A con man fooled US spooks into grounding international flights by selling them "technology" to decode al-Qaeda messages hidden in TV broadcasts, it's claimed.

A long and highly entertaining Playboy article explains that in 2003, 50-year-old Dennis Montgomery was chief technology officer at Reno, Nevada-based eTreppid Technologies. The firm began as a video compression developer, but Montgomery took it in new and bizarre directions.

He reportedly convinced the CIA that he had software that could detect and decrypt "barcodes" in broadcasts by Al Jazeera, the Qatari news station.

The Company was apparently impressed enough to set up its own secure room at the firm to do what Montgomery called "noise filtering". He somehow produced "reams of data" consisting of geographic coordinates and flight numbers.

In December 2003, it's claimed CIA director George Tenet was sufficiently sold on Montgomery's data to ground transatlantic flights, deploy heavily armed police on the streets of Manhattan and evacuate 5,000 people from the Metropolitan Museum of Art.

Homeland Security secretary Tom Ridge told the press the terror alert was the result of "credible sources - about near-term attacks that could either rival or exceed what we experienced on September 11".

In fact, according to evidence from his former lawyer, Montgomery, the "credible source", was a "habitual liar engaged in fraud".

Montgomery worked with the CIA's Directorate of Science and Technology - its Q Branch - engaged in exotic research and intelligence gathering. According to Playboy , one counter-intelligence official briefed on the programme said: "We were fucking livid. I was told to shut up. I was saying, 'This is crazy. This is embarrassing.'"

Eventually a branch of French intelligence helped the CIA prove that the Al Jazeera "messages" never existed. Files were handed over to counter-intelligence to investigate the scam.

The FBI uncovered a series of frauds by Montgomery, who was a compulsive gambler. As well as his "noise filtering" technology, he had rigged video software to convince officials it could detect weapons.

Following a dispute with eTreppid's financial backer, Montgomery took off with his "technology" and tried to win more government contracts alone. By now though, the officials he was trying to sell to were part of the FBI investigation. It reportedly "went nowhere", however.

By 2008, the financial dispute had come to court. Montgomery said he was still doing classified government work, for $3m. In June this year however, his gambling led to personal bankruptcy, listing his still-classified "technology" as a $10m asset.

Frances Townsend, a homeland security adviser to Bush, said she did not regret having relied on Montgomery's mysterious intelligence. "It didn't seem beyond the realm of possibility. We were relying on technical people to tell us whether or not it was feasible," she said. ®