On August 7, 2005, approximately 0900 mountain daylight time, a Sheel Vans RV-8, N5754S, piloted by a private pilot, was substantially damaged when it impacted terrain during a descent at the Fort Collins/Loveland Municipal Airport (FNL), Fort Collins, Colorado. Visual meteorological conditions prevailed at the time of the accident. The local personal flight was being conducted under the provisions of Title 14 CFR Part 91. The pilot was seriously injured and a passenger was fatally injured. The flight was originating at the time of the accident. The passenger's wife dropped her husband off at the airport shortly before 0900 for a flight with her father, the pilot. Witnesses reported the airplane departed runway 33. During the initial climb out, the airplane was seen to make a steep bank to the left, pitch down, and descend into the terrain. According to a witness, "I saw the light plane in a high left bank like it was trying to land on runway 15. Suddenly, the plane made an abrupt (steep) descent (approximately 45 degrees) nose down. About 50 feet above the ground, it seemed the pilot tried to level off. The plane impacted the ground at a lower angle of attack (I would say 15-20 degrees)." An FAA inspector, who was at the airport but did not witness the accident, immediately responded to the accident site. He said he found the fuel selector valve on the left tank and the left fuel tank was empty. The right fuel tank contained approximately "one inch" of fuel. One blade of the propeller was bent under the engine cowling, and the other was slightly damaged. The engine, a Lycoming O-360-A1A (s/n L-38634-36A), rated at 180 horsepower, had been extensively modified. On November 17, 2005, it was disassembled and examined at Beegles Aircraft Service, Greeley, Colorado. Engine continuity was confirmed. All cylinders had compression. The left magneto produced spark when turned. In place of a right magneto, the airplane was equipped with an automotive electronic ignition system. All eight spark plugs were of the automotive-type. There was no fuel in the engine-driven fuel pump, electrically-driven fuel pump, or fuel injectors. The engine data recorder was sent to the manufacturer. Data downloaded was found to be corrupt and meaningless.