Document Type: 
Document Number (FOIA) /ESDN (CREST): 
Release Decision: 
Original Classification: 
Document Page Count: 
Document Creation Date: 
December 22, 2016
Document Release Date: 
July 19, 2010
Sequence Number: 
Case Number: 
Publication Date: 
September 10, 1981
Content Type: 
PDF icon CIA-RDP90-00552R000404010003-1.pdf113.58 KB
STAT Sanitized Copy Approved for Release 2010/07/19: CIA-RDP90-00552R000404010003-1 ARTICLE SPP.~, = ED ON PJtGE -7 10 Sep ue-rber 1981 fl. ~/ Mel efls AMa anEnemy Post Eventually be met a Post reporter in New York and, on July 14. the Post pub- lished the McNells' -story of their dealings with CIA man Hugel. The tale: That back. in 1974. when they were in the securities business, Mr. Hugel gave them "inside" information about Brother Interne tional Corp,. of which Mr. Hugel then was president That he. lent' money to the Mc- Nells-improperly, 'because the securities By PAUL BLUSTEIN S raft R 'porl. o/ TH"r. WALL STREW JOURNAL NEW YORK-It was right out of a classy potboiler. Two brothers, oil men, accuse the Central Intelligence Agency's chief, spook of v'clating securities law. The brothers and $3 million mysteriously vanish. A third brother, only 42, suddenly dies. The CIA, naturally, takes an interest in the case. So does the Federal Bureau of In- v estiga.tion. It all leaves the New York Daily News breathing hard. "The story," says the paper, "reaches into the labyrinths of the Washington bureaucracy, the monied halls of Wall Street...." Soon, it seems, agents of the KGB, the RCMP, or Charlie's Angels :x'11 appear. Nope. More like agents from the IRS-for the true story, as it turns out, seems a bit i more run-of-the-mill. The brothers Samuel and Thomas MclNell, a lawsuit and other ev- idence now suggests, tried to blow a whistle on former CIA director of covert operations Max C. Hugel because the tough-minded Mr. Hugel had lent them money that he ungra- ciously made them repay; even making one of them give a- mortgage on his home to se- cure the debt. Suit Against Brothers To repay Mr. Hugel, the suit says, the brothers took funds that outside investors had put in their oil businesses. Then the brothers, ]n the belief that interest rates would fall, allegedly plunged heavily in the Treasury bill and bond futures markets. In- terest rates rose, the brothers dropped a bundle, and blew town. Just before they dis- appeared they made charges against Mr. Hugel that cost him his job. On Sept. 2, lawyers for the two oil com- panies that the McNells had controlled, Triad Energy Corp. and Everest Petroleum Inc., filed suit against the brothers in fed- eral court in New York.' The suit charged them with taking more than $3 million in company funds and losing at least a third of it in six months of speculation that began: in December I5'S9. In May or June, the two brothers began traveling around the. country and even t Switzerland. One of them,- Tom McNeil,l made a series of telephone calls from booths throughout the country to the Washington firm was a market maker in Brother stock -to finance the purchase of a big position in ) Brother. That after 1974's market crash put Il the McNells' securities firm out of business, Mr. Hugel harassed and angered the Mc- Neils by demanding repayment of the loans. Mr. Hual, who denied any wrongdoing, since has resigned from the CIA. Treasury Futures Now, the lawsuit filed in New York al- leges that the McNells used $90,000 in funds taken from the oil businesses last Decem- ber, just before they began speculating in the- futures market, to repurchase family real estate in Maine from their old antago- nist, Mr. Hugel; he had assumed control of the property because of the debt the Mc- Nells owed him. In spring 1981, according to the suit, the McNeils used additional com- pany money for a final ? repayment to Mr. Hugel,. who- then returned a $275,000 mort- gage he held on Sam McNeil's New Jersey home. The McNells' two oil companies, Triad and Everest, went into business only last year. Triad raised initial capital of $700,000 in the spring of 1980. It sold $2.5 million of shares in a public stock offering last Febru- ary, while the brothers were allegedly spec- ulating In Treasury bill and bond futures. Everest raised $1.2 million in the fall of 1950, and actually used some of the money I to successfully drill for wells in New York State. Sam McNeil, 47, was Triad's presi- dent; Tom McNell, 49, was Everest's. According to the lawsuit, the brothers, through Everest trading accounts, gained $26,257.50 in Treasury futures in December 1980. Then the market turned against them. The accounts, according to the suit, dropped 5203.000 in January, $220,000 in February, $196,000 in March, $400,009' in ' April, and $116,000 in May, when. the brothers became increasingly hard to reach. The suit also charges that the McNells funneled corporate money into personal trading accounts. . The June 1 death of a third brother, Den- nis, raised questions. On July 29, the Chi- cago Tribune published a story quoting a .di- rector of Triad Energy as- saying he had heard Dennis had been twice beaten before his death. Another Triad director and old friend of the McNells, -Thomas Walsh, now says that' Dennis was indeed beaten-in fights in a bar he had - owned in a tough Queens, New York. neighborhood. "He told me," W. Walsh says. of - Dennis, " 'The dumbest thing an Irishman can do is open a -bar in an Italian neighborhood.'-" A few days ago, as. television cameras whirred and shutters clicked, a wooden cas- ket containing the body of Dennis McNeil was lift'ed out of its plot in a Maine ceme- tery, loaded into a blue hearse, and taken to a morgue 50 miles away. After an eight-hour autopsy, pathologists determined that Den- nis had hepatitis and cirrhosis of the liver and had died a natural death. The other brothers are still unreachable. Sanitized Copy Approved for Release 2010/07/19: CIA-RDP90-00552R000404010003-1