run the exclusive Yellowstone Club in Montana.

Hoping to win more government money, Blixseth turned to some influential friends, like Jack Kemp, the former New York congressman and Republican vice-presidential nominee, and Conrad Burns, then a Republican senator from Montana. They became minority stakeholders in the venture, called Blxware.

'We are all toast'

In an interview, Burns recalled how impressed he was by a video presentation that Montgomery gave to a cable company. "He talked a hell of a game," the former senator said.

Kemp, meanwhile, used his friendship with Vice President Dick Cheney to set up a meeting in 2006 at which Kemp, Montgomery and Blixseth met with a top Cheney adviser, Samantha Ravich, to talk about expanding the government's use of the Blxware software, officials said. She was noncommittal.

Flynn, who was still Montgomery's lawyer at the time, sent an angry letter to Cheney in May 2007. He accused the White House of abandoning a tool shown to "save lives", and warned that if the administration failed to block a Montana judge from making confidential details public, Montgomery would have to "reveal the names of the individuals he worked with at the CIA." (After a falling out with Montgomery, Flynn now represents another party in one of the lawsuits).

But Montgomery's company still had an ally at the Air Force, which in late 2008 began negotiating a $US3 million contract with Blxware.

In emails to Montgomery and other company officials, an Air Force contracting officer, Joseph Liberatore, described himself as one of the "believers" in the technology, despite skepticism from the CIA and problems with the no-bid contract.

 

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