Madison Priest's history is filled with people who call him a con artist, a geek who invented nothing more than a beautiful lie.
None of them, though, can prove it.
He appeared with his magic box, promising it could convert plain copper phone lines that run to almost every home in the country into greased-lightning pipelines for data and video, four times faster than the most advanced fiber-optic cables. It was a magic box that would shock communications like the television had, transform technology like personal computers had, redefine entertainment like Nintendo had. It was a magic box he built from $100 worth of spare parts.
He choreographed elaborate demonstrations, quickening the pulses of engineers shocked by its innovation and capitalists stunned by its potential.
He asked for money and received it, sometimes more than a million dollars at a time, enough to move him from a cobblestone street in Palatka to a gated community in St. Augustine.
And then he stalled, stymied and stonewalled. Prototypes were destroyed by lightning, floods and plane crashes, he said. They were too unstable for independent tests. Just a little more money, he said, and it would be ready. Just a little bit more.
Every time, he wore out his partners -- rich partners like Blockbuster and Intel, prominent partners like former U.S. Sen. Paula Hawkins and the son of Atlanta media czar Ted Turner, partners who brought him to Silicon Valley and partners who brought him to Capitol Hill.
Sometimes they sued him, sometimes they threatened him and sometimes they just threw up their arms in disgust, but they walked away and left their money with him. Priest -- who declined repeated interview requests -- never needed to mourn the loss of old partners; he just found new ones. He has had many since 1994, and they have paid him at least $6 million.
They could never quite prove that his stories -- not his magic box -- were the inventions.
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Madison Priest shows a patent certificate issued by the U.S. government for his magic box technology. Priest said the box could transmit data much faster than any existing system, and could do it through an ordinary household telephone line.
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If it is a scam, they concede, it is truly a beautiful one.
The Revelation
A fortune can become a failure with a single phone call, which four Jacksonville-area entrepreneurs learned as their deal with Priest unraveled in 1998.
The four, including Teddy Turner, formed a company called Zekko in 1997, and soon its only business plan was to turn Priest's invention into a product.
None of them really liked Priest, but none of them cared. He was their Bill Gates, and his invention was their Microsoft.
It was almost a sure thing.
Priest was ferociously protective of its secrets, though, and by mid-1998 he was missing deadlines to turn over working prototypes.
But the investors wanted so badly to believe, and they moved on their faith and on their greed. By September 1998, Zekko had raised almost $6 million, with as much as $1 million going directly to Priest and his wife, Linda. Another $36 million was on its way.
And then the phone call came, a pinpoint moment where hope and trust became betrayal and panic.
The day after a critical fund-raising trip to woo major telecommunications firms in Chicago, court records show Linda Priest called one of Zekko's founding fathers.
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Linda Priest solders components to a circuit inside the Priests' Palatka workshop. In September 1998, Linda Priest told investors that her husband's magic box was a hoax.
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It was all a hoax, she said. There was no invention. There was only The Revelation.
Selling the Holy Grail
Today the Priests live in a 6,000-square-foot waterfront home, where five motorcycles, two trucks, a Jaguar, a Lincoln Town Car and a Mitsubishi Eclipse are all registered in their names, as are two small propeller airplanes.
But in 1994, they were living in a far more modest home, a mile or two from sleepy downtown Palatka.
Priest, a 40-something ex-con who dropped out of high school in rural Citra, had devised his invention just a year or so earlier. He had neither the connections nor the savvy to get rich off his magic box.
Hooking up with a former U.S. senator changed that. Paula Hawkins, a one-term Republican from the Reagan era, never invested any money with Priest. But she and her husband, Gene, had a golden Rolodex, and Priest gave them a 10 percent stake in his invention to mine it.
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About this series
The Times-Union's coverage of Madison Priest and his "magic box" is the result of a five-month investigation by reporter Matthew I. Pinzur and editor Marilyn Young.
Roughly four dozen interviews were conducted with partners, investors, engineers and others familiar with Priest's dealings. Hundreds of pages of public records and other documents were inspected, including seven lawsuits filed in state and federal courts in Florida, California and Colorado.
Neither Priest nor his wife, Linda, agreed to be interviewed, despite repeated verbal and written requests.
About the photos
Most of the photographs in this series were provided by Mark Strong, a former business partner of Madison Priest. Many are still frames taken from videos shot by Strong at meetings, tests and demonstrations spanning from 1996 through 2001.
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Meetings the Hawkinses arranged with politicians such as Sen. Orrin Hatch were encouraging, but nothing compared to to the response from top executives at Blockbuster.
Blockbuster wanted Priest's invention badly, Gene Hawkins said, as if the entertainment giant's survival depended on it. And, in fact, it might have. Video stores could crumble if people could watch movies over their phone lines, and Priest promised exactly that ability.
Phone lines have long been considered far too slow to carry the huge amounts of data necessary for high-quality video. Those limits created the need for cable modems and other high-performance data lines, like the T-1 and T-3 lines running in many businesses. Priest's invention would make those old phone lines faster than anything on the market, decimating the communications speed limit.
"That was the enormous breakthrough," Gene Hawkins said. "It was just conventional, regular, plain old telephone lines."
Gene Hawkins said he worked steadily on the project for months. He led Priest to Wayne Huizenga, then the chairman and CEO of Blockbuster. He also connected Priest with US West CEO Richard McCormick and other six-figure investors.
Court records indicate the Priests netted at least $2.25 million in those early deals, primarily from Blockbuster. Blockbuster and US West declined to comment.
In what would become an unwavering pattern, Priest took the investment cash without turning over working prototypes. By the end of 1996, Blockbuster and US West appear to have walked away.
"The bigger the fish you go after, the less likely they are to come after you," said Bob Mons, an investment banker and one of Zekko's founding partners in Ponte Vedra Beach. "They don't want to admit to being taken by a flimflam man from Palatka."
By that time, Gene Hawkins said, he and his wife had discovered Priest's criminal record, including numerous arrests and at least one conviction for grand theft. The arrests were years earlier, but were enough for the Hawkinses to stop working with him.
"That was very hurtful and disappointing, so we turned very, very sour, my wife in particular," Hawkins said.
The Priests' history is vague, clouded by years of varying stories the Priests told their business partners.
Priest, now 46, sometimes spoke of being a graduate of the Air Force Academy, lawsuits and interviews show. There are no records of his attendance there, which he explained by telling people he was assigned to super-secret covert operations. Sometimes he told potential investors he had worked on a classified missile and weapons design team for aerospace defense contractor Martin Marietta, according to a lawsuit filed by Zekko. But according to that lawsuit, he was never more than a low-level assembly line worker, and was fired for stealing equipment.
"Depending on the audience, the story would take on different embellishments," said Mark Strong, a Naples investor who became the Priests' closest business partner and later their most determined opponent. "If he thought the audience was really clueless, he would really spread it on."
Before stepping back, Gene Hawkins said he introduced Priest to K.C. Craichy, a Tampa businessman who became close with the inventor. Craichy and a friendgave Priest about $500,000 for a stake in VisionTek, the company the Priests formed to sell their invention. Craichy also agreed to serve as its CEO.
At the same time, in mid-1996, Orange Park real estate broker Walter Williams and at least 10 other investors from Florida saw demonstrations and invested nearly $300,000. Citing confidentiality agreements from a lawsuit settlement, Williams refused to discuss the deal with the Times-Union.
As many as 25 or 30 others may have invested at the same time, Strong said.
"He literally sold it to anyone who walked through the door -- friends, relatives, whoever he could get money from," said a source familiar with Zekko, who requested anonymity because a confidentiality agreement bars him from discussing the matter.
That money, like all the rest invested in VisionTek, went directly to Priest and his wife, according to many of their former partners.
Potential investors were dumbfounded by the demonstrations, which seemed generations beyond state of the art. With a conventional modem, one computer can transmit a music video -- with a small, fuzzy picture -- in an hour or more. At Priest's demonstrations, though, investors saw that same computer send video instantly. The Eagles' performance of Tequila Sunrise showed up on the second computer in digitally perfect full-screen glory, the music as clear as a compact disc.
Even with top-grade fiber optic cables, that kind of quality was rare at the time. Amazingly, the computers at Priest's demonstrations appeared to be connected with ordinary telephone cord. The only other wires were the electric cords that plugged the computers into a power strip.
The results were so staggering that investors said they overlooked Priest's demand -- his paranoia, even -- that no one so much as touch a keyboard.
"He had a Holy Grail that was the telecommunications equivalent of cold fusion," Mons said.
Craichy had seen Priest's elaborate show for about a year, always at places carefully prepped by Priest with computers provided by Priest and videos selected by Priest. Now Craichy wanted independent tests in which he controlled those variables.
As soon as he suggested it, Craichy said, Priest vanished.
"He wouldn't take my calls, he wouldn't come see me," Craichy said. "He disappeared."
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Tomorrow: As Priest's deals begin to unravel, his claims become even more daring.
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Deception revealed
The day after Linda Priest's 1998 confession to Zekko technology chief Herb Presley, he and Mons drove to Palatka to investigate.
It was Sept. 11, 1998, and it was the beginning of The Revelation.
Mons, who had been the primary fund-raiser for the nearly $6 million Zekko collected that year, said he planned to confiscate whatever prototypes he and Presley could find. Linda Priest's phone call notwithstanding, he still believed they would find some components, which could be given to engineers and possibly still turned into a product.
But any hope of keeping Zekko alive dissolved in the next few hours, according to interviews and court records.
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Linda Priest stands next to testing equipment during an examination of Madison Priest's magic box at Intertek Testing Services in Orlando. Though some tests of the box appeared successful, investors now suspect the technology does not exist and the box was a hoax.
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A computer at the Priests' home, which Strong said Linda Priest believed was a key part of her husband's network for that demonstration, turned out not to be a computer at all. Inside the steel computer case, Mons said, there were no circuit boards, no disk drives, no power source.
There was only a VCR.
The Revelation continued when Linda Priest took them to Kay Larkin Airport, a municipal airstrip in Palatka, where her husband rented a hangar for his planes. They found no prototypes, nothing that could have salvaged Zekko's investment. What they did find was plenty of evidence to suggest a massive fraud.
There were boxes of unused components. There were circuit boards configured with what the Zekko source called "obvious sneaks." And there was the power strip.
Hidden inside two power cords that plugged into the strip was a single piece of coaxial cable, which could secretly connect two computers. Sending video over coaxial cable is old technology, the basis of cable television. By hiding that cable in a power strip, Priest could make it appear that the video was traveling over phone lines.
"We found stuff that really scared the hell out of us," Mons said.
Arrogance, anxiety
As Priest's relationships with Craichy and the Hawkinses were crumbling around 1996, he found a new source of money and influence.
Strong had just sold a successful chain of medical imaging companies and was itching for a new business venture. He saw a demonstration in Tampa and was hooked.
"I thought I would be the guy that finally got this technology developed," Strong said. "That was my supreme arrogance."
He consulted Geoff Workman, a San Francisco merchant banker experienced with high-tech innovations, who advised him to move slowly.
"We've got an uneducated country bumpkin with a weird background in aerospace, who invented this in his workshop," Workman said. "I told Mark, 'This is going to require a lot of due diligence and vetting before we know if anything's even there.'"
Priest, though, was masterful at urging people to invest quickly, Strong said.
"If you didn't jump on this, some big company would get on it and you'd be aced out," Strong said.
Strong invested $100,000, and six months later he was ready to buy Priest's entire company. He had negotiated test-site agreements with three institutions, including the University of Florida and Columbia Hospital Corp. As soon as he had 40 working units for those clients, Strong said, he would sign the deal.
He never received them.
Strong's concern blossomed into heavy anxiety in April 1997, when Priest was nearly killed in a car wreck in his bright red Corvette.
"They said there was a chance he could die," Strong said. "If he died, the project was over."
During Priest's convalescence, Strong realized the risk of keeping the invention's secrets locked in its inventor's brain. He shifted his pressure on Priest from building the 40 units to documenting the technology.
Priest had always refused to draw complete schematics. Engineers who examined his diagrams were baffled when they showed components working beyond their capacity or being used in ways never intended. But like every story Priest told, there was always a nugget of truth, however obscure. The designs were implausible, the engineers said, but never quite impossible.
"His ideas are interesting and provocative, so he's got a good story," said Hal Puthoff, a Texas physicist considered an expert in the concepts Priest said he was using. "It might not be a true story, but it hangs together, at least in his own jargon."
After the wreck, Priest promised to explain everything in writing, calling Strong five or 10 times a day to update him.
"It was just all talk," Strong said. "He never filled in all the blanks."
While Strong waited, Priest began building the foundation for his next set of partners.
Presley and another high-tech industry entrepreneur, Michael Newman, were planning to invest $2 million in the project just after Priest's wreck. Within six months, Presley and Newman had joined Mons and Teddy Turner to form Zekko, and Strong had been almost completely cut out.
The deal with Zekko, detailed in an October 1997 letter, handed the Priests a lump payment of $500,000 and the potential to earn millions more.
The deal itself would not be signed for more than six months because the Priests, Linda especially, would call for endless revisions. Zekko officers now believe they were simply stalling for time.
"She was a first-time girl trying to be a lawyer," Mons said of Linda Priest, who did not respond to interview requests. "She was unbearably difficult to negotiate with."
But in late 1997, everything still looked stable. Presley and Newman found experts to examine the invention while Mons and Turner sought investors to fund it.
Priest, though, became their biggest obstacle on both fronts, Zekko officials said. Potential investors, most worth at least $1 million, were put off by his rural Florida twang, his T-shirts that said "rocket scientist," and breath so bad it could choke a man in close conversation.
Scientists and engineers were also frustrated in conversations with him: The self-taught inventor spoke a different scientific language than the Ph.D.s. They would praise the invention's potential, but refused to vouch for it until they could take the box apart and test it themselves.
None of it deterred Zekko. Priest claimed to be using theories called low-energy or zero-point physics, an obscure new scientific terrain.
"This is like the netherworld of physics," Mons said. "You cannot get anyone to come in and vet this and give it absolute verification."
While Presley struggled to arrange conclusive tests, Mons and Turner began raising more than $1.5 million from individual investors in late 1997. That Turner was attached to the project only made investors more confident.
"Obviously that was a good name, and there was some talk that CNN would be an end user," said Dave Wild, a South Florida investor who put $63,000 into the project.
Indeed, Turner arranged a demonstration for his father at CNN's Atlanta headquarters, according to Mons. Ted Turner did not return phone calls, and his son declined to discuss the matter, but Mons said CNN wanted to be the company's first client. Ted Turner provided Priest workspace at the CNN building, Mons said, and asked him to build a prototype. It never happened.
Looking back, Zekko's founders and investors see how Priest's endless stalling and laughable excuses should have made them more cautious.
At least 10 times, according to court records, Priest said working prototypes were hit by lightning. Other times he would claim they were damaged in floods, damaged in rains or otherwise became "unstable."
No one could force Priest to work faster or deliver the independent tests.
"Every time we told him to put up," Mons said, "he threatened to blow up and go away."
A half-mile lie
Even the phony computers and trick power strips did not prepare the Zekko bosses for the next day, when The Revelation continued and grew as they revisited buildings where Priest had hosted demonstrations.
At one site after another, Mons said, they found hidden lines of coaxial cable. In some places it was buried shallowly in the dirt. In others it was snaked along bushes.
The most dumbfounding was at the Fort Gates Ferry, a ramshackle barge that crosses the St. Johns River near Welaka. Priest would often demonstrate the invention there, transmitting video from a computer on one side of the river to a partner on the other side. It seemed, the Zekko executives thought, an impossible test to fake.
Then they saw more than a half-mile of coaxial cable coiled on the dock.
"Madison had actually run co-ax under the St. Johns River there," Mons said.
The ferryman at Fort Gates, Dale Jones, confirmed to the Times-Union that Priest had paid him to string the cable, but refused to discuss the matter.
The river is about a half-mile wide at the ferry, long enough that the cable would need special devices to amplify the signal. The Zekko source said the company had provided Priest with just such devices.
Rush to settlement
By the time Zekko's partners were getting queasy about Madison Priest, they were in too deep to retreat. In addition to more than $1.5 million Mons raised in late 1997, court records show prominent California computer chip maker Level One invested $3.5 million from October 1997 to January 1998.
The cash was flowing out of Zekko even faster than it was coming in. The contract with Priest had already paid him $500,000, and both Mons and another Zekko source said the inventor eventually got as much as $1 million of Zekko funds. In addition, the inventor's previous partners, including Craichy, Strong and the Hawkinses, began laying claim to the technology's rights. "We needed a clear title to this technology," Mons said, "and we were in a hurry."
So Zekko settled with everyone, according to company documents, paying out more than $1 million. Strong, who had signed non-circumvention agreements with Zekko bosses, received the juiciest deal: $525,000 cash, a $15,000 monthly consulting agreement and possible royalties. Craichy received $30,000 to $50,000, and the Hawkinses -- who invested only time, never money -- settled for a consulting agreement that was supposed to pay out $360,000. However, Gene Hawkins said they never received more than about $20,000.
"All those consultants; maybe only one worked for the company," the Zekko source said. "The rest were getting paid to settle."
No one from Level One, which has since been purchased by Intel, would comment on their investment in Zekko. Priest repeatedly postponed delivery of working prototypes during 1998, and by September, Zekko's officers could not imagine why Priest continued to miss delivery deadlines and stall on conclusive testing. Before flying with Priest to meet with eager investors from Ameritech and GTE in Chicago, one of Zekko's executives confronted Linda Priest, the Zekko source said.
If this was a hoax, she was warned, Zekko would pursue them like Captain Ahab followed his whale. Major corporations like Blockbuster might have been willing to write off their losses to avoid the negative publicity associated with lawsuits, but Zekko had no such compunctions.
Because Linda Priest had become the court-appointed liquidator for VisionTek, the Zekko executive assured her she would be easier to convict than her husband and serve more jail time. If she had anything to confess, he told her, now was the time.
She said nothing, and the trip to Chicago went on as planned, with Priest joined by Presley and another Zekko board member. The companies offered to write a check for more than $36 million on the spot. The Zekko executives held off, though. Both company sources and David Hodges, a Jacksonville private investigator hired by Strong, said Zekko wanted to be completely secure in the technology before putting major telecommunications companies on the hook for that much cash. Had the top executives accepted the check, some would have received bonuses as high as $875,000.
"The day before, you thought you were a billionaire," the Zekko source said. "Then you've got serious questions."
Profiting from belief
Ironically, it was fallout from Priest's Chicago demonstrations that destroyed Zekko.
Linda Priest's version of those events, according to Mons and other sources, went like this:
She believed her husband usually demonstrated the technology by connecting to a modem in their home computer, so she expected him to call from Chicago and tell her to turn it on. Unbeknownst to her, he was using the computer in his shop, which was already on. When he failed to call that day, she grew suspicious and opened the home computer. Inside the case she found nothing but a VCR.
When Priest returned to Palatka the next day, his wife was gone. She had emptied their house and filed separation papers in court. She initiated The Revelation when she called Presley, Zekko's technology chief, and told her story. She also called the FBI.
"She was in this up to her eyeballs," Mons said. "Now she was trying to extricate herself."
The accusations sent Zekko into a tailspin. The company's officers spent the next few days discovering staggering evidence of a massive scam. Many resigned in disgust, their investors' stock apparently worthless. Zekko stopped paying Priest and everyone else.
"This is a very well-orchestrated con, and there are a lot of people involved," Mons said.
It might have all ended here, with Priest dismissed as a scheming nerd who knew nothing special after all.
But Madison Priest knew one thing had not changed. People -- even smart, rich and powerful people -- want to believe in a magic box.
Within three months, Linda Priest would recant her accusations and reconcile with her husband. They would enigmatically explain the damning evidence as fallout from amnesia related to Priest's car accident -- amnesia they never mentioned at the time. They would accuse Zekko of breaking its contract, voiding the company's claim to the invention.
They wrapped the same old box with a ribbon of fresh, new stories. This time, the plan -- and the stakes -- would be even grander.
Times-Union library director Jennifer O'Neill and staff writer Marilyn Young contributed to this report.
Staff writer Matthew I. Pinzur can be reached at (904) 359-4025 or via e-mail at mpinzur@jacksonville.com.
