Invention was Too Good to be True
Brent Kovar got investors and employees to believe
his invention was the next big thing,
but nobody's ever seen it.
By Leonora Lapeter Anton
St. Petersburg Times
July 1, 2007
Brent Kovar stood before a giant movie screen in the penthouse theater of a downtown high-rise. The featured attraction was an excerpt from the movie Top Gun, with stars Tom Cruise and Anthony Edwards yelling "we have the need -- the need for speed!"
Kovar told the group of investors sitting in front of him that he had found speed. He had invented the most promising advance in Internet communication on the planet.
His "magic" black box could compress massive amounts of data and transmit it faster than ever before, Kovar said.
Using an antenna in a nearby control room, he told investors, the movie had been sent to a satellite in the sky, then back down. It took only seconds at a time when transmitting a movie by dialup took almost half a day.
The investors were spellbound.
"There was an aura around you that I'm involved in something gigantic here," said B. Scott Limehouse, Kovar's vice president of sales.
But as the offices cleared that day in early 1999, Limehouse walked into the room where the antenna had just beamed Top Gun to the satellite above.
It lay on the floor. He picked it up and looked out the window at Tampa Bay.
How, he wondered, did we just do that?
The holy grail?
On a warm day in February, a 40-year-old Kovar got up and pitched his invention again. He drew diagrams and explained how it sent signals that traveled from Earth to the satellites and back down.
This time his audience was a Pinellas County civil jury considering whether he had stolen the very technology he had created.
The verdict? A $36-million judgment against Kovar, one of the largest in Pinellas history.
Kovar, who declined to be interviewed for this story, has never been charged criminally.
But thousands of civil court documents depict a man who got dozens of investors to give him at least $21-million for the next sparkling Internet invention -- technology they now believe never existed.
Kovar formed several companies on the strength of his invention. He said he could transmit massive amounts of information -- from video conferences to movies and music -- faster than ever before. Later, he said his invention could provide security on every plane in America.
He had a keen sense of timing. Both companies seemed to ride the edge of the technology frontier. One expert called his invention the "holy grail" of Internet communication. Kovar knew he had everyone's attention.
He bragged to investors, sometimes in newsletters and brochures, that he had the interest of high-profile players like AOL-Time Warner, American Airlines, Bill Gates and Donald Trump.
Kovar said he had met one-on-one with Tom Ridge, head of Homeland Security; gone to dinner with President Bush; and that Vice President Dick Cheney wanted to discuss "various homeland security initiatives."
Representatives for the three men say they've never heard of Kovar.
Over a decade, all kinds of investors poured money into Kovar's companies -- from a group in Kuwait and Saudi Arabia ($13-million) to his own mother-in-law ($40,000).
One investor paid the $16,000-a-month rent for Kovar to house his first major company in the penthouse suite at the Plaza Tower in downtown St. Petersburg, Kovar's former employees say.
He persuaded the families of employees, friends and his new wife, Martyne LaDuke, to ante up. She said family members put in more than $500,000, including her sister, a widow who invested her husband's death benefits.
LaDuke and Brent Kovar had met in 1997 at a fundraiser. For their July 2002 wedding, she said, he flew guests on seven helicopters into the Grand Canyon. He sent her son to an exclusive local private school and moved her into his $1.3-million waterfront home in Tierra Verde.
She said he was smart, generous and kind. He also was excessive, flashy and lived a disposable life. He would throw out the Christmas lights and decorations with the Christmas tree. Once he bought a massive pot for a shrimp boil and threw it out rather than clean it.
At the same time, LaDuke, 44, said Kovar was quiet and socially awkward. He knew how to pitch his invention with the finesse of a political candidate. But he struggled with small talk and had few friends.
She came from a big family and had lots of friends, but LaDuke didn't like them investing in Kovar's technology. She worried about mixing family and business.
Still, she said, Kovar went behind her back and got her 78-year-old mother to invest. Jeanne LaDuke said Kovar came to her and said: "Martyne doesn't want you to hear about this so don't tell her."
Kovar also made his pitch to LaDuke's college roommate, Christine Wattley, during a visit from Kentucky. Kovar told Wattley and her husband, Mark, (the couple declined to be interviewed) they would get a four-to-one return on their money, court records show. Soon, he was flying to Kentucky to talk to Wattley's friends and family. As a result, 19 people from Kentucky, Ohio and Illinois invested a combined $775,000.
LaDuke, who was divorced from Kovar in 2004, said she began to worry when she learned he was pitching his invention to other parents.
Jean Johnston remembers Kovar coming to the private school armed with a prospectus. He told her, "I know you all are friends, but I wouldn't want y'all to miss out on an opportunity like this," recalled Johnston, a St. Petersburg parent. She and her husband gave him $85,000.
Once, LaDuke said, Kovar asked her to bring some well-to-do friends to his company's Raymond James Stadium skybox for a Bucs game. The next day she found a $20,000 check from one of them in his shirtpocket.
LaDuke said: "I just thought 'Uh, I'm leading these sheep to slaughter.' "
Brent Kovar was a computer whiz in Pasadena, Calif., during the 1970s before most people ever owned one.
"As a preteen, he had a computer in his room, and he could do all kinds of things with it," said Russell Boring, Kovar's cousin.
His mother, Joy, was a school teacher. His father, Glenn, worked for the U.S. Forestry Service, also serving as a technical adviser for the TV show Lassie. They divorced when Brent was 8.
Kovar's mother bragged to family and friends that Brent was so smart he graduated from high school and earned a bachelor's degree from a California technical institute at the same time.
His resume says he worked as a project manager for a few engineering and wireless technology companies. But his interests seemed to lie in inventing, he told friends and family.
He dabbled with a few smaller inventions, according to his resume, including a robotic arm for manufacturing that could be programmed from half a mile away. Kovar also told family and friends that he developed an emergency communication system for deaf drivers.
Eventually, he hit on the genesis of his "magic cube" invention. He would later tell friends and employees that it was during a trip to the Virgin Islands with his father in 1987 that he realized his invention's potential with satellites. Father and son decided to start a business.
Satellite Access Systems
By 1996, the Kovars had enough seed money to set up their new company, Satellite Access Systems, in an office in downtown St. Petersburg. They chose the city, they said, because it was on the 28th parallel -- among the best places in the world to link up with satellites. They arrived in style -- in the penthouse of the Plaza Tower.
The business became a family affair. Brent's mother kept the books. His father was president. His cousin, Boring, was legal adviser.
In pitching his dream, Brent Kovar used words like "algorithmic virtual tables" and "binary pattern transmission" and a "dimensional rotating array matrix."
Imagine, he would tell investors, that large files of information could be cloned and sent over the Internet. He would hold up a Rubik's cube. A block of data would represent points on the cube, he would say. He had figured out how to send the location of the data, or the coordinates, rather than the actual data.
"He'd give you the impression that he was trying to bring it down to your level, but it was still so over your head," said his former sister-in-law, Michelle Ginocchio.
As the investment money poured in, Kovar increased salaries and doled out bonuses, employees said. He frequently took them out on his boat, treated them to dinner at the Melting Pot and Bern's Steak House and spent $20,000 on a New Year's Eve party complete with a horse-drawn carriage for guests. He even got Jennifer Fishel, his office coordinator, an Omega slide necklace with diamonds for her birthday one year, she said.
Limehouse, Kovar's vice president of sales, pitched Kovar's invention about 80 times to investors from around the world. He likened the invention to sending information through a large pipeline -- rather than a tiny straw.
One day, Larry Wilcox from the TV series Chips came in to see a demonstration, said former employees. The next day, experts from AOL and COMSAT were there, they said.
A large man who wore his dark hair pompadour-like, Kovar had an uncanny way of making everyone feel like he was in complete control, employees and investors said. He was believable.
Limehouse saw top engineers from COMSAT, a satellite company, grill Kovar with highly technical questions about his invention. "He just sat there answering questions -- the most calm, collected, confident guy in your life," Limehouse said. "And they were in awe over the guy."
The demonstrations typically began with security guards checking identification. Potential investors would be led into the penthouse theater for a video conference demonstration with Kovar and Fishel.
She would be seated in front of a camera in one room. Investors would be seated before a large screen with Kovar and Limehouse in the nearby theater.
Fishel says Kovar told her that real-time video of herself would be piped up to a satellite 22,000 miles above, then down to the investors in the theater. She would start the video conference with her typical, "Hello, gentlemen, does anyone need refreshments?"
At the time, she had no reason to doubt anything Kovar said.
"He looked like a 300-pound teddy bear," said Fishel, 36. "He had this round face and if he said the sun was going to be green tomorrow, you knew that the sun was going to be green."
But sometimes things didn't make sense. Like when Kovar asked Fishel to pause for two seconds during the video conference. She now thinks he was asking her to mimic a delay.
"He'd tell me, 'When I speak to you, count to two before you respond because no one will believe that it's as fast as it is,' " she recalled.
Joe Morgan, a wireless technology expert who was brought in by investors to look at Kovar's technology in 1999, didn't believe it anyway.
Morgan, 58, who now owns Keystone Wireless Inc., said he stepped out during a demonstration one day to take a cell phone call and realized there was no delay between Fishel's voice and the transmission in the demonstration room. "When there was no delay, that means he was running it on a relay: two wires twisted together. That's all it amounts to. I said let me see your satellite bills. It was all a big lie."
The day Limehouse discovered the antenna lying on the floor during a demonstration, he knew something was wrong, too.
"At the time, you have to understand, I thought this guy was a complete genius," said Limehouse, 38.
Later that night he followed the cables from the computer in the theater. He made a grim discovery: Top Gun wasn't coming from a satellite thousands of miles above.
It was coming from the next room.
"It was an awful feeling coming to the realization that something wasn't right here," Limehouse said.
By this time SAS was $4-million in debt and employees were working for nothing but hope.
"It was three years into it and we hadn't generated any significant revenues," said Kovar's cousin and legal adviser, Boring, 45. "We had multiple opportunities ... but every deal for one reason or another would not be completed. And we spent a lot of money."
Kovar's employees had observed a pattern.
"Top engineers and experts came in from all over the world, and they were all overwhelmed and awed and baffled by this technology," Boring said. "But he refused to reveal exactly how it worked. He'd say this is what we're doing and the rest is proprietary information."
Limehouse and Boring went to Kovar with their concerns. Within days, they said, they were fired.
The Kovars had found a buyer, Corsaire Inc., to pay off the debt and take the invention forward. But that relationship soon broke down. "Brent Kovar vanished with the technology," court records allege.
In October 1999, SAS sued Kovar and his parents in Pinellas Circuit Court. A judge ordered Kovar to produce his invention, so he dropped off a box of computer equipment at the office of SAS' lawyers.
SAS attorney David Sockol said an expert tried to decipher the equipment and deemed it was "just junk."
The tragedy of Sept. 11 offered Kovar a new opportunity for his invention. He resurfaced with several new companies, including SkyWay Communication Holding Corp., which marketed homeland security for the airline industry.
He claimed he could provide a continuous video feed with face recognition technology of an airline cockpit so agents on the ground would be able to monitor passenger safety. He said his technology used an antenna network on cell towers to accomplish this feat.
Again Kovar set up demonstrations of the technology -- this time with a TV monitor connecting potential investors to the cockpit of a Cessna flying overhead.
"In 10 years, I see SkyWay as the dominant player in inflight entertainment and security," Kovar would say in a marketing DVD. "We'll be the industry standard. ... If your children are going on board, you can rest assured your children are safe."
LaDuke recalled the night Kovar and his father got up in front of a party of shareholders and employees and announced they had put the technology in Air Force One, the president's plane. There was clapping and back-slapping. The next day, Kovar told her SkyWay had simply acquired a series of towers that Air Force One had used for signal transmission.
LaDuke was floored. Was anything he said true? she wondered.
"He said, 'I can't help what people think about what we tell them. You don't understand how big business works. Everybody does this.' "
Before long, the two dozen investors from Kuwait and Saudi Arabia who had put in $13-million became skeptical about Kovar's spending and his technology, court records show. They complained when SkyWay spent $300,000 on six Hummer vehicles for "marketing" activities and $100,000 on a skybox at Raymond James Stadium in 2004.
They eventually outlined a trail of SkyWay press releases they said falsely pumped up new contracts and relationships with major companies. They filed suit in December 2004, accusing the Kovars of fraud and misrepresentation. Within a year, the Kentucky investors also asked for their money back and sued.
Brent Kovar defended himself in a Tampa Bay Business Journal article in 2005. He said he and other company officers used their $1-million in personal funds to save the company after investors fled.
As SkyWay's debt soared, Brent Kovar sold his stock. Over the course of two months, he got rid of nearly 2-million shares for a total of $314,547, according to Securities and Exchange Commission records. At the same time his parents unloaded $437,125 in stock.
By June 2005, SkyWay had filed for bankruptcy.
This year, Kovar and his parents faced charges in civil court from the first company, Satellite Access Systems. The investors who had bailed the company out of debt in 1999 said Kovar had run off with the technology.
Sockol, the lawyer representing SAS, didn't think the technology was real. But he couldn't prove it.
Instead he argued that the Kovars had stolen it. Brent Kovar, who had run through a string of lawyers and turned up representing himself, said he had returned the technology back in 1999. It wasn't his fault the company couldn't get it working.
During the trial, an expert testified that if SAS had brought what Kovar promised to market, it would have been worth hundreds of millions of dollars.
Sockol is still trying to locate the Kovars' assets. So far he has recovered about $15,000.
The SEC has subpoenaed the Kovars and others involved in SkyWay, according to two attorneys involved in lawsuits. The SEC would not confirm whether it is investigating.
SkyWay is reorganizing under a new name, World Capita Communications Inc. Its owners are some of the Arab investors, bankruptcy records show. They now own Kovar's patent for a formula that compresses data for satellite transmission.
This month, World Capita filed complaints in bankruptcy court against the Kovars. Among the claims: that Kovar and his mother fraudulently transferred more than $600,000 to themselves, "purportedly" for travel and loans they made to the company. They also say Brent Kovar made almost $100,000 in personal purchases on the company's credit at Las Vegas Carting, a motorcycle dealer, International Plaza, a watch company, a dive shop and a spa.
Brent Kovar lives with his mother at his Tierra Verde home with a Hummer parked out front. Speaking in his driveway one day recently, he would only say that "something big" is about to happen. Later in an e-mail response, he said:
"I have been through enough in nine years and many people have suffered including stockholders, employees, myself and family," he wrote. "Please let me go on with my life."
Times researchers Angie Holan Drobnic and Cathy Wos and staff writers Helen Huntley and Scott Barancik contributed to this report.
[ RGM Short Selling Home page ]