NEW YORK, OCT. 8 -- Two brothers, whose allegations against Max Hugel forced him to resign as deputy director of central intelligence in 1981, were sentenced to prison here today for stealing $284,000 from two small companies they ran.
Thomas R. and Samuel F. McNell Jr., who disappeared for nearly six years after their accusations against Hugel, resurfaced last spring and pleaded guilty to interstate transportation of stolen property. A separate civil action alleges that they stole as much as $3 million.
U.S. District Court Judge Vincent Broderick sentenced Thomas McNell to five years in prison and Samuel to four years. The brothers, who ran two oil and gas firms out of a small Broadway office, vanished in August 1981 after The Washington Post published their allegations of improper financial activities by Hugel, a former business associate.
Hugel, who had been put in charge of the covert operations at the Central Intelligence Agency by then-director William J. Casey, strongly denied the allegations but promptly resigned, saying he sought to avoid further embarrassment to the administration.
Hugel, now a private businessman active in Republican politics, said from Washington today that the McNells' sentencing was "further vindication of what I've been saying all along -- their allegations were totally false, irresponsible and never should have been made in the first place."
Hugel had papers served on the brothers here today in an effort to collect a $931,000 judgment he won against them in a defamation suit. He was awarded the money after the McNells failed to appear in a New Hampshire court to contest the suit.
According to Samuel Schmidt, Thomas McNell's court-appointed attorney, the brothers had been hiding in "small towns in Nevada and California" since their disappearance.
Thomas McNell was arrested last May in a hotel bar in California and charged with illegal possession of guns. Samuel McNell surrendered in June and remains free on a $250,000 personal-recognizance bond secured by a lien on his wife's house in Holmdel, N.J. Both men pleaded guilty June 18.
The McNells, asking the judge for leniency, blamed their actions on Hugel, who they said threatened several times to kill them. "There was no doubt in my mind that Hugel would eventually try to kill my brother and I," Thomas McNell told the judge.
Hugel called the allegation about threats "absolutely, totally and utterly ridiculous. I can't believe anyone would believe what they say after what they did. They ran away because they stole $3 million of someone's money. I've become a convenient excuse for everything they did."
Samuel McNell told the judge, "Back in 1981, I really wasn't thinking quite rationally. The pressures of the Max thing and the CIA just caused us to act irrationally. I hope the court may have a little mercy on us."
After long deliberation in chambers, Judge Broderick said, "I accept the argument that the McNells were deathly afraid of a man named Max Hugel, who had made covert and perhaps even overt death threats against them and even their attorney. Fear could explain going into hiding, but it doesn't explain stealing."
According to the indictment, the scheme to remove assets from the Triad Energy Corp., headed by Samuel McNell, and Everest Petroleum Inc., headed by Thomas McNell, began in April 1981 before their allegations against Hugel.
The indictment said the brothers began moving money into Swiss bank accounts to "conceal their fraudulent theft and conversion of corporate funds until they fled" from New York.
In an article July 14, 1981, The Post reported the McNells' allegations that Hugel provided them with "insider" information about a New York wholesale firm he headed and that Hugel had engaged in questionable stock-market transactions to try boosting the value of the company's stock.
The article also quoted some of the brothers' secretly recorded telephone converations with Hugel.
At the time, Hugel said the McNells had threatened to "blackmail" him when he tried to sever their business connection and collect several hundred thousand dollars in loans in the 1970s.
The McNells, who also received suspended prison sentences and probation today, still face state charges of grand larcency related to the case.Staff writer Howard Kurtz contributed to this report.