Colonel Merton Bell was a former tank commander who, after leaving the army, founded and led a mercenary firm, First Defense PMC, the largest in the United States up until Bell's death at the hands of his second-in-command, Jason Paul Dean who was later revealed to be working for the Reynosa Cartel.
After spending two months in a Mexican prison thanks to the actions of NCIS Special Agent Leroy Jethro Gibbs, Bell, consumed by revenge against Gibbs began planning with his own lawyer, Margaret Allison Hart and Paloma Reynosa, who was the head of the Reynosa drug cartel aiding, Hart simply because she believed Bell was a good man and Paloma because she like Bell also had a strong grudge against Gibbs, the grudge being that Gibbs had killed her father twenty years ago.
In the final episodes of Season Seven, Bell started to make his move against Gibbs and sent one of his men, Lieutenant Jason Paul Dean, to kill Special Agent Lara Macy before gathering his men to go to Mexico and kill Michael Franks and his family, presumably as a means of hurting Gibbs.
In the resulting gunfight that happened between Franks and Bell's own men, several of the cartel's men arrived on the scene, Paloma having sent them to capture Franks as leverage against Gibbs and to kill Bell, whom she no longer needed and due to the fact that she disagreed with Bell's plan to kill Franks.
Dean, who had been turned by Paloma, killed Bell, and Bell's head and hands were cut off -- presumably, by cartel members under Paloma's orders. Dean later admitted to being responsible for killing Bell, but not for mutilating his corpse.
Paloma later revealed to Gibbs that she had formed an alliance with Bell but that he and his men were only means to an end, meaning that once they had outlived their usefulness to her, she had ordered her men including Dean to kill them.
Bell's body (minus head and hands) were returned to Washington D.C., where NCIS Medical Examiner Dr. Donald Mallard performed the autopsy, which revealed that Gibbs's SIG Sauer had been used to shoot Colonel Bell, but the bullets were delivered post-mortem and as such, Gibbs, therefore, was innocent of Bell's death; someone else had shot Bell's dead body with his SIG in an attempt to frame him, hinting that someone had used Gibbs's gun to shoot at Bell's remains after Dean had knocked Gibbs out.