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The story of the billion-dollar sale of an amazing new Israeli high-tech medical product that can notify the patient, doctors and emergency services half an hour before an oncoming heart attack seems too good to be true, and probably is.

The Taiwanese company, Micro-Star International, which is supposedly paying $370 million for 37% of the Life Keeper heart monitor patch, said it knows nothing of any such deal. Its representatives never came to Israel to discuss such an agreement. The senior management of SafeSky, the Israeli firm, also never met with the Taiwanese firm, and all the contacts were conducted only via fax and e-mail.

The Israeli press, including TheMarker, covered the billion-dollar story extensively on Monday, but information started pouring in quickly that raised serious questions about the deal. It seems the whole affair was a fraud carried out through the Internet (See box).

Even the Israeli side's lawyer, Gabriel Hake of M. Seligman, never met any of those involved from the other side face-to-face, but only by e-mail, and Hake said the deal was done with an internal MSI lawyer. Such a lack of negotiations and proper due diligence is quite uncommon in the high-tech or bio-tech sectors. Hake said he only prepared the memorandum of understanding and did not meet with the buyer. Though Hake refused to discuss his fee, estimates are the law firm was paid $150,000 for the work.

An MSI spokesperson, Juting Chang, denied any such deal yesterday, telling TheMarker that MSI had never heard of SafeSky or Life Keeper and had never been approached by the Israeli company. MSI said it had investigated the matter internally and determined that there was no truth to the story, nor was the company's British branch involved in such a deal, as had been reported in Israel.

Chang added that the computer equipment manufacturer was not interested in the medical technology sector, and had given up its previous ventures in the field. At the end of the conversation with TheMarker, Chang asked for information on SafeSky, possibly for future legal action.

The two founders of SafeSky, Aharon (Arik) Klein and Dr. Amos Bouchnik, each owns 50% of SafeSky. Bouchnik is steadfast in his insistence that the details of the deal he released to the press are accurate.

The product at the heart of the so-called deal is SafeSky's Life Keeper patch. Supposedly the patch is about as big as a 10-agorot coin and includes a microprocessor designed to monitor various information about the person wearing it, such as heart rate, heart rhythms, body temperature, blood pressure and blood sugar levels, and transmit the data via a Bluetooth wireless connection. The sticker, which is placed on the patient's arm or attached to a watch, can transmit a continuous data stream to a cellular phone and it can identify preliminary symptoms of a heart attack - and broadcast a warning to the mobile phone. The patient's phone can then send out its own warning to a number of preset contacts, such as doctors or an emergency medical service, also informing them of the patient's location using the phone's GPS capabilities.

"The invention was tested for a year and a half," said Bouchnik, calling it an "international breakthrough. We are used to doctors not being impressed, but at the end of the presentation they applauded," he told Army Radio yesterday morning.

In addition, Bouchnik revealed on the radio that mobile phone giant Nokia was installing Life Keeper's software on all its mobile phones.

Nokia said it did not release any statement on the matter and that the company does not comment on rumors.

Klein is the firm's president, and supposedly is the man behind the product's patents and algorithms - even though he has no technical or medical background. He also served two prison terms for fraud. In 1997 he was sentenced to 40 months in prison and in 2002 was again arrested for fraud and check-forging, and sent back to prison in 2003. He says he spent much of his time in jail developing the product.

As to his partner's criminal record, Bouchnik said: "So what. I kow all about it. He committed crimes in the past, paid his debt to society and today he is cleaner than clean. Klein is the one leading the development. He has worked on it for eight to 10 years and we have other new developments that will surprise everyone," said Bouchnik. "I have a notarized copy of the agreement," he added in response to doubts raised about the validity of the deal.

In addition to being the company's chairman Bouchnik is a practicing dentist, and owns a chain of dental clinics with 16 branches in Israel. He also owns 17% of the Sialo biotech firm and 50% of the Eshed Group media and marketing company.

SafeSky CEO Dr. Gavriel Picker is also a dentist - and is a childhood friend of Prime Minister Benjamin Netanyahu, a former patient. The two have known each other since first grade, in Jerusalem's Katamon neighborhood, Picker said. Picker has not practiced dentistry for over a decade, and is now an independent businessman and consultant. He also serves on the boards of several well-known firsm: Kamor Motors, Eliyahu Insurance and the IDB Goup's Property and Building - and he is considered a close friend of Nochi Dankner, IDB's controlling owner.

Former senior Mossad official Hagai Hadas, responsible for the negotiations over the release of captive soldier Gilad Shalit, is also a director of SafeSky. He told TheMarker yesterday he had seen the Life Keeper patch and examined it himself. He called Klein "very talented" and said the company had a number of other technologies Klein had developed. Klein had very advanced technological abilities, Hadas said, "but in the past he had chosen to use them improperly, and paid the price. Today he is harnessed to the real thing. In the next few days everyone will see the proof of the deal," Hadas said.

Picker also said the company does not have any cardiologists involved in product development or testing, though he assumes that MSI does. In addition, he said that he does not know whether U.S. Food and Drug Administration approval has been obtained for the product, but he is checking into it. Picker did say that such approval was most likely unnecessary as the patch is non-invasive. He refused to reveal further technological information, saying it was patented and proprietary, but the trial results were clear and convincing.

The Chief Scientist's Office had also never heard of the Life Keeper product, until it read about it in the press. Israeli high-tech companies usually ask the Chief Scientist for various forms of aid, including investment. It also seems the Israel Tax Authority knows not of the sale, despite the fact that companies that negotiate large deals usually contact the ITA in advance to work out the tax implications, which would be huge in the case of a $370 million payment. There are cases, even billion-dollar ones, where the companies pay the full tax, such as when Warren Buffett's Berkshire Hathaway bought Iscar from the Wertheimer family for NIS 3.7 billion, and Iscar paid the tax in full.

It does seem that SafeSky has tried to raise funds from investors over the past few months. One investor who met with Klein twice a few months ago said the meeting was "weird." He said Klein did show some sort of a presentation on his laptop but did not even bring along the patch. "When we asked him where the patch was, he avoided the question and said he had forgotten it. When we tried to understand what he actually had ready, he admitted there was still no trial yet and the product had not been examined by experts in the field. We had the impression that if there was [new] technology, it was still in its infancy," said the investor.

The anonymous investor did say that Klein was well-spoken, dropped the names of respectable people in the field and was quite impressive, "but our feeling at the end of the meeting was this was an attempt to find investors who do not understand [the business]," he said.

Other investors expressed similar opinions, even calling Klein charismatic, smart and convincing. But one senior physician who met with Klein said, "In the end I left the meeting thinking that I wouldn't buy a used car from him." The doctor said the problem was Klein's pretentiousness, explaining that Klein told stories, showed the patch but refused to explain the technology behind it - and "there was a huge gap between his claims and the evidence that he presented," the doctor said.