Your Company’s Fraud Defenses Aren’t Ready for AI Threats – Harvard Business Review
In the early 1960s, Tino De Angelis, a New Jersey commodities trader, secured loans with his warehouse receipts, claiming that his company, Allied Crude Vegetable Oil Refining, had vegetable oil stores in tanks in Bayonne. But most of that oil did not exist. Many tanks held seawater with just enough film of oil on top to fool an inspector checking from the hatch, and pipes between the tanks let Allied move the same oil into whichever tank was being tested. When the real receipts ran short, Allied forged more on a stolen American Express receipt book. When the scheme came apart in 1963, roughly $175 million in collateral turned out not to exist. The lenders never truly relied on just the oil. They relied on the name printed on every receipt, American Express Field Warehousing Corporation, and treated that trusted name as proof that someone had checked.
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