http://www.youtube.com/watch?v=tib2Urowsdc
Both he and his students were completely convinced that the junk he was teaching them was real. This is what happens when you train in a little cocoon, and don't venture out into the real world to test things out.
While this is an extreme example, it's not really that much different than the things that many of the people post here. Just look at how many people talk about the skill of this or that grandmaster, but there is absolutely no evidence of this person doing anything skillful outside of the training facility with his own students or students attending a seminar.
It's also not that much different than those who claim certain techniques (can we say standing joint locks) are valid, although there is next to no evidence of these things working on a consistent basis.
And yes, this guy was talking crap about MMA being a sport with rules and how he had actually fought many times on the street and was also undefeated in over 200 no rules matches... and, until this match, there was no evidence of his skills, except as "felt" by his students. Sound familiar?