A police inquiry into allegations that a VIP paedophile ring had operated in Westminster and murdered three boys found parts of the accuser's account were "totally unfounded, hopelessly compromised and irredeemably contradicted", a court heard.
Carl Beech, known by the pseudonym Nick, went on the run to Sweden when his extremely damaging allegations were proved to be false, jurors were told.
The 51-year-old father from Gloucester had drawn sketches that appeared to be related to the abuse he claimed to have suffered, including demons and smaller figures surrounded by red.
He is on trial at Newcastle Crown Court, where he denies 12 counts of perverting the course of justice and one count of fraud.
Tony Badenoch QC, prosecuting, said his accusations against powerful figures in the military, security services, politicians such as Sir Edward Heath and Lord Brittan, and Jimmy Savile, were among the "most heinous" that could be made.
His claims were initially made to Wiltshire Police and then the Metropolitan Police, sparked the £2 million Operation Midland and led to elderly suspects such as Lord Brittan, Lord Bramall, who is a former head of the Army, and ex-MP Harvey Proctor having their homes raided.
When that inquiry was ultimately stopped, Northumbria Police was tasked with looking into the accuser himself, and his three-bedroom rented property, with his £30,000 Ford Mustang convertible parked outside, was raided.
Mr Badenoch said: "Northumbria Police followed a number of lines of inquiry and found that key elements of the story were totally unfounded, hopelessly compromised and irredeemably contradicted by other testimony."
Prosecutors said Beech claimed the VIP ring held his head underwater to make him comply with their sick wishes, leaving him with a lifelong fear of water - but revealed he was photographed snorkelling on his honeymoon.
It also said Beech claimed to have been sexually abused on Ted Heath's yacht, describing it as having double beds and cabins - but interviews with his crew revealed the racing boat had only hammocks.
And the jury was told Beech claimed Lord Bramall was a regular abuser, but the prosecution said that during the 1970s, at the height of the Northern Irish terror threat, such a senior figure lived behind barbed wire and had constant security with him.
Dawn Beech, his wife of 22 years, said a penknife he claimed Mr Proctor threatened to use on him to cut his genitals was actually an object he had kept in his "happy memory box", jurors were told.
The prosecution said Beech fled to Sweden as a "fugitive" when he was charged and had to be extradited.
The jury was played a video of a police interview in which he wept as he claimed a schoolmate was murdered because he defied a warning not to make friends.
Mr Badenoch said that the allegations all concerned young boys, saying: "It is quite impossible to conceive of allegations of a worse kind to be made."
The prosecution described it as an "extraordinary tale", and said he picked his "targets" after conducting internet research.
The court heard Beech's lies also gave false hope of news to the family of 15-year-old Martin Allen, who disappeared in 1979.
In his 40s, Beech claimed that as a schoolboy he had seen "literally dozens" of powerful men in the paedophile ring, at locations ranging across four counties, the south coast of England, and all over London, and that he was taken out of school one day a week for this to happen.
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Mr Badenoch told jurors that a Metropolitan Police officer had at the time described the allegations as "credible and true", and said the force launched Operation Midland as a result in November 2014.
Beech was given anonymity as a complainant of sexual abuse, and was therefore given the name Nick.
He said that Lord Brittan had died after his own home was searched and while the investigation into Beech's claims was still active.
Mr Badenoch said that the three men had all suffered "immeasurable distress" and "reputational damage", adding that Lord Bramall's wife had died "whilst the file was still open".