She learned that Stark was particularly paranoid with his personal information, specifically in regards to his War Machine project. His primary databases were encrypted using a key derived from his biometric data, meaning that someone had to be Tony Stark in order to access it.
Unhindered, Demona obtained a sample of Tony's blood and used it in a ritual to create a magical clone - a homunculus - of Stark, implanting it with all the information and memories needed to fulfill her plan. The Gargoyle knew that there was no way that she could just replace Stark, as his friends and colleagues knew him too well and would immediately know something was amiss. Therefore, Demona had to come up with a new plan to get her creation in control of Stark's company.
The Xanatos family was old money, the product of generations of investments. Their oldest child, David, was pretty unremarkable for an heir to a multi-million dollar fortune. He loved to ski and spent much of the winter months traveling to the world's greatest ski slopes to spend his inheritance. He had taken many trips on his father's private jet, but on the occasion something went wrong and the plane crashed in the Colorado Rockies.
David was taken to the local hospital where he was stabilized but had suffered severe burns and scarring to his upper torso. In order to repair his damaged face, he was flown to a private clinic where emergency plastic surgery was conducted. When he healed, he was handsome again, but many people noted how different he looked and acted. The trauma of the accident had seemed to make him like another person.
No cared enough to investigate the changes to David or the fact that over the next year very paramedic, doctor, nurse, or attendant mysterious passed away of a number of completely normal-appearing illnesses and accidents. Even when David's parents both passed away because of a severe case of influenza, the coroner ruled it "natural causes". All according to plan.
When Stark was declared dead after the Watchtower Incident, Stark Industries stock took a nosedive, further dropping after word emerged that the leader of Checkmate, Henry Gyrich was reevaluating the effectiveness of the War Machine project. Using his fortune David Xanatos bought controlling stock in Stark Industries and renamed it Xanatos Enterprises. His rebranding of the coffee-shop Stark-Bucks to breakfast-focused Xana-Toast was particularly hard for Mel to take...
Gaining access to the Stark Files, Xanatos' programming kicked in and he gave Demona data so she could barter with Orchis. Fascinating by the schematics himself and the newly, Xanatos used the War Machine schematics to create the Steel Clan, autonomous robots that looked like metal versions of the Gargoyle Goliath.
With the defeat of Destine by the Mythic Avengers, the Gargoyle could not control David any longer. Unable to utter the code-phrase to keep Xanatos under her control, David began to have doubts about what he was doing and who he actually was. Using his advanced knowledge of computers he hacked into her personal files and discovered the truth about his life.
Losing his touch with reality, he became obsessed with the Gargoyles and pursued them mercilessly. Discovering a way of entering Outland, he sent his Steel Clan in the pocket dimension, immediately raising the ire of Ken and the Mythic Avengers. In the following battle at Xanatos Tower, David donned a suit of Red Clan armor very reminiscent of Iron Man. He was soundly defeated and incarcerated in the Black Mass detention facility for observation.
Knowing he was a copy, David Xanatos signed over his stock in the company to Stark. Tony said he always wanted a brother and surprised everyone by welcoming David into the family. Because David was not his real identity, the homunculus renamed himself as Arno Stark, after Tony's late uncle Arnold.
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