CIA spun off financial speculators in the 1980s

(WMR)—When William Casey took over as CIA director in 1981, he brought with him into Langley a team of fellow Wall Street businessmen whose first priority was to milk the intelligence agency for every drop of usable information they could gather in order to game the stock market while armed with top secret intelligence findings.

WMR has discovered a collection of now-declassified CIA documents that point to the frustration of the CIA in trying to identify the sources of leaks of classified information to investors who paid top dollar for exclusive access to the intelligence collected by U.S. intelligence sources and methods around the globe.

Casey brought with him into the CIA, a New Hampshire businessmen named Max Hugel. His only intelligence experience having been as a junior Army intelligence officer in World War II and someone who took advantage of Japan’s defeat to corner the American market in imported Japanese sewing machines through his Brother International typewriter company, Hugel became the deputy director of operations at the CIA, a post previously held by such professional spies as Allen Dulles, Richard Bissell, and William Colby and a job that placed Hugel in charge of the CIA’s clandestine operations around the world. CIA veterans were not only upset with Hugel’s gruff Brooklyn Jewish mannerisms but also with his close connections with known Israeli intelligence operatives in Washington and New York.

Casey wanted Hugel in charge of the CIA’s clandestine service because he believed Hugel would excel at establishing CIA “off-the-shelf” proprietary companies to hide agency clandestine operations from congressional oversight. Casey’s reliance on proprietaries would help doom him and several other CIA officials in the Iran-contra scandal.

Because Hugel’s appointment did not require Senate confirmation, the old CIA hands were not able to mount a Senate whispering campaign against Hugel. Casey’s choice had helped Ronald Reagan win the 1980 New Hampshire primary and Casey, as national campaign chair, owed Hugel in a major way. Instead, CIA veterans had to force Hugel out of Langley’s ranks in another way.

Those who wanted to be rid of Hugel had a dangerous path to travel. Casey also brought into the CIA as general counsel, former Securities and Exchange Commission (SEC) Enforcement Director Stanley Sporkin, a member of Casey’s Wall Street cabal. As long as Sporkin covered for Hugel, the Clandestine Services chief would be immune. And Sporkin was useful in covering up Casey’s own problems with business fraud. Casey successfully beat back calls for his resignation for a 1981 swindle in which Casey misled investors in buying shares in a company that he knew would go bankrupt.

The anti-Hugel faction saw a major opportunity to remove Hugel when it was discovered that in the 1970s Hugel manipulated the stock of a partner firm of Brother International, Centronics Data Computer Corporation of New Hampshire, the manufacturer of printers and a firm for which Hugel served as chief operating officer. Sporkin, the chief SEC enforcement officer, appeared to have let Hugel’s stock manipulations to proceed without a peep from the federal regulators.

Three brothers, all principals in a firm called Triad Energy Corporation of New York, Samuel, Thomas, and Dennis McNell, charged that Hugel was involved in swindling $3 million from Triad’s bank account. On May 31, Dennis McNell left his Queens home to go jogging. McNell returned home with a ruptured spleen, He was rushed to the hospital where he later died from his injuries. It later emerged that Dennis McNell had been assaulted twice before and was subjected to repeated warnings for him and his brothers to keep their mouths shut about Hugel. Authorities believe McNell had been severely beaten before returning home.

Hugel insisted that he was innocent but in July 1981, he resigned from the CIA. However, that did not stop Hugel from suing his two brothers for libel in leaking details of the stock fraud to the press. Hugel won the lawsuits. Hugel was often seen at the Rockingham Park thoroughbred racetrack in Salem, New Hampshire. In 1983, Hugel and three partners bought the track, New England’s oldest, after a 1980 fire, that followed by nine days another major fire, destroyed the complex. The park’s owners believed the fire was the work of one or more arsonists and after Hugel bought the track, rumors that it had been hit by “Jewish lightning” were commonly heard in New Hampshire.

Even Israeli intelligence officials in Washington distrusted Hugel because of what they believed was his disposition to personally capitalize on intelligence information. As a result, the Mossad carefully withheld the identities of Israeli agents from Hugel.

But as with the neoconservatives of today, Hugel was not about to let his time with the CIA not materialize into some profit.

In February 1984, the CIA’s Deputy Director of Security investigated an Alexandria, Virginia-based group called the “Center for Strategic Investing.” The group’s letterhead listed four people identified as retired employees of the CIA who served on the Center for Strategic Investing’s “Intelligence Board of Advisors.” The CIA has redacted the list of advisers on the letterhead but it is clear that more than four individuals were listed. The CIA Security Office claimed in a February 22, 1984, memo that they had no record of the four individuals having ever been employed by the CIA. But more interestingly, on the group’s letterhead is a handwritten note from a CIA official to “John” (possibly CIA Deputy Director John McMahon) that asks him about the members of CSI’s Intelligence Board of Advisors: “Please let me ‘know’ what you ‘know.’ What you wish you ‘knew’—etc. about these folks.” Clearly, the members of the Intelligence Board of Advisors triggered some sort of alarm bells at the CIA, otherwise, the deputy director would not have been asked to get involved.

Knowing that Hugel was apt to trade intelligence for business opportunities, the CSI letter contains information that points to someone with insider knowledge attempting to game the international investment business. More interestingly, the letter states that CSI includes “retired agents from the CIA . . . NSA . . . Britain’s MI-5 . . . and Israel’s Mossad.” It also claims these retired agents “have access to the intelligence black market . . . to a lifetime of professional contacts,” adding, “we’re dealing with some pretty tough characters, remember.”

On September 8, 2008, WMR reported on another CIA document that pointed out how Israelis manipulated international commodities markets by committing terrorist attacks: “In 1966, two individuals, Jay Aubrey Elliott and Rolf Dunbier, were arrested in New York for planning to blow up the Kafue River bridge in Zambia, the only bridge servicing Zambia’s Copperbelt Province. At the same time, Violet Elliott, Elliott’s wife; Itzhak Berkowitz (alias Yitzhak Markovitch), a former member of the Jewish terrorist Stern Gang; Efraim Ronen, Benjamin Edoui, and Raphael Tseriano were arrested in Tel Aviv by Israeli police after the Shin Bet, Israel’s security service, and the FBI discovered the plan to blow up the Zambian bridge in order to drive up the world’s copper prices. Jay Elliott, the agent for Friedrich Zoellner Corporation, had earlier visited Tel Aviv to sign up explosive experts to blow up the Zambian bridge. Law enforcement authorities in Zambia and the United States were tipped off about the plan.”

The CSI letter brags about another such operation, a 1982 plan to hijack a South African train with a shipment of the strategic rare earth mineral palladium by a three-man assassination team led by East German agent Horst Kyritz. Along with South African accomplices, Kyritz (a common German-Jewish surname) and his team derailed the train en route to Johannesburg and blew open the door of the armored train car, killed four guards, and stole the palladium, with $3 million. The South Africans and the mining company involved kept the attack secret but a retired CIA agent in South Africa supposedly tipped off his brother-in-law, a dentist, in Chicago. The CSI report fails to mention one thing: that the two producers of palladium in the world—South Africa and the Soviet Union—had an unwritten agreement to regulate the price of the rare metal in a two-nation cartel. Someone else had stolen the South African palladium, a country with an established record of such acts to drive up the world’s prices of other commodities, such as copper in the Zambian terrorist caper.

Hugel would never draw attention to Israel for such operations. The CSI claimed the operation had been ordered by KGB chief Yuri Andropov, who was, at the time, trying to create a detente with the West. However, Hugel and his co-ideologues were not interested in detente. They were responsible for plunging U.S.-Soviet relations into a new “Cold War” over the issue of the emigration of Soviet Jews to Israel.

At any rate, CSI’s clients reportedly made a killing in the palladium market after the South African heist.

The CSI letter also points to its use of tax avoidance schemes by CIA “front” companies from tax liability. It is important to restate that Casey wanted Hugel specifically to head the agency’s clandestine service to establish such “front” companies and Hugel was seen as an expert in such matters.

Another telltale sign that Hugel was involved with CSI is the letter’s bragging about its knowledge of psychological profiles of world leaders. It talks about a “certain left-wing, anti-American” European leader being on the CIA payroll for the past 19 years (a possible reference to either Greek Prime Minister Andreas Papandreou or Portuguese Prime Minister Mario Soares, both accused of CIA ties), the fact that Iran and Israel conducted a “flourishing trade” (information that would have been picked up by Hugel from Iranian Jewish CIA interlocutor Manucher Ghorbanifar), that the average Indian member of parliament can be rented by any foreign intelligence service, except Pakistan, for about $5,000 a year; that two African leaders still practice cannibalism—one of these statesmen spoke before the U.N. General Assembly in September [1983] (likely a reference to Zaire’s Mobutu Sese Seko who was at the UN in September 1983 and Equatorial Guinea’s Teodoro Obiang); and that a certain loud, right-wing military leader, in Latin America, has recently agreed to exchange diplomatic relations with the Soviet Union—but for a price—a seven-figure Swiss bank account—and the delivering into his hands of a certain left-wing political figure (possibly a reference to Chile’s General Augusto Pinochet who saw relations with Moscow severed after the 1973 coup against Salvador Allende. The Soviets must have rejected the deal because relations between Chile and Moscow were not reestablished until 1990).”

Max Hugel serves as a stark example of dual loyalty’s threat to U.S. national security. The term dual loyalty does not even do justice to Hugel. He was willing to trade intelligence from any source, including the Israelis, to feather his own nest.

Hugel died peacefully in 2007. The same cannot be said for his victims, which according to one Washington insider, included a number of Nicaraguans, Salvadoreans, and Hondurans who fell victim to “front company” and “phony foundation” activities established by Hugel and his compatriots.

Sporkin went on to become a judge for the U.S. District Court for the District of Columbia and he is currently in charge of BP America’s Ombudsman Team. Casey died from a brain tumor in 1987. Casey took ill and was unable to talk just before he was to testify to Congress on the Iran-contra scandal. However, while in a coma, Casey, according to Washington Post sage Bob Woodward, came to just in time to give Woodward a four-minute-long death bed interview.

Previously published in the Wayne Madsen Report.

Copyright © 2013 WayneMadenReport.com

Wayne Madsen is a Washington, DC-based investigative journalist and nationally-distributed columnist. He is the editor and publisher of the Wayne Madsen Report (subscription required).