The Salad Oil Scandal of the early 1960s was one of the worst corporate scandals of its time. It occurred when executives at New Jersey-based Allied Crude Vegetable Oil Company discovered that banks would make loans secured by the company's soybean oil or salad-oil inventory.

When inspectors would test Allied's holding tanks to confirm they were full, the company consistently passed the test. However, management didn't remind anyone that oil floats on water. The containers, filled with water, had just a few feet of oil on top, fooling everyone. In 1963, the scam came to light, and over $175 million-worth of salad oil was missing, causing

several notable market reverberations.

1. Who was the perpetrator of the fraud, why did they do it and what was the outcome for that individual? Were there multiple perpetrators? Could one person have done this alone? What were the penalties?

2. There are many victims of fraud, please name them and how were they affected?

3. How was the crime discovered? Please discuss the way this was discovered as well as the most common ways that frauds are found out. Considering how it was discovered, is it more likely that fraud would be discovered in this method today or less likely, why?

4. Were there any red flags that you can identify?

5. Did their accounting firm make any errors?

6. What internal controls (preventative and detective) could they have put in place to

prevent it from happening?

Answer rating: 100% (QA)

ANSWER 1 The main perpetrator of the Salad Oil Scandal was Anthony De Angelis the president of Allied Crude Vegetable Oil Company De Angelis engaged i... View the full answer