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Show sday July 16, 1981, THE HERALD Distresses Reagan CHICAGO A new bacterium capa eating the liamt Agent ( as developed by scientists seeking tc CIA Issue Stirs Fervor WASHINGTON (UPI) Unrelated past However, he said CIA general counsel Stanley Sporkin has begun an investiga business dealings haveled to the resignation of the CIA's spymaster and cast a shadow over the agency's director Wil- ton. In reference to the Huge! case, Gergen said Reagan retains full confidence in Casey and believes he has done‘‘a firstrate job" as head of the CIA As for Casey's own legal problems, the White House said ‘We will have no commentbecause the liam Casey — rattling the White House with twin tremors. Max Hugel stepped down Tuesday as head of CIA clandestine operationsin reSponse to a published report — which he denied — that he engaged in improper or illegal stock market practices in the mid1970s while president of a New York wholesale firm. Meantime it was disclosed a federal judge in New York hadruled that Casey. 68, and seven other members of a nowdefunct New Orleans agribusiness com- matter is up for appeal. We would like to pointoutthatit (the allegations) has been matter of discussion as far back as his confirmation hearings’ as head of the Securities and Exchange Commission Casey was appointed SEC chairman by President Richard Nixon in 1971 U.S. District Judge Charles Stewart said Casey, who served as a board memberand secretary of Multiponics Inc. permitted pany knowingly misled investors in raising $3.5 million. The White House declined commenton distribution ofa circular for a securityoffering that contained false and mis- Casey's case. noting the matter was under appeal. But President Reagan said he was saddened by the events that led to the resignation of Hugel, who. like Casey, had worked on his SARA “T was distressed that once again we seem to be taking accusation as conviction,” Reagan said. ‘‘He resigned because he didn’t want to cause any troublein the administration. I think it should be remembered there’s been nothing but the allegation.” White House communications director David Gergen tried to put distance between Reagan and Hugel’s CIA appointment, noting it was Casey who selected him as the CIA's deputy director for operations. “As you know, Mr. Hugel was not nominatedby the president.” Gergensaid. “The issue never cameto him originally as: ‘Do you want or not want this individual?” “The president was saddened by the events that have led to the Hugel resignation,” Gergensaid, but added. ‘‘As far as the White House is concerned.this matter is closed.” Casey accepted Hugel’sresignation with “deepest regret” and appointed John Henry Stein. a littleknown careerintelligence officer, as Hugel’s replacement. The Washington Post reported Tuesday that Hugel, according to two former associates, engaged in ‘a pattern of improperorillegal” stock market practices intended to boost his firm's stock. Hugel, 56, said the allegations were “‘unfounded, unproven anduntrue.’’ But in a letter to Casey, he said. “Under present circumstances, I feel I can no longer effectively serve you or the agency.” Gergen said the White House had no “hard evidence” of any wrongdoing and Reagan did not ask for Hugel’s resignation. age 55 Bacterium Can Annihilate Agent Orange leading details. The judge's findings were contained in a partial “summary judgment” issued May 19, which becamepublicly known Tuesday. It was the result of a class-action suit filed in 1974 by IIT, an investmenttrust and other Multiponics investors who are expected to seek damages for the actions of Multiponics’ officers Casey's attorney, Arnold Jacobs, said a motion for reargument of the case has been filed. Casey could not be reached for commentand the CIA had no comment. The CIA did not furnish any background on Stein, Hugel’s replacement. other than to say he was a “career CIA officer." The Postsaid Stein is 49 and a Yale graduate who held posts in Europe, Africa, Cam- bodia and Libya. It quoted Emory C. Swank, former U.S. ambassador to Cambodia ascalling Stein “very career, doesn’t make waves, very hard worker, the sort of personality the agency prefers. particularly on the operations side."” The first of the two ClA-related shock waves Tuesday was triggeréd by the Post story on Hugel under the banner headline “CIA Spymaster is Accused of Improper Stock Practices." The Post based its report on allegations by two former Wall Street brokers, Thomas R. MeNell, 49 and his brother. Samuel F. McNeill. 47. who said they joined Hugel in prohibited actions intended to boost the stock Brother International Corp. The Brooklyn-born Hugel founded Brother International with two other associates after World WarII as the U.S. distributor of sewing machines and typewriters manufactured by the Japanese firm Brother Industries Ltd. He wasits presidentuntil 1975. che from and multiplies in contaminated x environm: University of Illinois Medical Center spokesmen The Fost said the McNells “who admit their own culpability,”’ produced 16 secret tape recordings of telephone conversa tions with Hugel in 1974 and 1975 and docu ments to corroborate their charges that Hugel Dr. Anada Chakrabarty, headof the fort, said the new bacteriumwas create genetic engineering techniques it has enough 245-T the herbicide said the bacterium feeds on the chemical which was widely used during the Vietnam War and Orange, on which to feed has been linked tobirth defects and other ailments 2.45-T is exhausted. the bacterium dies ef through Agent In the process hesaid, carbon dioxide. water and hydrochloric acid are produced. When the supply of —"Provided them with ‘insider’ (information) on the companyhe headed in advanceof disclosure to other investors and the general public. —‘Improperly funneled funds to McNell Securities, the principal firm trading in his company’s stock. —"Relying on a business associate orchestrated the phased purchaseof15,000 shares of his company’s stock to create the appearance of increased market in- terest in it The newspaper said Hugel called the MeNell brothers ‘‘vindictive” people who first attempted to swindle himand later to blackmai!” him The allegations if true. would constitute violations of SEC regulations governing insider trading and market manipulation by fraud But Hugel probably would notbe subject to prosecution because theusualstatute of limitations — barring someother form of criminal conspiracy — runs out twoto five yearsafter the violation. al Hugel denied the allegations to the Post and again late Tuesday, in a statement read to reporters outside his Virginia FAMOUS NAME BRANDS OR HIM AND HER. HUNDREDS OF STYLES AND SIZES OF TOP QUALITY LEATHER SHOES PLUS THE FULL SERVICE THAT HAS MADE HANOVER FAMOUS. home. ‘I deny the allegations of wrongdoing,” he said. “If that’s not clear enough, let me say it again.I've done nothing wrong.” Casey's appointment of Hugelto whatis considered one of the most sensitive posts in the governmentdrewcriticism from intelligence circles because of Hugel’s relative inexperience But in a letter to Reagan at the time Casey said he had known and trusted Hugelfor 20 years and thatheselectedhis deputy director from outside the intel- EE ligence community to prevent in-fighting for the job Casey's selection of Hugel stunned FRY veteran intelligence officers for three basic reasons: —Hugel had no background for running the CIA's clandestine operations and its “deep cover’’ operatives. FREE —There was available within the agency a choice of professionals who could have filled the post. —The operations directorate already had been mauled badly during the tenure of Stansfield Turner as CIA directorin the Carter administration. Turner — in aneffort to bring ‘new blood” inio the agency — forced into early retirement or fired more than 1,000 CIA officers, many of them veteran of the agency’s covertside. (A $10.00 VALUE) With purchaseof $20.00 or more. (while supplylasts) RICHARD | SALMONS New“ih Say. 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