The U.S. of A. has had its share of Bernie Madoffs over the years, but I guess in Europe they go in for more high-brow swindles.
Such is the case of Dietmar Machold, who, at 63 is facing jail time for a fraud scheme that involved Stardivari and other ultra-ultra stringed instruments.
Dietmar wasn’t an overnight violin huckster sensation. The story began when his father opened a modest violin shop in Bremen, Germany, in 1951. Son Dietmar took over the business in 1980, the dawn of the Greed Is Good decade. Not content to sell pedestrian violins to folks with less-than-Yehudi-Menuhin, not-so-prodigy children so that the kids could scratch out a few bars of “Twinkle, Twinkle, Little Star” to an audience of beaming grandparents, Machold decided to think and do BIG.
A generation later, as upper-end violin prices — like those of art, houses, credit default swaps and medical care — had crept inexorably upward, a dozen or so global dealers had dwindled to three or four, and Machold was one of them. The Bremen shop was still operating, and Machold now had shops and affiliates in Zurich, Vienna, New York, Chicago, Seoul and Tokyo.
The trade had never known a multinational on this scale. Instruments below $90,000 were “Mickey Mouse violins,” Machold told interviewers. Anything below $1.25 million was not worth his time. (Source: Washington Post.)
Well, as far as I know, Mickey Mouse never played the violin. Maybe Machold meant Jack Benny?
In any case, Machold became the go-to’s go-to for Strads. His reputation was such that he was able to prepare the appraisals for two violins, valued at $6.8 million, that he himself used as collateral for a multi-million dollar loan from the Bremen Sparkasse savings bank.
Those Bremen bankers had a gulp moment when violinmaker Roger Hargrave informed them that the violins were not Strads. In fact, they were worth close to $6K and $6.8M.
The bankers[also] had Hamburg forestry expert Micha Beuting examine the alleged Stradivari instruments. If they had been genuine, the trees used to make them would have to have been felled before 1737, the year of Antonio Stradivari's death.
In his report, Beuting noted that based on the growth rings, the trees had been cut down decades after Stradivari's death -- probably in the northern Alps or the Bavarian Forest, but clearly not in the southern Alps, where the spruce trees Stradivari used to make his violins grew. (Source: Spiegel.)
But it was pretty easy for the bankers to be duped.
After all, Machold had been a good bank client for years. He lived in a 700 year old Austrian castle. He was named an honorary professor by the Austrian ministry of culture. And, in 2005:
Erwin Pröll, the governor of the state of Lower Austria, awarded Machold the "Grand Gold Medal of Honor for Services to the State." Best of all, he anointed Machold a "citizen of the world" in full view of the illustrious assembled guests. (Source: Spiegel.)
Seriously, who would doubt the word of a ‘citizen of the world’? One who owned 44 cars – mostly Bentleys, Rolls, and Aston Martins. And Machold was such a trusted authority that:
At the 2005 annual meeting of the American College of Trust and Estate Counsel in Orlando, members were invited to bid on a weekend at Machold’s castle. The ACTEC Foundation looked forward to the auction proceeds. The winning bidder looked forward to “a personal concert played on a Stradivarius violin.” (Source: Washington Post.)
Hmmmm. How many of those American College of Trust and Estate Counsel members do you think could tell the difference between a Stradivarius and a Mickey Mouse fiddle worth $90K? Wonder who won that bidding war…
In real life, by 2005, Dietmar Machold’s world was beginning to come unstrung. Not only was he foisting off violins of dubious pedigrees as thoroughbreds, he was using instruments which he didn’t actually own as collateral in multiple banks, for multiple loans, to pay off the real owners. In some cases, the collateral that the banks held was a photograph of a violin, not the actual violin. (See me after if you’d like to look at a Kodachrome snap of the Brooklyn Bridge.)
In true Madoffian-Ponzish fashion, he’d pay off Person A with Bank Loan B, and pay off Bank Loan B with Bank Loan C. Thus he managed to keep all the balls in the air until 2008 when the economy went south, taking Machold with it.
Machold filed for bankruptcy, and an assemblage of banks and individuals have claims against him that amount to about $200 million.
Well, they’re not making any more Strads, so the price will keep going up as long as there are folks who want them – a couple of years ago, one went at auction for nearly $16M. But whether he ends up in the hoosegow or not, it’s a safe bet that none of them will be sold or appraised by Dietmar Machold.
Meanwhile, his creditors are no doubt playing one very sad song for him on the world’s tiniest violin.
No comments:
Post a Comment