Tino De Angelis
| Company type | Private |
|---|---|
| Industry | Commodity trading, Vegetable oil refining |
| Founded | 1955 |
| Founder | Anthony "Tino" De Angelis |
| Defunct | 1963 |
| Fate | Bankruptcy following fraud scandal |
| Headquarters | Bayonne, New Jersey , United States |
| Products | Vegetable oil, shortening |
Anthony "Tino" De Angelis (November 3, 1915 – September 26, 2009) was an American trader specializing in global vegetable oil futures markets.
In 1962, De Angelis' company, Allied Crude Vegetable Oil Refining Corporation, orchestrated a scheme defrauding 51 banks of more than $180 million ($ billion in today's terms) during the salad oil scandal by attempting to corner the soybean oil market.
Biography
Born in the Bronx to Italian immigrant parents, De Angelis managed roughly 200 workers at a meat and fish market during his teenage years. After learning about the new National School Lunch Act program, which purchased food items at fixed prices, he acquired the Adolph Gobel Company in North Bergen, New Jersey and secured a substantial government contract. He then overcharged by $31,000 and supplied over two million pounds of uninspected meat. Eventually, Gobel collapsed financially.
In 1955, he established Allied Crude Vegetable Oil Refining Corporation along with affiliated firms to engage in the U.S. government's Food for Peace initiative, which sold subsidized surplus foodstuffs to Europe to aid post-war recovery. Operating from a rundown "tank farm" located in Bayonne, New Jersey, and supported by leading grain exporters, he exported large volumes of inferior shortening and other vegetable oil products to European markets. De Angelis grew into a major force within European commodity trading and later diversified into cotton and soybean markets.
By 1962, his goal was to dominate the soybean oil market by accumulating vast reserves. Leveraging these holdings as collateral, he secured loans from numerous Wall Street banks and firms to purchase extensive oil futures contracts, speculating on price increases fueled by his control of supply.
Fraud with warehouse receipts
During the early 1960s, American Express (Amex), known primarily for traveler's checks and credit cards, launched a "Field Warehousing" division aimed at lending against inventory assets. De Angelis became a prominent client; Amex issued warehouse receipts for millions of barrels of vegetable oil listing him as beneficiary. These receipts were then used as collateral by banks or brokers to obtain cash.
As the volume of warehouse receipts expanded, De Angelis began substituting water for soybean oil inside storage tanks. Some tanks featured hidden compartments while others employed intricate piping arrangements designed to mislead inspectors.
Officials were confounded by reports that De Angelis' soybean oil inventory surpassed total U.S. supplies according to the United States Department of Agriculture. Nevertheless, Amex maintained a lenient stance due to his importance as a customer. With Amex guaranteeing the oil and De Angelis offering enticing terms, major firms such as Bunge Limited, Staley, and Procter and Gamble became involved. Additionally, Bank of America extended collateralized credit facilities.
Scheme uncovered
The scheme came to light after inspectors received tips regarding bribery attempts and inconsistencies in deliveries, which led to the discovery of water mixed in Allied's storage tanks. This revelation caused a sharp collapse in soybean oil futures prices, instantly erasing the value of the associated loan collateral. On November 19, 1963, De Angelis' firm declared bankruptcy, exposing hundreds of millions of dollars in missing funds. The financial soundness of the dealers involved in De Angelis' futures transactions came under scrutiny. Anticipating an investigation by the U.S. Securities and Exchange Commission, the New York Stock Exchange (NYSE) suspended trading operations for Williston and Beane and Ira Haupt and Co..
By November 22, 1963, NYSE president G. Keith Funston took measures to avert a broader market crisis as Ira Haupt's 20,700 clients hurried to sell off their oil holdings amid growing loss concerns. Due to the extensive volume of trades executed on De Angelis' account, banks were saddled with more than $37 million in bad loans. This financial turmoil, combined with the assassination of President John F. Kennedy that afternoon, triggered a frantic sell-off of 2.6 million shares and caused the Dow Jones Industrial Average to plunge approximately 24 points (around 5%) within 27 minutes. Consequently, the exchange shuttered trading 83 minutes ahead of schedule.
David M. Satz Jr., U.S. Attorney for the District of New Jersey, charged De Angelis with contempt after uncovering over $500,000 transferred from Allied into his Swiss bank account. American Express suffered significant losses when compelled to fulfill warehouse contract obligations. The two implicated brokerage firms were eventually absorbed by larger entities, and De Angelis was sentenced to seven years in prison. Investor Warren Buffett seized the opportunity presented by the scandal by acquiring a 5% stake in American Express for $20 million during the stock price decline.
After his release in 1972, De Angelis orchestrated another fraudulent operation by 1975—a Ponzi scheme focused on Midwest livestock markets. Through slaughterhouses named Rex Pork and Mister Pork, he defrauded livestock dealers in Indianapolis out of $7 million (equivalent to roughly $31 million in 2016). Among the principal victims were M&R Livestock, which was owed $3.5 million, and Farrow and Co., both enduring major financial setbacks due to deceptive payment assurances.
The details of this fraud were chronicled by Norman C. Miller in The Great Salad Oil Swindle (1965), a book based on his Pulitzer Prize-winning reporting for the Wall Street Journal.