I had a new hire last year that did this. He interviewed pretty well and we brought him on as contract-to-hire through a placement company.
We're a small company, so it was pretty easy to have everything set up for him on day one to begin contributing. The first day was spent getting to know other members of the team and we were working to get him familiar with the codebase of a new application that we were working on. We had identified 10 or so tickets, new data entry pages and some UI bug fixes, that we thought would be a gentle introduction to the new app and walked him through a couple.
The first couple of days were okay, but I started observing strange behavior. He didn't contribute in meetings, but he was very outspoken when explaining why this project was substantially more difficult than we'd thought. Also, he kept coming back to the need for us to completely throw out all of the prior work because it was "all wrong." The explanations never got any deeper than that, though. I also noted a couple of exchanges in which I found his behavior towards our project manager to be somewhat belligerent when discussing project details.
At first, I just figured he was carrying some of his previous shop with him and that that was how he was used to communicating. I gave him a week to prototype his architectural recommendations and pulled him off of all meetings so that he could focus on it. This also gave me a convenient way to separate him and the project manager from further confrontation while I examined the situation.
The week passed and his prototype looked like he'd worked on it for about an hour. I asked him if he thought this was working out and he admitted that it wasn't. I then asked him if he wanted to terminate the contract and he jumped at the opportunity.
Speaking with the placement firm later that day, they apologized and said that he had admitted to them that he'd been working another full-time job and that he couldn't keep it up anymore. They offered to forgo charging me for the last two weeks. We still lost a substantial amount of time on the project.
Start to finish, this whole episode took a little over three weeks and we were lucky to get out of it so quickly. The kicker was that I was able to replace all of the shoddy code that this guy wrote over that period in one long Saturday evening.
I'm more afraid of hiring people I don't know now. There's no coding test that will tell you if someone is just going to lie right to your face every day.