Anthony "Tino" De Angelis (November 3, 1915 – September 26, 2009)
[Silverman, Steve]
''Useless information'' podcast, "The Case of the Phantom Vegetable Oil",
January 30, 2018. Retrieved June 11, 2018. was an American commodities trader who dealt in vegetable oil
futures
Futures may mean:
Finance
*Futures contract, a tradable financial derivatives contract
*Futures exchange, a financial market where futures contracts are traded
*''Modern Trader'', formerly Futures, an American finance magazine
Music
* ''Futures' ...
worldwide.
In 1962 De Angelis' company, ''Allied Crude Vegetable Oil Refining Corporation'', bilked 51 banks out of over $180 million ($ billion today) in what became known as the
salad oil scandal after he failed to
corner
Corner may refer to:
People
*Corner (surname)
*House of Cornaro, a noble Venetian family (''Corner'' in Venetian dialect)
Places
* Corner, Alabama, a community in the United States
*Corner Inlet, Victoria, Australia
* Corner River, a tributary o ...
the
soybean oil
Soybean oil (British English: soyabean oil) is a vegetable oil extracted from soybean (''Glycine max'') legumes. It is one of the most widely consumed cooking oils and the second most consumed vegetable oil. As a drying oil, processed soybean oil ...
market.
Biography
De Angelis was born to
Italian
Italian(s) may refer to:
* Anything of, from, or related to the people of Italy over the centuries
** Italians, a Romance ethnic group related to or simply a citizen of the Italian Republic or Italian Kingdom
** Italian language, a Romance languag ...
immigrant parents in the
Bronx
The Bronx ( ) is the northernmost of the five Boroughs of New York City, boroughs of New York City, coextensive with Bronx County, in the U.S. state of New York (state), New York. It shares a land border with Westchester County, New York, West ...
. While still a teenager he managed about 200 employees in a meat and fish market. When he found out that the new
National School Lunch Act
The National School Lunch Act (79 P.L. 396, 60 Stat. 230) is a 1946 United States federal law that created the National School Lunch Program (NSLP) to provide low-cost or free School meal, school lunch meals to qualified students through subsidi ...
program would buy practically any food items (given certain price requirements) he took over the Adolph Gobel Company in
North Bergen, New Jersey
North Bergen is a township in the northern part of Hudson County, in the U.S. state of New Jersey. As of the 2020 United States census, the township's population was 63,361, an increase of 2,588 (+4.3%) from the 2010 census count of 60,773, ...
and was awarded a large contract, whence he promptly overcharged the government by $31,000. He also delivered over 2 million pounds of uninspected meat. Gobel would eventually go bankrupt.
In 1955, he formed ''Allied Crude Vegetable Oil Refining Corporation'' and other related companies to participate in the U.S. government's
Food for Peace
Since the 1950s, in different administrative and organizational forms, the United States' Food for Peace program has used America's agricultural surpluses to provide food assistance around the world, broaden international trade, and advance U.S. ...
program to sell subsidized surplus food ingredients to Europe to shore up their weak post-war economies. He formed Allied in a dilapidated "tank farm" in
Bayonne, New Jersey
Bayonne ( ) is a City (New Jersey), city in Hudson County, New Jersey, Hudson County in the U.S. state of New Jersey, in the Gateway Region on Bergen Neck, a peninsula between Newark Bay to the west, the Kill Van Kull to the south, and New York ...
and, with the patronage of several major grain exporters, began shipping massive quantities of substandard
shortening
Shortening is any fat that is a solid at room temperature and is used to make crumbly pastry and other food products.
The idea of shortening dates back to at least the 18th century, well before the invention of modern, shelf-stable vegetable ...
and other
vegetable oil
Vegetable oils, or vegetable fats, are oils extracted from seeds or from other parts of edible plants. Like animal fats, vegetable fats are ''mixtures'' of triglycerides. Soybean oil, grape seed oil, and cocoa butter are examples of seed ...
products to Europe. De Angelis gradually became a major player in Europe and the commodities markets, later expanding into cotton and soybeans.
In 1962, De Angelis began to accumulate massive quantities of soybean oil to attempt to corner the soybean oil market. With his huge inventory as collateral, he borrowed from various
Wall Street
Wall Street is a street in the Financial District, Manhattan, Financial District of Lower Manhattan in New York City. It runs eight city blocks between Broadway (Manhattan), Broadway in the west and South Street (Manhattan), South Str ...
banks
A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets.
As banks ...
and companies, and used the proceeds to buy as many oil futures as possible. Soon he would be long a large quantity hoping for soon-to-be expensive oil and oil futures, as prices rose due to the market corner.
Fraud with warehouse receipts
In the early 1960s
American Express
American Express Company or Amex is an American bank holding company and multinational financial services corporation that specializes in payment card industry, payment cards. It is headquartered at 200 Vesey Street, also known as American Expr ...
(Amex) was a respected name in traveler's checks and credit cards. The company created a new division to specialize in "Field Warehousing" to finance businesses using their inventory of goods and commodities as collateral. Tino De Angelis was a new customer and Amex wrote warehouse receipts for many millions of barrels of vegetable oil with him as beneficiary. The receipts would then be presented to a bank or broker and discounted for cash.
As De Angelis' stock of warehouse receipts increased, he began to replace the soybean oil in his tanks with water. Some tanks had special compartments, while others were hooked-up to a maze of pipes to shuttle oil from one tank to the next to fool inspectors.
What puzzled authorities about Amex's Field Warehousing operation was that De Angelis' soybean oil stock exceeded the stock available in the entire United States, according to the
Department of Agriculture
An agriculture ministry (also called an agriculture department, agriculture board, agriculture council, or agriculture agency, or ministry of rural development) is a ministry charged with agriculture. The ministry is often headed by a minister f ...
. While the warehouse operation was small, Amex was lenient with De Angelis, as he was one of their main customers. With Amex staking its reputation behind all the oil and with De Angelis offering great deals, mainstream companies such as
Bunge Limited
Bunge Global SA (''BUN-ghee'') is a global agribusiness and food company, incorporated in Geneva, Switzerland and headquartered in St. Louis, Missouri, United States.
As well as being an international soybean exporter, it is also involved in f ...
, Staley, and
Procter and Gamble
The Procter & Gamble Company (P&G) is an American multinational consumer goods corporation headquartered in Cincinnati, Ohio. It was founded in 1837 by William Procter and James Gamble. It specializes in a wide range of personal health/cons ...
were soon participating.
Bank of America
The Bank of America Corporation (Bank of America) (often abbreviated BofA or BoA) is an American multinational investment banking, investment bank and financial services holding company headquartered at the Bank of America Corporate Center in ...
joined in to provided collateralized loans.
Scheme exposed
Inspectors were eventually tipped off by bribery attempts and delivery mistakes. They inspected Allied's tanks again and this time they found the water. A massive soybean oil futures crash ensued and wiped out the value of the loan collateral in minutes. On November 19, 1963, De Angelis' company filed for
bankruptcy
Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the deb ...
and investors found hundreds of millions of dollars in unaccounted funds. The financial integrity of the dealers behind De Angelis' futures trades was now in question. Traders scurried to recover their funds after the
New York Stock Exchange
The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District, Manhattan, Financial District of Lower Manhattan in New York City. It is the List of stock exchanges, largest stock excha ...
, worried about a
U.S. Securities and Exchange Commission
The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...
investigation, suspended ''Williston and Beane'' and ''Ira Haupt and Co.s trading privileges.
On November 22, 1963, NYSE president G. Keith Funston attempted to avert a market crash as Ira Haupt's 20,700 customers, fearing financial ruin, scrambled to sell their oil holdings before they became worthless. Because of all the trades the brokerage firm did on De Angelis' behalf, various banks were left holding the bag with over $37 million in unrecoverable loans. This rush, combined with the panic ensuing from the
shooting of President Kennedy that afternoon, led to 2.6 million shares being sold and the Dow dropping 24 points (about 5%) in 27 minutes. The exchange was forced to close 83 minutes early.
U.S. Attorney for the District of New Jersey David M. Satz Jr.,
Keller, Karen
"Former U.S. Attorney David M. Satz Jr. dead at 83; pioneered casino gaming laws", December 26, 2009. Retrieved June 11, 2018. charged De Angelis with contempt after he found De Angelis had funneled over $500,000 from Allied into his personal account at a Swiss bank. Amex was forced to make good on their warehouse contracts and took a massive loss. The two trading firms were eventually bought by larger players. De Angelis was sentenced to a seven-year jail term. In the wake of the scandal, keen observer and investor Warren Buffett
Warren Edward Buffett ( ; born August 30, 1930) is an American investor and philanthropist who currently serves as the chairman and CEO of the conglomerate holding company Berkshire Hathaway. As a result of his investment success, Buffett is ...
took advantage of the plunge in the price of American Express shares and bought 5% of the company for only $20 million.
In 1972, De Angelis was released. By 1975 he was involved in another scam, this time a Ponzi scheme
A Ponzi scheme (, ) is a form of fraud that lures investors and pays Profit (accounting), profits to earlier investors with Funding, funds from more recent investors. Named after Italians, Italian confidence artist Charles Ponzi, this type of s ...
involving livestock in the Midwest. De Angelis used two slaughter houses, Rex Pork and Mister Pork, to swindle livestock dealers in Indianapolis out of $7 million (approximately $31M in 2016 dollars) worth of hogs. Two of the top livestock dealers facing losses were M&R Livestock (owned by Theodore C. McAninch) and Farrow and Co. (owned by Allan S. Farrow). De Angelis continued trading with these livestock dealers via fraudulent letters promising payment. The biggest loser, M&R Livestock, was owed $3.5 million ($21 million in 2016 dollars).
The swindle was documented in detail by Norman C. Miller in '' The Great Salad Oil Swindle'' (Baltimore, MD: Coward McCann Books, 1965). The book is based on Miller's coverage of the story in the ''Wall Street Journal
''The Wall Street Journal'' (''WSJ''), also referred to simply as the ''Journal,'' is an American newspaper based in New York City. The newspaper provides extensive coverage of news, especially business and finance. It operates on a subscriptio ...
'', which won a Pulitzer Prize
The Pulitzer Prizes () are 23 annual awards given by Columbia University in New York City for achievements in the United States in "journalism, arts and letters". They were established in 1917 by the will of Joseph Pulitzer, who had made his fo ...
in 1964.
References
External links
A web page about the mafia in New Jersey contains an excerpt from Norman Miller's article.
''Life''
"The Mob: Gallagher continued" "The Congressman and the Salad Oil Swindler", ''Life Magazine'', October 25, 1968 (reprint), pp. 70–71.
{{DEFAULTSORT:De Angelis, Tino
1915 births
2009 deaths
American commodities traders
American confidence tricksters
American Express people
American people convicted of fraud
American people of Italian descent
People from the Bronx