CIA SPYMASTER IS ADMITTING IMPROPER STOCK PRACTICES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00552R000404020013-9
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: July 14, 2010
• Sequence Number: 13
• Publication Date: July 14, 1981
• Content Type: OPEN SOURCE

Sanitized Copy Approved for Release 2010/07/14: CIA-RDP90-00552R000404020013-9
JIAI
ARTICLE APPEARED
ON PAGE_ _ - r _
By Bob Woodward and Patrick E.Tyler
Washington Post atatt Writes :
Max Hugel, who holds one of the most
eensitive jobs in the Reagan administration
es chief of the CIA's clandestine service,
engaged in a pattern'of improper or illegal
.took market practices. in the mid-1970s
that was intended to boost the stock of the
New York wholesale firm he headed, ac-'
cording to two former .business associates
who secretly tape-recorded Hugel's busi-
ness conversations.
The allegations against: Hugel, 56, are
made by two former Wall. Street brokers,
'T'homas R. McNeil, 49, and his brother Sa-
muel F. McNeil, 47, who charge that they
participated with Hugel in a series of pro-.
hibited _practices which deceived other in-
vestors. Several securities experts, con-
sulted about the ease, agree that Hugel's
pa rticipation in these activities, if true.
would be at least improper and perhaps il-
legal.
The McNells' tapes and documents cor-
roborate these accusations: Hugel provided
them with "insider" inforrmation on the
company he headed in advance of disclo-
sure to other investors and the general
public, Hugel improperly funneled funds to
McNeil Securities, the principal firm trad-
ing in his company's stock, Brother Inter-
national Corp., through loans to Samuel
McNeil as a middleman.
The McNells, who admit their own cul-
pability in these activities, further allege
that Hugel, relying on a business associate,
orchestrated the phased purchase of 15,000
shares of his company's stock to create the
appearance of increased market interest in
it.
As the Central Intelligence Agency's '
deputy director for operations, Hugel today
THE WASHING-OtN POST
14 July 1981
worldwide - nefwork of covert intelligence i , _ ?. aewuiuruiieu uy
agents. He emphatically denies any wrong-I his two lawyers,. and Sporkin, rep-
doing in his business relationships with the II resenting the CIA, met with report-
McNells and accuses them of- threatening': era and editors at The Washington
him with "blackmail" when he tried belat- Post to review the accusations and
edly to sever the business connections and records. Hugel said he canceled a
collect several hundred thousand dollars in weekend trip on an important over-
loans. seas "operation" in order to confront
Hugel, however, did not report any , the charges.
blackmail threats to the .CIA's Office of Se- I "There isn't any question I won't
curity which reviewed his past for the nec- answer," Hugel said. "'T'his is a very
essary security clearances. Hugel describes serious matter, my friends. My per-
the McNells as "vindictive" people who, sonal reputation is at stake. I intend
among other things, tried to swindle him. to see this thing through to its very
He dismissed all of their accusations as re- end."
sentments left over from their ill-fated Hugel and his attorneys requested
business connections in 1974 that ended in ' a second meeting with Post reporters,
bankruptcy for Thomas McNell.. yesterday at which they presented i
Beyond th_e accusations of improper be- some documents and repeated
havior, the McNeil tapes_ portray.ia~c Hugel's denials. Hugel said some of
Hugel as a combative and volatile his emphatic denials of last Friday
person, given to profanities and may have appeared misleading, par- i
angry expressions. At one point, titularly in light of the tape record- j
when the business relationship was ings, but he had no intention of de-
souring,.Hugel expressed' his rage at ceiving. Again he said he is innocent
the McNells' Wall Street lawyer. "I'll of any intent to conspire with the
kill the bastard," he said. On another McNiells or anyone else.
tape, Hugel suggests that Thomas ; I never profited one penny from
Lhe purchase or sale of Brother
McNeil might be found "hanging by I stock," I~iugel said. Of his 20 years ,
the balls p the outstanding loans with Brother International, he said,
were not repaid. "I'm proud of what I did and I'm
These revelations of stock market proud of it now."
irregularities confront the leadership ! Friday's response to point by- 1
at the CIA with special irony. Hugel
was brought from the Reagan cam- ! point questions, Hugel denied ever
neigh organization into the sensitive E sharing any insider" information
job of spymaster by CIA Director ; with the McNeil firm while it was
William J. Casey over the objections . making a market in his company's
of some senior officials to his lack of stock as well as the other allegations.
experience. Casey is himself a former When several. of the tape recordings
chairman of the Securities and Ex- I were played for him and his lawyers,
change Commission which polices ; Hugel said he recognized his own
Wall Street and he chose as CIA voice but he didn t know what to
' make of the conversations. His law-
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eneral counse
has access to the U.S. governments moat g y p? j . yers advised him not to answer fur-
fnr ' mAnv wan wax the chief en- . ..ley could
Sanitized Copy Approved for Release 2010/07/14: CIA-RDP90-00552R000404020013-9 _,:__ _uld