Report: Nevadan’s bogus data sparked terror alert

WASHINGTON -- Days before Christmas in 2003, a nationwide terror alert had Las Vegans on edge.

After speaking with Homeland Security Secretary Tom Ridge, Gov. Kenny Guinn moved to comfort the citizenry that he knew of no credible threats against the city. The Clark County sheriff echoed that message, despite persistent rumors that Las Vegas could be a target.

The FBI canceled vacations for some agents and requested additional ones be sent to Southern Nevada. Precautions were more visible at Hoover Dam as law enforcers conducted random vehicle searches. Resorts stepped up their security, as did officials at McCarran International Airport.

The scenario was repeated in other major cities after Ridge on Dec. 21 put the nation on Code Orange alert, the second-highest warning level, saying he was acting on information from "credible sources."

But a published report now suggests there was no credible information, and that a Nevada software designer with a spotty reputation somehow had scammed top officials in the Bush administration that he could predict terrorist attacks.

The designer was Dennis Montgomery, the chief technology officer of eTreppid, a Reno company that was developing video software. Montgomery would become known a few years later when, during a bitter legal dispute with his business partner, he accused Gov. Jim Gibbons of accepting favors in return for steering federal contracts to the small firm.

Federal authorities investigated the accusation and ended the probe in 2008 without bringing charges against Gibbons.

Near-panic over reports of possible terrorist attacks subsided after a few weeks of nothing happening. A report by investigative journalist Aram Roston in the current issue of Playboy traces the Code Orange alert to bizarre information that Montgomery supplied to the CIA.

According to the story, Montgomery convinced federal authorities that al-Qaida was transmitting information hidden in the broadcast signals of Al-Jazeera, the Arabic language news network. Secret bar codes instructed terrorists where to strike next, identifying targets by latitude and longitude, he contended.

Montgomery claimed eTreppid had technology to break the codes, and found receptive ears within the CIA's Directorate of Science and Technology, the agency's codebreaking branch. It was not reported how much the government paid for the data.

The information reported by the magazine could not be independently confirmed this week. Neither the CIA nor the Department of Homeland Security had immediate reaction. Montgomery could not be reached, nor Ellyn Garofalo an attorney who represented him during his dispute with business partner, Warren Trepp.

"It's certainly Roston's view of the world," attorney Stephen Peek, who represents Trepp, said Wednesday. "I don't have the same facts that Roston had."

And Peek said any information he does have is protected by the state secrets privilege, invoked in the civil case by then-Director of National Intelligence John Negroponte, and a protective order entered in U.S. District Court.

Nevada Sens. Harry Reid and John Ensign were not familiar with Roston's report and did not comment on it, according to aides.

A CIA team is reported to have set up shop at eTreppid in 2003 and received reams of data from what Montgomery called his "noise filtering," Roston reported. The information was map coordinates and aircraft flight numbers, he said. The data was shared with CIA director George Tenet, and then the White House. But few others were told about it until eventually word got around and experienced operatives shouted alarms that Montgomery's purported software was too far-fetched.

The CIA was acting on the information without understanding how Montgomery was coming up with it, Roston reported. But in the post-9/11 atmosphere, as the Bush administration was trying to filter threat information from numerous sources, authorities believed they had no choice but to explore the claims.

Ultimately, the CIA and the French intelligence service commissioned a second company to re-create the codes Montgomery said were being found in the Al-Jazeera signals.

"They found definitively that what Montgomery claimed was there was not. Quietly as far as the CIA was concerned the case was closed," Roston reported. "The agency turned the matter over to he counterintelligence side to see where it had gone wrong."

Even after the Al-Jazeera technology was discredited within the CIA, it was still a secret and eTreppid continued to be awarded government contracts from other agencies, some at the urging of Gibbons, Reid and then-Rep. Jon Porter, R-Nev.

One was a $30 million no-bid contract in 2004 from the Special Operations Command for "target recognition" video software. Several eTreppid employees later told investigators they could not be sure such software was developed.

Review-Journal writer Carri Geer Thevenot contributed to this report. Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault@stephensmedia.com or 202-783-1760.