The Great Salad Oil Swindle

Anthony De Angelis ran the Allied Crude Vegetable Oil Refining Corporation, and for a few years in the early 1960s he was one of the most important men in American commodities. He bought soybean oil, stored it, and borrowed against it — using warehouse receipts that said the tanks were full.

The tanks were not full. The trick was elegant and almost stupidly simple.

Inspectors verified inventory by lowering a measuring tape into a tank and reading the level. De Angelis' tanks were mostly water, with a layer of oil floating on top. Oil is less dense than water, so it sits on the surface — and the tape measured the total depth, not the oil. Warehouse employees reportedly warmed the tanks so the oil layer spread thinner and covered more surface. On paper, Allied held oceans of oil.

Against that phantom inventory, De Angelis borrowed heavily from Wall Street firms, which accepted the receipts as collateral. When the scheme collapsed in November 1963, the exposure brought down brokerage houses, including Ira Haupt & Co., and cost firms and investors an estimated $150 million — well over a billion in today's money.

De Angelis went to prison. Two regulatory lessons followed and stuck: warehouse receipts for commodities became far more tightly controlled, and the episode is cited as a direct spur to the tightening of American futures regulation.

What makes it worth remembering isn't the audacity. It's that the fraud required no hacking and no forgery of anything fundamental — just physics that the inspectors never accounted for and lenders who never looked past a signature.