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De Angelis wisely saw that a shrewd operator could make a fortune out of two other Government programs: farm price supports and foreign aid. His idea: buy up the bulging soybean surplus, turn it into soybean oil, which is used for everything from salad dressing to paint, and ship the oil abroad—either privately or through the many Government aid programs. Between 1958 and 1962, De Angelis built a sprawling refinery in Bayonne and leased 139 oil storage tanks, many as tall as five-story buildings. Operating in a slippery, fiercely competitive industry, he outdid other companies by buying the most modern equipment, paying the highest wages and putting in the lowest bids for Government export contracts. By 1962, he accounted for three-quarters of the nation's exports of soybean and cottonseed oils, shipping 361 million lbs. All this required considerable capital—and that is how the swindle began.
Paper Mountain. To finance his rapid growth, Tino borrowed huge sums of money, using huge amounts of oil as collateral. But there was one hitch: he never had all that oil. What he did have was a mountain of paper—certificates attesting that he owned the oil. Although Billie Sol Estes at that very time was making headlines for having passed off similarly spurious paper for nonexistent ammonia tanks, the bankers and brokers never bothered to check up on De Angelis' tanks. Nor did they question De Angelis' warehouse receipts, because Tino had them signed by officials of American Express Co.
In a sense, American Express got mixed up with Tino in an effort to spur sales of its famous travelers' checks. Back in 1944, the company figure J that it could induce bankers to push the checks by performing a service for them. A subsidiary, American Express Warehousing, would store, inspect and vouch for the oil that commodities dealers commonly used as collateral for their bank loans. It was a rewarding business—De Angelis paid American Express Warehousing up to $20,000 a week—but terribly risky. If anything went wrong, Amexco's subsidiary was responsible for making good on its warehouse certificates.
Shouting Down. De Angelis' men duped Amexco with surprising ease. Often, one of them would clamber to the top of a tank, drop in a weighted tape measure, then shout down to an Amexco inspector on the ground that the tank was 90% full. Sometimes the tanks were indeed full—with water, topped by a thin slick of oil. Usually many were empty. Moreover, the tanks were connected by a jungle of pipes; Tino's men sometimes sneaked into the casually guarded tank farm on weekends, pumped oil from one tank to another. These machinations gave him an endless supply of oil certificates—and endless borrowing power. At one time he had loans out on three times as much oil as the Bayonne tanks could hold. But Tino figured—rightly—that his various and hotly competitive creditors would never get together and compare their overlapping certificates.