The partial sale of an Israeli medical device firm to a British-Taiwanese company for $370 million has turned out to be an elaborate hoax, taking in serious businesspeople, senior doctors, former intelligence officers, political insiders and most of the Israeli media.

SafeSky seemed to have it all: a managing director who is the Prime Minister’s best friend, an invention that could change the medical world forever, a former Mossad deputy chief on the board and the potential to make all those involved into multi-millionaires.

The company, owned by Dr Amos Buchnik and Arik Klein, had apparently developed a sticker that could give a 30-minute warning of an impending heart attack, if worn on the chest.

The presentations were enthusiastic, and businessmen and doctors lined up to invest. Dr Gabi Picker, a childhood friend and former advisor of Binyamin Netanyahu, was drafted in as the managing director.

Hagai Hadas, the former number two in the Mossad and Mr Netanyahu’s personal representative in the talks over captured soldier Gilad Shalit, became a director.

And then, two weeks ago, came the breakthrough. MSI, the Taiwanese computer giant which is part British-owned, was about to sign an agreement to buy 37 per cent of SafeSky for $370 million, giving it a valuation of $1 billion.

Shareholders began to calculate their profits and the media celebrated yet another Israeli high-tech success.

But a couple of journalists called up the MSI offices in London and then Taipei, and could not find anyone who knew what they were talking about. The story unravelled in a matter of days.

Klein was an established fraudster who had served two prison terms for fraud. The presentations had been orchestrated by a freelance computer programmer from Cyprus and no serious doctor could be found to vouch for the wonder sticker.

But how had the directors of the company been hoodwinked so easily?

It turned out that all the correspondence they had seen between SafeSky and MSI on the impending deal had been between SafeSky and a false email registered in Klein’s name. A statement by MSI denying “any knowledge or involvement of this alleged transaction” and a threat of legal action ended the speculation.

Dr Picker resigned in embarrassment after he realised he had been hoodwinked, followed by Mr Hadas.

The PM’s Office was forced to put out a statement expressing its confidence in the special representative, but Mr Hadas’s image as the man who can deal with Hamas has been tarnished.

“It seems incredible that so many experienced operators were fooled so easily,” said a Jerusalem businessman who was approached to invest in SafeSky, “but when someone is faced with the prospect of making so much money in a short time, it is hard to resist.”