Salad Oil Scandal
Corporate Fraud Scandal
CLASSIFICATION: Financial Crime
LOCATION
New Jersey, United States
TIME PERIOD
1963
VICTIMS
3 confirmed
In 1963, the Salad Oil Scandal emerged as a significant corporate fraud case involving the Allied Crude Vegetable Oil Company, owned by Anthony "Tino" De Angelis, in New Jersey. De Angelis fraudulently inflated the company's inventory of salad oil, securing approximately $180 million in loans by falsely presenting ships filled with water as containing salad oil, deceiving banks and investors. The scandal unraveled when the anticipated Russian soybean market failed to materialize, leading to a drastic drop in soybean prices and exposing the fraudulent activities. De Angelis was ultimately convicted of fraud and conspiracy, serving seven years in prison before his release in 1972. The incident caused substantial financial losses to major corporations, including American Express and Bank of America, and has since been compared to later financial crises due to its impact on lending practices.
Theories suggest that Anthony "Tino" De Angelis orchestrated an elaborate scheme to defraud banks by inflating the inventory of salad oil, which involved using water to deceive inspectors. There is speculation that the scandal's impact on financial institutions led to a shift in lending practices, drawing parallels to the risky behaviors observed during the 2007–2008 financial crisis. Additionally, some believe De Angelis's previous legal troubles may have influenced his willingness to engage in further fraudulent activities.
The Salad Oil Scandal: A Tale of Deception and Financial Ruin
In the annals of American corporate history, few scandals have left as indelible a mark as the infamous Salad Oil Scandal of 1963. This tale of greed and deception, also known as the Soybean Scandal, unfolded like a gripping thriller, ensnaring some of the most conservative financial institutions of the time and resulting in losses exceeding $180 million—a sum that translates to a staggering $1.85 billion in today's currency.
The Mastermind: Anthony "Tino" De Angelis
At the heart of this elaborate fraud was Anthony "Tino" De Angelis, a former commodities broker with a tarnished past. De Angelis had previously run afoul of the law for supplying uncertified beef to schools under the National School Lunch Act. Yet, it was through his ownership of the Allied Crude Vegetable Oil Company in New Jersey that he would orchestrate one of the greatest financial deceptions of the 20th century.
The Fraud Unfolds
The scheme began when De Angelis secured a contract with Food for Peace, a federal program designed to sell excess food stocks to impoverished nations. With this contract in hand, he discovered a loophole that allowed him to exploit Allied's inventory of salad oil for personal gain. The ploy was ingeniously simple yet devilishly effective. De Angelis would arrange for ships, supposedly laden with salad oil, to dock and undergo inspection. Inspectors, misled by the appearance of oil floating atop tanks filled primarily with water, certified these shipments. This certification enabled Allied to use the fictitious inventory as collateral, securing loans worth millions from unsuspecting banks.
The deception didn't stop there. When inspectors visited Allied's facilities for audits, De Angelis and his team would shuffle the same stock of salad oil between tanks, creating the illusion of abundant reserves. To keep the inspectors occupied and distracted, they would host lavish lunches. In total, Allied claimed to hold 1.8 billion pounds (approximately 820,000 tons) of soybean oil as collateral, when in reality, their stock amounted to a mere 110 million pounds (roughly 50,000 tons).
One of the scandal's key victims was American Express Warehousing, Ltd., a subsidiary of American Express. De Angelis managed to dupe them into issuing warehouse receipts for non-existent salad oil, exacerbating the financial fallout.
The Unraveling and Impact
The intricate web of deception began to unravel when the anticipated opening of the Russian soybean market failed to materialize. This triggered a sharp decline in soybean prices, prompting investors to attempt a cash-in. As a result, the stock of American Express plummeted by more than 50%, costing the company nearly $58 million. The shockwaves of the scandal reverberated through other financial giants like Bank of America and Bank Leumi, as well as various international trading companies.
In the aftermath, Anthony De Angelis faced the full force of the law. He was convicted on charges of fraud and conspiracy, culminating in a seven-year prison sentence. He served his time and was released in 1972, leaving behind a legacy of financial chaos and corporate cautionary tales.
Legacy
The Salad Oil Scandal stands as a stark reminder of the vulnerabilities within financial systems and the perennial nature of greed. The scandal's capacity to lure even the most prudent lenders into reckless practices drew parallels with future financial debacles, including the 2007–2008 subprime mortgage crisis.
Sources
- Malone, Noreen (2012-04-01). "Salad Oil Swindle!" New York. Retrieved 2020-02-07.
- Justice Litle (2007-09-05). "Tactical View: A Little Help From Our Friends". Financial Sense Editorials. Archived from the original on 21 September 2007. Retrieved 2007-11-26.
- Staff (January 3, 1964). "Justice Steps In". Time. Archived from the original on January 8, 2010. Retrieved 2007-09-01.
- "Salad Oil Scandal". Investopedia. Retrieved 2007-09-01.
- Corporations: Oil, Vinegar & Sugar, TIME, September 3, 1965.
- Staff (June 4, 1965). "The Man Who Fooled Everybody". Time. Archived from the original on October 15, 2007. Retrieved 2007-09-10.
For further exploration of this dramatic episode in financial history, one might consult "The Great Salad Oil Swindle," a book that delves deeper into the scandal's intricate details.
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Fraudulent Scheme Begins
Anthony De Angelis starts inflating inventory of salad oil to secure loans.
Food for Peace Contract
De Angelis awarded a contract with Food for Peace, allowing him to exploit federal food programs.
Fraud Exposed
The scandal is uncovered when the Russian soybean market fails to open, leading to drastic price drops.
American Express Stock Crash
American Express stock drops over 50%, resulting in nearly $58 million in losses.
Legal Action Initiated
Authorities begin legal proceedings against De Angelis and Allied Crude Vegetable Oil.
De Angelis Convicted
Anthony De Angelis is convicted of fraud and conspiracy charges related to the scandal.
De Angelis Released
Anthony De Angelis is released from prison after serving seven years for his crimes.
In 1963, the Salad Oil Scandal emerged as a significant corporate fraud case involving the Allied Crude Vegetable Oil Company, owned by Anthony "Tino" De Angelis, in New Jersey. De Angelis fraudulently inflated the company's inventory of salad oil, securing approximately $180 million in loans by falsely presenting ships filled with water as containing salad oil, deceiving banks and investors. The scandal unraveled when the anticipated Russian soybean market failed to materialize, leading to a drastic drop in soybean prices and exposing the fraudulent activities. De Angelis was ultimately convicted of fraud and conspiracy, serving seven years in prison before his release in 1972. The incident caused substantial financial losses to major corporations, including American Express and Bank of America, and has since been compared to later financial crises due to its impact on lending practices.
Theories suggest that Anthony "Tino" De Angelis orchestrated an elaborate scheme to defraud banks by inflating the inventory of salad oil, which involved using water to deceive inspectors. There is speculation that the scandal's impact on financial institutions led to a shift in lending practices, drawing parallels to the risky behaviors observed during the 2007–2008 financial crisis. Additionally, some believe De Angelis's previous legal troubles may have influenced his willingness to engage in further fraudulent activities.
The Salad Oil Scandal: A Tale of Deception and Financial Ruin
In the annals of American corporate history, few scandals have left as indelible a mark as the infamous Salad Oil Scandal of 1963. This tale of greed and deception, also known as the Soybean Scandal, unfolded like a gripping thriller, ensnaring some of the most conservative financial institutions of the time and resulting in losses exceeding $180 million—a sum that translates to a staggering $1.85 billion in today's currency.
The Mastermind: Anthony "Tino" De Angelis
At the heart of this elaborate fraud was Anthony "Tino" De Angelis, a former commodities broker with a tarnished past. De Angelis had previously run afoul of the law for supplying uncertified beef to schools under the National School Lunch Act. Yet, it was through his ownership of the Allied Crude Vegetable Oil Company in New Jersey that he would orchestrate one of the greatest financial deceptions of the 20th century.
The Fraud Unfolds
The scheme began when De Angelis secured a contract with Food for Peace, a federal program designed to sell excess food stocks to impoverished nations. With this contract in hand, he discovered a loophole that allowed him to exploit Allied's inventory of salad oil for personal gain. The ploy was ingeniously simple yet devilishly effective. De Angelis would arrange for ships, supposedly laden with salad oil, to dock and undergo inspection. Inspectors, misled by the appearance of oil floating atop tanks filled primarily with water, certified these shipments. This certification enabled Allied to use the fictitious inventory as collateral, securing loans worth millions from unsuspecting banks.
The deception didn't stop there. When inspectors visited Allied's facilities for audits, De Angelis and his team would shuffle the same stock of salad oil between tanks, creating the illusion of abundant reserves. To keep the inspectors occupied and distracted, they would host lavish lunches. In total, Allied claimed to hold 1.8 billion pounds (approximately 820,000 tons) of soybean oil as collateral, when in reality, their stock amounted to a mere 110 million pounds (roughly 50,000 tons).
One of the scandal's key victims was American Express Warehousing, Ltd., a subsidiary of American Express. De Angelis managed to dupe them into issuing warehouse receipts for non-existent salad oil, exacerbating the financial fallout.
The Unraveling and Impact
The intricate web of deception began to unravel when the anticipated opening of the Russian soybean market failed to materialize. This triggered a sharp decline in soybean prices, prompting investors to attempt a cash-in. As a result, the stock of American Express plummeted by more than 50%, costing the company nearly $58 million. The shockwaves of the scandal reverberated through other financial giants like Bank of America and Bank Leumi, as well as various international trading companies.
In the aftermath, Anthony De Angelis faced the full force of the law. He was convicted on charges of fraud and conspiracy, culminating in a seven-year prison sentence. He served his time and was released in 1972, leaving behind a legacy of financial chaos and corporate cautionary tales.
Legacy
The Salad Oil Scandal stands as a stark reminder of the vulnerabilities within financial systems and the perennial nature of greed. The scandal's capacity to lure even the most prudent lenders into reckless practices drew parallels with future financial debacles, including the 2007–2008 subprime mortgage crisis.
Sources
- Malone, Noreen (2012-04-01). "Salad Oil Swindle!" New York. Retrieved 2020-02-07.
- Justice Litle (2007-09-05). "Tactical View: A Little Help From Our Friends". Financial Sense Editorials. Archived from the original on 21 September 2007. Retrieved 2007-11-26.
- Staff (January 3, 1964). "Justice Steps In". Time. Archived from the original on January 8, 2010. Retrieved 2007-09-01.
- "Salad Oil Scandal". Investopedia. Retrieved 2007-09-01.
- Corporations: Oil, Vinegar & Sugar, TIME, September 3, 1965.
- Staff (June 4, 1965). "The Man Who Fooled Everybody". Time. Archived from the original on October 15, 2007. Retrieved 2007-09-10.
For further exploration of this dramatic episode in financial history, one might consult "The Great Salad Oil Swindle," a book that delves deeper into the scandal's intricate details.
No Recent News
No recent news articles found for this case. Check back later for updates.
No Evidence Submitted
No evidence found for this case. Be the first to submit evidence in the comments below.
Join the discussion
Loading comments...
Fraudulent Scheme Begins
Anthony De Angelis starts inflating inventory of salad oil to secure loans.
Food for Peace Contract
De Angelis awarded a contract with Food for Peace, allowing him to exploit federal food programs.
Fraud Exposed
The scandal is uncovered when the Russian soybean market fails to open, leading to drastic price drops.
American Express Stock Crash
American Express stock drops over 50%, resulting in nearly $58 million in losses.
Legal Action Initiated
Authorities begin legal proceedings against De Angelis and Allied Crude Vegetable Oil.
De Angelis Convicted
Anthony De Angelis is convicted of fraud and conspiracy charges related to the scandal.
De Angelis Released
Anthony De Angelis is released from prison after serving seven years for his crimes.