A recent 'cryptogram' (by Bruce Schneier) discusses several psuedo-crypto
companies, their "secure" algorithms, and misimformation...

The complete text can be found at: www.counterpane.com. Check for the
Feb. 15 edition.

Here's a brief protion:

Warning Sign #1: Pseudo-mathematical gobbledygook.

In the quote above, notice the "unique in-house developed incremental base
shift algorithm." Does anyone have any idea what that means? Are there
any academic papers that discuss this concept? Long noun chains don't
automatically imply security.

Meganet has a beauty on their Web site: "The base
of VME is a Virtual Matrix, a matrix of binary values which is infinity in
size in theory and therefore have no redundant value. The data to be
encrypted is compared to the data in the Virtual Matrix. Once a match is
found, a set of pointers that indicate how to navigate inside the Virtual
Matrix is created. That set of pointers (which is worthless unless
pointing to the right Virtual Matrix) is then further encrypted in dozens
other algorithms in different stages to create an avalanche effect. The
result is an encrypted file that even if decrypted is completely
meaningless since the decrypted data is not the actual data but rather a
set of pointers. Considering that each session of VME has a unique
different Virtual Matrix and that the data pattern within the Virtual
Matrix is completely random and non-redundant, there is no way to derive
the data out of the pointer set." This makes no sense, even to an expert.