(AP) -- An argument that began inside a midtown Manhattan McDonald's restaurant early Monday erupted in gunfire at the steps of a nearby subway entrance when a gunman shot three men, one fatally, near Penn Station, authorities said.

The three victims, all men in their 40s, were drinking coffee when a heavy-set man in a black hooded sweatshirt engaged them in a brief conversation, left the restaurant and then waited for them to exit, following the group into a subway station, where he fired four times, New York Police Department Chief of Detectives Robert Boyce said.

"The nature of the dispute is being investigated now," he told reporters outside the subway entrance at 35th Street and Eighth Avenue, where a wooden cane could be seen resting on the subway entrance's top steps.

The shooting occurred in the entrance to the subway, not in the transit system itself, in an area where there are no security cameras, Boyce said. It occurred at about 6 a.m. just two blocks north of Penn Station, one of the nation's busiest transit hubs, as the morning rush was getting underway.

A 43-year-old man shot in the neck was pronounced dead at the scene, officials said. A 45-year-old shot in the neck and stomach and a 48-year-old man shot in the thigh were taken to Bellevue Hospital, they said.

No arrests had been made and investigators were searching for the gunman and possibly two others who may have fled north on Eighth Avenue in a dark-colored car, officials said.

A law enforcement official, speaking to The Associated Press on condition of anonymity because the official wasn't permitted to discuss an ongoing investigation, identified the man who was killed as Angel Quinones. The official identified a man who was shot in the neck and stomach as William Lamboy and the other victim as Eddy Torres.

All three men had lengthy arrest records for mostly drug charges, the official said.

Torres, who was speaking to detectives, provided much of the narrative to investigators, Boyce said. The other victim, Lamboy, was transported to the hospital in critical condition, officials said.

Two men who attend a nearby methadone program at the West Midtown Medical Group, about a half-block from the where the shooting took place, said they knew two of the victims, Quinones and Lamboy. They said both men came to the clinic for years.

"They were real nice guys, straight guys," said Michael Gessow, 39, of the Bronx, who said he has been coming to the clinic for 10 years. "I can't believe it."

Richard Buckley, 59, said he was shocked.

"I've been coming here for 14 years and I've never seen anything like this happen," he said.

Samuel Ramsey, the director of operations for West Midtown Medical Group, said his organization had been contacted by police but couldn't comment on the shooting because of medical privacy concerns. He said the outpatient, substance-abuse program, which serves roughly 900 people, has been around for more than 20 years and has no history of violence.

The McDonald's where the victims were initially approached by the gunman has become a gathering place of sorts in recent years for former addicts and others who attend substance-abuse programs located in the surrounding area.