Playboy has a fascinating article on Dennis Montgomery, the man who conned the CIA, the Department of Homeland Security, the Navy, the Air Force, the Senate Intelligence Committee and even Dick Cheney's office into his phoney anti-terrorist decryption technology.
Montgomery - then co-owner and Chief Technology Officer of Vegas-based "eTreppid Technologies" and a notorious gambler with $12 million in debt - staged false demonstrations on his laptop, using his "top secret software" to convince the previous administration about an absolutely stupid idea: Arabic TV station Al Jazeera was transmitting encrypted instructions which included "target coordinates" and flight numbers to sleeping Al Qaeda operatives around the world, using clues in their programming.
How serious was the government about this? On December 21, 2003, Montgomery fake information fired up all alerts, getting the country into a mass panic attack after Department of Homeland Security's secretary Tom Ridge announced a risk of an attack "that could either rival or exceed what we experienced on September 11" based on "credible sources". The credible sources was Montgomery. Nothing ever happened then, but that was the beginning of the scam. Later, Montgomery declared that the Department of Defence paid his company "$US30 million in contracts and and appropriated another $US100 million in their black budget."
After reading the article, I still can't understand how the hell a crook like this was able to con an entire administration, the largest intelligence agency in the world - who at the end discredited Montgomery's fake montage - and the most powerful military force, with such a preposterous idea. Was he really that smart? Maybe the key was his relation with Nevada Then-Congressman Jim Gibbons - later accused of using his influence to get this contracts to eTreppid? Was it the incompetence of the people in charge at the time? Was it their desperation to find any threads that could be used on their own benefit?
I'm leaning to a combination of all this possibilities. Go read the reportage. As a bonus, you would be able to claim that you actually ogled over Playboy for a real article. [Playboy - Some images in this page are NSFW]