Or, maybe the original story was true that he was actually fired simply for having multiple jobs, because the bosses were butthurt, and the later edit about low performance was not really entirely accurate.

It doesnt sound a bit strange to you when the OP states that "his talent went to waste"? Don't you think the "best engineer you ever worked with" could pass an interview rather easily (I mean, he already did at least 3 times) and get back to work somewhere else? Is the OP implying that losing this particular job was so devastating that this brilliant engineer quit the industry?