Commodities: Justice Steps In

• Share

In the annals of international finaglers, first place is still held by Swedish Match King Ivar Kreuger, whose machinations in the 1920s caused hundreds of investors to lose a total of $500 million. The Great Salad Oil Scandal recently set off by pudgy Tino DeAngelis (TIME, Nov. 29 et seq.) stands to cost the banks and companies involved upwards of $100 million — putting DeAngelis second only to Kreuger.

But the new scandal, if second in cost, remains first in mystery.

In the first step toward penetrating the mystery, Attorney General Robert Kennedy's Justice Department last week won an 18-count indictment against DeAngelis, whose Allied Crude Vegetable Oil Refining Corp. precipitated the scandal by going into bankruptcy. The counts charged DeAngelis with transporting across state lines $40 million worth of forged warehouse receipts for vegetable oil. DeAngelis pleaded not guilty to all counts. If convicted, he could get as much as a $10,000 fine and ten years in jail on each count.

The forged receipts represent oils that were either missing or never existed at all. Even worse, say investigators, many of the tanks in which the nonexistent oil was supposed to be stored did not exist either. By an intricate system of leasing and subleasing, Allied managed to convince a lot of people that it had stored nearly a billion pounds of oil in an American Express subsidiary's tank farm in New Jersey that has a capacity of only 500 million pounds.

The Justice Department, which moved quickly in the fear that DeAngelis might try to skip the country, is not alone in its desire to get to the bottom of DeAngelis' tangled affairs. Senator John L. McClellan, who never minds working in the glare of headlines, has launched a "quiet study" to see whether his investigative committee should look in. Convinced that any new controls by Washington would smother trading, the nation's commodity exchanges have set up committees to stiffen margin requirements and trading rules. Nonetheless, other indictments are expected to follow the one handed down last week, and FBI agents are investigating the seemingly endless possibilities of legal violations that could involve others than Tino DeAngelis.