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The Capitalist Crucify the Old Man - 1880's


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Saturday, May 02, 2009


I believe the term scam evolved from the French “escamote”, which is a magician’s ball. While the “marks” watched the magician shift the hidden ball his “escamoteur” (accomplice) would “escamoter” (steal away) with the mark’s purse. By 1893 Isabel Burton could write, “You have been robbing the public for the last quarter century, and only the other day you bought a bottle of ordinaire and escamote'd it into sixteen kinds of vins fin., a scam if ever I heard one.” (The Life of Captain Sir Richard F. Burton)
When the Dutch settled New Amsterdam, the chief gunner (or “Konstapel”) assigned to defend the harbor was granted land where the narrow Kill (or tidal channel) van Kull, runs past Staten Island (left of above frame), separating the bay of New York (foreground) from the bay of Newark (background). This land grant, called Constable Hook, was specifically the land jutting out from Bayonne, New Jersey, 10 miles south of Manhattan. In the late 1950’s (as it is today) Constable Hook was the unattractive home of industrial tank farms, including the 139 gray-green storage tanks, some, five stories tall, where Anthony De Angelis e-scam-tuer-ed with his investor’s purse.The vegetable and fish oil in the tanks owned and leased by Allied Crude Vegetable Oil Refining Corporation was destined for shipment to factories worldwide to be converted into margarine, vitamin extracts, paints, soaps and toiletries, pharmaceuticals and, of course, salad oil. In order to measure the volume held in each tank American Express Warehouse instructed its inspectors to lower a ruled measure to the bottom of each tank. When the measure was withdrawn, the inspector would note the film of oil on the tape. American Express could then vouch for the amount of oil held by Allied at Constable Hook. The only problem was that all of the men working at Constable Hook for American Express were also working for Anthony De Angelis.As already mentioned Thomas Clarkin was paid $500 a month by American Express as a custodian and to keep the inventory records, but Anthony paid Tommy $400 a week as a “messenger”. And, as Anthony later admitted, “He told me he needed a house for his wife and kiddies so I said, `Tommy I'll give you the money for your house.” And he did. Joe Lumuscio, another of Anthony’s ‘buddies’, was paid $6,000 a year as a custodian by AmEx, but pocketed $53,000 a year from Allied. And overseeing the entire scam was the General Manager of the Constable Hook facility, Leopold Bracconeri, who was Anthony’s brother-in-law.Like all scams, this one was based on a simple slight of hand. When the inspectors verified the inventory Allied’s custodians were the ones who actually climbed atop each tank, lowered a tape measure, and read off the level of oil. The inspectors would rarely if ever check the tape. So Anthony’s boys could call out any number they wanted and that number would become the “official and verified” inventory. Gradually Anthony’s boys would fill the tanks with salt water, leaving a few inches of oil floating on the surface. Then when “inspecting” each tank, they would note the film of oil at the top of the tape, which was more than enough to lull any overly conscientious inspector. The captains of industry who ran American Express never visited Constable Hook, and certainly never climbed atop the tanks upon which so much of their fortunes and reputations were based.According to author Norman C. Miller, Anthony had come to an amazing realization, that “…he always had more oil stored than he needed to satisfy customers' immediate demands…(and)As long as he could meet daily withdrawals, he might have almost any amount of oil in storage, for all the world knew.” Then, using the magic of the credit line AmEx had granted him, Anthony could convert any excess product he had at Constable Hook into cash, and then using the magic of “Commodity Futures” he could multiply that credit line by a factor of 95.Wikipedia defines a futures contract as an agreement “… to buy or sell a specified commodity of standardized quality at a certain date in the future.” But in practice Futures are bought and sold as if they were stock, usually by speculators who have no intention of ever taking delivery on the commodity. The philosopher Thales had invented the idea in the 4th century B.C. when one summer he reserved olive oil presses for the fall harvest with a down payment. If the harvest was good, the presses would be in demand and Thales could charge more for their use. If the harvest was bad, Thales was out his deposit. It was a brilliant innovation, sharing the risk of producers with investors. But the system was rife with possibilities for fraud, which is why it languished for 2,000 years outside the mainstream of capitalism.The heady field of commodity futures traders usually worked on a 15% margin, which meant that for a million and a half in collateral (vegetable oil) Anthony could buy the contract for oil worth $10 million. But since Anthony was so well connected in the industry he was able to negotiate for a 5% margin from Wall Street brokerage houses Ira Haupt and Williston & Beane. That meant that with AMEX receipts claiming $ 1.5 million in inventory at Constable Hook, Anthony could commit to the purchase of $142.5 million worth of futures. And that was the temptation for Anthony’s boys to claim increasing quantities of oil the tanks did not contain.With buying power like that Anthony was driving the price of soybean, cottonseed and corn oils up, thus profiting more from his fraudulent inventories. In reality, Allied was shipping up to 100 million pounds of vegetable and fish oil out of Constable Hook each week, $250 million worth in a year, 75% of US total exports of vegetable oils. But that was no longer enough for Anthony. Showing paper profits on his futures trades, Anthony began to dream of cornering the entire market on vegetable oils. His secretary, Josephine Salto, begin to carry her typewriter with her. At anytime Anthony might ask her to type up a blank AMEX Warehouse inventory receipt claiming a new figure; “a figure apparently unrelated to anything except Allied’s need for cash” (Miller).By 1960 Allied’s operations, both legal and illegal, were beginning to show the strain. Anthony claimed to have spent $2 million to win a contract from the Spanish government. But the deal fell through after the U.S. Department of Agriculture charged Allied with back dating a 1958 contract. Other Spanish customers were claiming the oil they had bought was arriving spoiled. The USDA fined Anthony $1.5 million, and the little con man complained, “While I was brilliantly moving and selling all over the world, I had a very powerful force working against me.”It was true. And the dark force working against Anthony turned out to be Anthony De Angiles.

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Thursday, April 30, 2009


I believe the phrase originated on May 12, 1849. Mr. Thomas McDonald was approached on a New York street by a fashionable dressed man who greeted him as if an old acquaintance. After a few moments’ pleasant conversation the man abruptly asked, “Have you confidence in me to trust me with your watch until tomorrow?” Without thinking Mr. McDonald handed over his gold watch, valued at $110. However, Mr. McDonald did the see the old friend “tomorrow”. He never saw the stranger or his watch again…until July 7th of 1849, when he spotted the man on a street corner in lower Manhattan and had him arrested. According to the New York Herald the villain was quickly identified as William Thompson, lately of Sing Sing, and the paper invited victims of similar thefts to visit his cell at the Tombs to identify the suspect. When they did Mr. Thompson identified himself boastfully as, “I am the Confidence Man.”As is proven by the pervasiveness of “con men” on Wall Street, success in business is no more a measure of personal intelligence or integrity than the ability to snake a sewer pipe or repair an automobile - as the script for the 1940 film “Citizen Kane” pointed out.BERNSTEIN: Thatcher! That man was the biggest darn fool I ever met -
THOMPSON: He made an awful lot of money.
BERNSTEIN: It's not a trick to make an awful lot of money…if all you want is to make a lot of money…That kind of fellow you can fool every day in the week - and twice on Sundays!”And that goes a long way to explain the career of con man Anthony ‘Tino’ De Angelis, the one time so-called “Salad Oil King of New Jersey”. In the words of Roger Lowenstein, Anthony was “…a familiar type in American finance, possessed with a combination of brilliance and moral flexibility that produces a first rate white collar criminal” (“BUFFET” page 80), which also describes many first rate captains of American finance, as well.
Time Magazine described "Tino" this way; “His five-foot-four-inch frame was burdened by 240 fleshy pounds, making him seem wider than he was tall. Thin wire-rimmed black spectacles perched precariously on his round face…His rumpled (ready-made) suits usually looked as if he had slept in them…(He) drove around in a large Cadillac and always ostentatiously carried a thick wad of bills.”Norman C. Miller tried to explain Anthony’s charm as a con man for the Saturday Evening Post; “There is something contagious about (his) guileless, open-handed manner….It infected people far outside of his usual social circles. A variety of big businessmen were happy to have a part in Tino’s expansion plans… It pleased him to distribute largess among his retinue of lieutenants and hangers-on, often in the form of cash”. .”(Miller; In Anthony’s own words, “Here we have a man born and raised in the poor section of New York, (who) rises to the point where he runs ten, fifteen businesses or plants around the country.”While still in his twenties Anthony had “…an exceptional ability in knowing how to process hogs. Some of my methods,” he claimed, “cut the cost of processing hogs enormously.” Anthony opened his own meat packing firm in the midst of the Great Depression and turned a $100,000 profit the very first year. By the end of WWII, like much of the rest of America, Anthony had a pile of capital ready to invest.
He bought controlling interest in Adolf Gobel Company, a deli and sundry wholesaler, and by 1953 he was large enough to be charged by the Federal government with selling them two million pounds of un-inspected meat. Anthony paid the fines and took Gobel into chapter 11, bankruptcy.Then, in 1955, Anthony borrowed from his two biggest customers, Continental Grain Co. of New York and Bunge Corp. of Buenos Aires, to set up “Allied Crude Vegetable Oil Refining Corporation”, and related companies, which owned warehouses and storage tanks on Constable Hook, New Jersey. The business shipped olive and soybean oil world wide, oil produced from soy beans and olives owned by Continental and Bunge. The investors – slash - customers charged Allied 15% interest on the loan, but they also took the soy and vegetable oils which Allied had in storage, as collateral, which meant that Anthony didn’t have to risk a dime of his own money to create the company.As proof that the oil existed in Allied’s storage tanks Anthony hired American Express. The banking firm had recently started a new division, AMEX Wharehousing, in order to take advantage of the budding market of commodities futures. For a fee AMEX provided receipt's which validated the existence of the oil. Everything depended on that verification. But in 1955, when American Express was charging Allied $20,000 a week to verify the soybean and olive oil in Allied’s tanks, the futures market was not regulated. So, when American Express hired “custodians” to verify the product they hired people like John Bongardino (the brother-in-law of Anthony's secretary), and Thomas Ckarkin, who was paid $500 a month by American Express as a custodian, but was also paid by Tino $400 a week as a “messenger”.
How could Anthony afford to pay his employees such salaries? Because the wizards running American Express had given their customer Anthony De Angelis, a $3.7 million credit line. And once he had those receipts with that most hallowed of Corporate names in his hand,Anthony was bankable; he had become part of that amoral world of corporate capitalism, where success is the ultimate gauge of moral superiority and can be purchased on margin.
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