Mr Hendy-Freegard denies the charges
A teacher was ordered by a bogus MI5 agent to pretend to be homosexual as part of a secret mission to expose an IRA cell, a court has heard.
John Atkinson, 34, told London's Blackfriars Crown Court on Thursday that his "coming out" was one of several bizarre precursors to a "life on the run" from imaginary terrorists.
Mr Atkinson has alleged Robert Hendy-Freegard, a 32-year-old car salesman, pretended he was working undercover to bring an IRA gang to justice and then "recruited" him to help.
Mr Hendy-Freegard, from Blyth, near Worksop, Nottinghamshire, denies charges including kidnap, making threats to kill and deception.
Mr Atkinson, who was approached by the car salesman when he was a student at Harper Adams Agricultural College in Newport, Shropshire, accepted he had not displayed a great deal of intelligence.
"I was the most stupid person going at the time," he admitted to London's Blackfriars Crown Court.
Mr Atkinson said he had become "scared and paranoid" and agreed to a series of "tests" to toughen him up and give him the skills he would need for the task ahead.
He told the jury the tests included a number of "blindfolded" beatings at the defendant's hands, wearing a woman's dress in a pub, sporting a "ridiculous" haircut, punching a fellow student and then hunting for another one to kiss.
John Atkinson said he had been very "stupid"
'Decade of deceit'
The court has heard that he and two women students at Harper Adams eventually spent years moving around the UK to try to stay one step ahead of the provisional killers said to be on their trail.
Mr Hendy-Freegard is accused of conning Mr Atkinson, his parents and five other victims out of more than £650,000 during a decade of deceit.
The car salesman denies 21 offences, including allegations of kidnapping by "force or fraud", theft, deception, assaults and threats to kill between 1993 and last year, when he was arrested.
Mr Atkinson, who was spending his third day giving evidence behind screens, denied inventing his account.
'Four years of hell'
Questioned by Martin Hicks QC about his so-called "coming out" in early 1993, Mr Atkinson insisted he had been acting under the defendant's orders.
He said he had been told the reactions of fellow students might help identify IRA members he had been told were at the college.
During cross-examination, Mr Hicks accused the 34-year-old of being the real source of the IRA storyline.
Mr Atkinson replied: "I did not go through four years of hell from that man and then go through seven years of studying and working my hardest to rebuild my life to then come back to this court and humiliate myself and disgrace my family and take that kind of nonsense from anybody.
"How dare you insult me?"
He later apologised to Mr Hicks, saying: "I apologise for attacking you.
"I understand you are in a very difficult position defending the indefensible."
The trial continues.