Tino De Angelis filled tanks with water, not oil — and cost 51 banks $180M

Allied Crude Vegetable Oil Refining Corporation was founded by Tino De Angelis, a commodities broker who had already bankrupted one company and been sued by the SEC for using fictitious inventory to obtain loans. Despite this record, De Angelis built Allied into a giant of the vegetable oil trade, convincing banks to lend against its vast inventory of soybean and cottonseed oil stored in tanks at a New Jersey facility.

The inventory was a fraud. De Angelis had built hidden compartments in storage tanks so they appeared full with less oil, moved the same oil between tanks so it was counted multiple times, and simply filled tanks with water. His warehouse receipts claimed 900,000 short tons of oil — but the actual stock was 55,000 tons. The fraud was exposed in November 1963 when De Angelis tried to corner the cottonseed oil futures market and the price collapsed.

Allied filed for bankruptcy on 18 November 1963, just days before the Kennedy assassination. The fraud hit 51 financial institutions, including Bank of America and Chase Manhattan. American Express, whose warehousing subsidiary had certified the non-existent inventory, saw its stock drop by a third and paid $60 million in settlements. De Angelis was sentenced to 20 years in prison in 1965 and released in 1972.