HOW MCNELLS MADE AND ENEMY OF MAX HUGEL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00552R000404010003-1
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: July 19, 2010
• Sequence Number: 3
• Publication Date: September 10, 1981
• Content Type: OPEN SOURCE

STAT
Sanitized Copy Approved for Release 2010/07/19: CIA-RDP90-00552R000404010003-1
ARTICLE SPP.~, = ED
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10 Sep ue-rber 1981
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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