Salad Oil Swindle Cost Wall Street $150 Million!

Tino's Bottomless Tanks of Oil

Originally appeared in Saturday Evening Post on April 25, 1964
By Norman C. Miller

The Congressman and the Salad Oil Swindler

Oil and water mixed at Bayonne, where a maze of pipes and interconnected tanks made almost anything possible at inventory time.
At this point the De Angelis career begins to depart from the Horatio Alger script. In 1952 the Agriculture Department charged that Gohel had sold the Government poor qualits meat for the federal school-lunch program. Less than a year later, the Securities and Exchange Commission accused him of understating the Gobel company's 1952 losses by $145,000, in a report to stockholders. In July, 1953, Tino took Gobel into bankruptcy court.

Tino eventually paid $100,000 in damages to clear up the school-lunch business. It took him five years to get Gobel out of bankruptcy-but in the meantime he had spotted something more promising than hog-butchering. American farmers' production of vegetable oils had begun to run ahead of consumption in the mid'50's. Huge surpluses of oil had begun to pile up, and the Government was eager to develop markets abroad.

Tino borrowed money to set up Allied, building a three-million-dollar refinery at Bayonne and leasing a number of storage tanks there. He would buy raw vegetable oil from the big "crushers" that squeeze soybeans and cottonseed in the South and Midwest, ship it to Bayonne, refine it, and sell it-usually to exporting companies. His two biggest customers were Continental Grain Co. of New York and Bunge Corp., a firm headquartered in Buenos Aires. Tino's services and storage facilities were so valuable to Continental and Bunge, who together sell about two billion dollars' worth of commodities around the world each year, that they and other exporting firms helped to finance him. While some of these companies apparently charged as much as 15 percent for credit, it was worth it to Tino, who could borrow far more from his customers than he could from banks. He would pledge warehouse receipts for oil as security, ostensibly use the money to buy more oil and pledge that for still more money.

Tino became a big operator in the Government's Food for Peace program, in which the Agriculture Department would sell surplus oil to various needy countries for their currency and pay off the American exporter in dollars. In such deals, Tino was far more than a middleman supplying the exporters. Leaving his modest office in Bayonne, he would make swings through foreign markets, talking to government officials to line up sales for his exporter customers. He became a familiar figure in such places as Karachi, Istanbul and Madrid, and foreign buyers would often visit him at Bayonne. Only last September, Tino recalls, a Pakistani businessman dropped by to discuss a damage claim on an oil shipment, and Tino slipped him "a few thousand" in an envelope to forget about it. "That's the petty-larceny way you have to do business in some parts of the world," Tino says.

In 1960 the Justice Department sued Tino for fraud in a 1958 shipment of oil to Spain via the Isbrandtsen shipping line, whose exporting subsidiary did considerable business with Allied and loaned Allied money. The charge claimed Tino had falsified sale dates in order to qualify for government financing. Allied and lsbrandtsen paid $1.5 milhon damages to the Government to settle the matter. Tino now declares that all this was part of a "plot" by the Agriculture Department to "get" him. "While I was brilliantly moving and selling all over the world, I had a very powerful force working against me," he says darkly. For all this, his customers continued to get licenses to export and continued to get their oil from Tino. If the name "Allied" did raise red flags in Agriculture, Tino blurred the picture somewhat by doing business under a variety of other names, such as Shortening Corp. and Trans World Refining. In fact, Allied was merely the apex of a complex of a dozen companies controlled by Tino and handling various aspects of his sprawling operations.

Nothing about Tino's reputation seemed to bother the businessmen he dealt with. so long as his patronage was profitable. Besides his previous involvements with the law, there was a rumor on Wall Street that he was bankrolled by the Cosa Nostra, based on his minority interest in a Chicago shortening firm which employed known hoodlums. The rumor didn't hurt him in business. In fact, says a trader for a major vegetable-oil firm, "we figured Tino might have planted the rumor himself. If he were backed by that kind of money, we would have known he was good for all he owed us."

In any case, Tino's business and his debts expanded apace. The sales of his companies mounted to some $250 million a year, and at one point he was supplying 75 percent of U.S. exports of cottonseed and soybean oil. Customers found that Allied could usually quote prices below its competitors, which seemed to reflect a highly efficient operation.

But something more than efficiency was involved, according to the charges now filed against Tino. For a significant fact apparently struck him almost at the moment he got into the oil business in a big way in 1958. He realized that he always had more oil stored than he needed to satisfy customers' immediate demands, and it was inconceivable that all customers with calls on oil would ask for delivery at the same time. As long as he could meet daily withdrawals, he might have almost any amount of oil in storage, for all the world knew.

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