The Electric Kool-Aid Bandwidth Test (continued)

In the basement of the San Diego County Courthouse, however, I discovered a small window into Stewart's past. There I found a record of his first company, a venture called Claritek, which he founded in 1989. The idea behind it was essentially what is known today as telemedicine: The company would create technology to send cardiology images over the telephone lines, enabling hospitals to get real-time advice from heart specialists thousands of miles away.

Stewart intended to use a public demonstration to prove the technology worked - the same game plan he would later adopt to plug Media Fusion - and met with several top cardiologists and radiologists. "Everything he talked about seemed really neat," remembers Eric Hoffman, a professor of radiology at the University of Iowa. "It was vague and far-out enough that neither I nor my computer experts could figure out if it was real. At the same time, we couldn't say it wasn't real. When we tried to say, 'Let's go ahead with this, let's get some money in this,' we never heard from him again."

Symbolics, a hardware manufacturer that shipped Stewart more than $500,000 in workstations, found him similarly elusive. According to court documents from a breach-of-contract suit filed by Symbolics against Claritek in 1990, Stewart simply disappeared when the company tried to collect its money or its equipment. "Claritek is and at all times was a sham," one filing reads, "and was used by defendant Stewart as a device to avoid individual liability for the purpose of substituting a financially insolvent corporation in his place."

When a Symbolics employee showed up at a San Diego hospital to repossess some of the machines, they had been removed. After a city marshal tracked down most of the equipment at a storage facility, Symbolics dropped the suit.

Stewart's sales pitch mixed a barrage of technical jargon with tales of top secret intrigue, including hush-hush technology work for the World Bank.

I contacted Atle Steen, a San Diego-based engineer who knew Stewart at the time, to ask what he remembered about Claritek. His reply: "I sincerely don't believe Luke was a scam artist," he wrote in an email. "But like many who are promoting a new concept and seeking venture capital, I expect he would emphasize the positive and downplay the negative."

Still, Stewart's ventures for the seven years after Claritek - some of which were missing from his official story - repeated the same pattern. In San Diego, Las Vegas, and Washington, DC, he moved among a hazy network of small-businesspeople, gambling executives, and high tech vaporware peddlers. Interviews with nearly a dozen sources paint a picture of a fast-living pitchman seeking money for one idea after another, a man who could alternately bewilder and intimidate potential investors with a barrage of technical jargon and tales of top secret intrigue.

Al Meranto, a federal grant writer and night club developer in Las Vegas, was a friend and business partner of Stewart's for more than a decade. "I watched him over the years bring certain beautiful ideas and inventions and thoughts that could change the entire world's application on things," he said. "But it seems that every time, he would start something, get to a certain level, and then literally disappear."

Many of Stewart's ventures, including an online gambling proposal called GOLD, operated under a limited liability corporation called Texas Information Development Commission, which he claimed was created to conduct secret technology work for the World Bank. Nancy Lee-Rohm, a former employee of TIDC, said she loaned him $50,000 to get the company off the ground. She said Stewart also ran up a $50,000-plus bill on a TIDC corporate credit card she had signed off on. Then he came to her asking for more. When she refused, he cleaned out the office and vanished, leaving her with more than $100,000 of debt. "He ruined my life," she said. "And he ruined my marriage due to what he put us through."

Many former partners and investors tell similar tales, saying that Stewart lived extravagantly, traveling by limo and spending thousands on lavish dinners and hotel suites. Often, he was living on other people's dime - two people I spoke with claimed to have lost tens of thousands in hotel credit card charges by Stewart. "He'd take anything from anybody," said Meranto. "Nothing was sacred."

SEC documents reveal that in 1997, Stewart persuaded a company called Las Vegas Entertainment Networks to sign a $1.5 million contract for him to test ASCM at the El Rancho Hotel, and deploy it in Guatemala. According to the documents and a former partner, more than $1 million was paid out for equipment and expenses, but the technology was never tested.

None of this was known to Edwin Blair, when in 1997 he stepped up to order a drink at a Dallas restaurant and started chatting with a man shuffling papers at the bar. It was Stewart, who proceeded to describe his magnetic wave discoveries and the potential of ASCM. Within weeks, the two were partners in Media Fusion, and Blair's connections started bringing in investments.

As Media Fusion's stature grew, those who had lost money to Stewart were baffled by his newfound success. "He's got more balls than a slaughterhouse," said Henry Drexler, a retired doctor who says he invested and lost money on Stewart's Las Vegas ventures. "If bullshit was music, he'd be a hundred-piece symphony orchestra."

By spring 2000, few people knew that Luke Stewart's Media Fusion symphony was already in its final movement. Publicly, the company was still charging ahead, meeting with potential partners, reporters, and congresspeople. Positive stories, with just a hint of skepticism, appeared in Business 2.0, BusinessWeek, Forbes.com, and Popular Science. Behind the scenes, though, the business was beginning to crumble.

That February, Media Fusion brought in an outside accountant to organize its finances. What he found, say several employees, was shocking. Stewart and Blair were each pulling in more than $1 million per year in salary and expenses. Stewart had resumed his spending habits, traveling by limo and dropping tens of thousands over the year on liquor and dinners. Soon after the accountant started asking questions, he was summarily dismissed.

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