The Great Salad Oil Swindle

The Great Salad Oil Swindle
	FALSE
	"Storage tanks in Bayonne, New Jersey, operated by the Allied Crude Vegetable Oil Refining Corporation held enormous quantities of soybean oil, certified by warehouse receipts, that could be used as collateral for loans."
Domain	Business, Finance & Scams
Tactic	Fraud or Scam; Fabrication;
Era	Historical
First seen	1950s
Origin	Warehouse receipts issued for Allied Crude's tanks by a subsidiary of American Express, used by Anthony "Tino" De Angelis to borrow from banks and brokers
Last reviewed	2026-10-26
	Further reading: books on Business, Finance & Scams

The Great Salad Oil Swindle was a fraud uncovered in November 1963 in which a New Jersey commodities trader, Anthony "Tino" De Angelis, used fake inventories of soybean oil to borrow vast sums of money. De Angelis's company, the Allied Crude Vegetable Oil Refining Corporation, stored oil in tanks in Bayonne, New Jersey. Warehouse receipts certifying the oil were used as collateral for loans from major banks and Wall Street brokers. When the scheme collapsed, inspectors found that many tanks contained mostly seawater with a thin layer of oil floating on top, and that the receipts covered far more oil than existed. Losses were estimated at about $150 million to $175 million, equivalent to well over a billion dollars today. The scandal shook Wall Street, nearly ruined American Express and indirectly gave Warren Buffett one of his most famous investments.

The claim

By the early 1960s De Angelis was a major figure in the soybean oil market, exporting oil to Europe, including under US government food aid programs. Allied Crude leased tank storage in Bayonne. The tanks were managed by American Express Field Warehousing Corporation, a subsidiary of American Express, which issued warehouse receipts certifying the amount of oil stored. These receipts were treated as reliable documents and could be pledged as collateral for loans from banks and brokerage firms.

De Angelis used the borrowed money to finance his operations and, increasingly, to speculate in soybean oil futures, trying to corner the market by buying up contracts that would rise in value if prices climbed.

Origin

De Angelis had a history of commercial misconduct, including problems with meat supplied to a federal school lunch program in the 1950s. Despite this, lenders continued to do business with him because the warehouse receipts were backed by the reputation of American Express.

The fraud exploited weaknesses in inspection. Oil floats on water, so a tank filled mostly with water and topped with a layer of oil could pass a quick inspection that measured only the surface. According to later accounts, De Angelis's employees used techniques such as piping oil between tanks so that the same oil could be inspected more than once, and placing containers of oil beneath inspection openings in tanks that were otherwise filled with water. Receipts were also issued for oil that did not exist at all.

What the evidence shows

The scheme unraveled in November 1963, when soybean oil prices fell. De Angelis's speculative positions collapsed, and he could not meet margin calls. His brokers, including Ira Haupt & Co. and J. R. Williston & Beane, which had lent heavily against warehouse receipts, faced enormous losses. Ira Haupt & Co. failed, and the New York Stock Exchange had to arrange a rescue to protect its customers, the first time it had done so.

When inspectors examined the tanks, they found that the quantity of oil on hand was a small fraction of what the receipts claimed. Reported totals in the tanks exceeded the entire amount of soybean oil that US government statistics indicated was in storage nationally. The collapse was overshadowed in the news by the assassination of President John F. Kennedy days later, on November 22, 1963, which also caused market turmoil.

De Angelis pleaded guilty to fraud and conspiracy charges and was sentenced in 1965 to 20 years in prison. He served about seven years. American Express faced claims from lenders for the value of the false receipts. Its share price fell by about half. Its chief executive, Howard Clark, decided that the company should make good on its subsidiary's obligations, agreeing to pay about $60 million to settle claims, to protect the reputation of its traveler's checks and card businesses.

Warren Buffett, then running an investment partnership, studied American Express during the crisis. Observing that customers continued to use its cards and traveler's checks, he concluded that its core business was intact and invested a large share of his partnership's assets in the company. The investment was highly profitable and became a celebrated example of buying a strong business during a temporary crisis.

Why it persists

The Salad Oil Swindle is studied as an example of fraud built on trust in intermediaries:

Borrowed credibility. Lenders trusted warehouse receipts because they carried the American Express name, not because they checked the oil.
Weak verification. Inspections that measured only part of a tank could be fooled.
Speculation magnified losses. De Angelis's attempt to corner the market made the eventual collapse far larger.
Warning signs ignored. His history of misconduct did not stop lenders.

Similar frauds involving fake commodity inventories have recurred. In 2014, for example, investigators in China found that metal stored at the port of Qingdao had been pledged repeatedly as collateral for multiple loans.

Lessons for readers

Documents certifying assets are only as reliable as the inspection behind them.
A respected name on a document does not guarantee what it describes.
Check whether claimed quantities are plausible. The supposed oil exceeded national supplies.
A person's past misconduct is relevant to whether they should be trusted with money.
Fraud combined with speculation can produce sudden, large collapses.

Sources

Norman C. Miller, The Great Salad Oil Swindle (Coward-McCann, 1965).
Norman C. Miller, reporting in The Wall Street Journal, 1963–1964 (awarded the 1964 Pulitzer Prize for Local Reporting).
Roger Lowenstein, Buffett: The Making of an American Capitalist (Random House, 1995).
Securities and Exchange Commission and New York Stock Exchange records concerning Ira Haupt & Co. (1963–1964).