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Salad Oil Fraud
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Salad Oil Scandal
The Allied Crude Vegetable Oil scandal of 1963 led by Tino De Angelis.
American Express had recently created a division that spealized in field warehousing, which made loans to businesses using inventories as collateral.
The Fraud
Allied Crude Vegetable Oil
-De Angelis recieved loans using his vegetable oil inventory as collateral
Gig's Up
-This proved an easy way to make money, so De Angelis started to falsify warehouse receipts for oil that he didn't have.
-A vegetable oil company located in New Jersey
-Led by Tino De Angelis
-Cornered the market on vegetable oil, which was the
main ingredient salad oil
-American Express sent out inspectors to make sure that De Angelis actually had the vegetable oil that he claimed.
What they didn't know was that many of the tanks were filled mostly with water with a minimum of oil floating on the top to fool the inspectors, or that some of the tanks were connected with pipes to other tanks so the oil could be transferred between tanks when the inspectors went from one tank to the other.
-De Angelis was caught after the inspectors were tipped off about the fraud.
-Crude used $150 million in vegetable oil as collateral and had gotten loans for 51 companies.
-Once the scandal was exposed, American Express was one of the biggest casualties. Its stock dropped more than 50% as a result of the scandal, which cost the company nearly $58 million. De Angelis was convicted of fraud and conspiracy charges in connection with the scandal and served seven years in prison, gaining his release in 1972.