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05. 06. 12. - 16:01

Fiddling violin dealer charged over multi million pound fraud

Austrian prosecutors have filed charges against the world's leading expert on Stradivari who lived in a castle and had a fleet of luxury cars including two Rolls-Royces with what is believed to be the world's biggest ever musical fraud.

The reputation of 62-year-old Dietmar Machold was so well regarded that he was allowed to value the instruments and give them certificates of authentication which he then used as security to take out loans.

His reputation meant for example that a German bank loaned him millions of pounds when he provided them with two almost worthless violins and a certificate he had signed himself in which he claimed they were both genuine Stradivari.

When the German bank decided at a later stage to get a second opinion they were shocked to find that the two violins worth little more than 3000 GBP in total. They filed for a return of the money and Vienna court and Machold's empire began to unravel.

And this week Machold whose company Machold Rare Violins had been in the family for five generations since it was founded in 1861 was charged with embezzlement, bankruptcy fraud and grand commercial fraud.

He fled Castle Eichbüchl at Katzelsdorf in Austria to Switzerland after the German bank case caused him to file for bankruptcy, and he was arrested there in 2011 and extradited back to Austria in January of this year where he currently sits in a jail in Vienna.

Machold, who at the height of his fame had stores in Vienna, Zurich, New York City, Aspen, Chicago, Seoul and Tokyo had dealt in one in every two of the Stradivari and del Gesù violins in existence - making million in the process.

Together with his schoolteacher wife Barbara Drews, 37, the pair travelled the world buying up rare violins and then selling them on often for fantastic profits.

Prosecutors said the charges are only relating to the German violins and an amount totalling close to 5 million Euros. The total losses from Machold's  insolvency however have been put at around 150 million Euros. The prosecutors have also received 46 criminal complaints from Australia, the United States, the Netherlands, Belgium and Germany, where he is accused of further frauds. The claims include 6 million Euros for UniCredit Bank AG (previously Bayerische Hypo- und Vereinsbank), 5.4 million Euros for Schweinfurt-based Flessabank, 5.8 million Euros for the Austrian bank BAWAG, 2.3 million Euros for the UniCredit Bank Austria and 1.5 million Euros for the Austrian banking group Hypo Alpe Adria. And a Dutch citizen living in southern France, has filed a claim for 2.5 million Euros.

Also charged are his former business partner and two others not yet named. Prosecutors say that more charges are pending and the case could take place this summer and result in Machold being jailed for up to 10 years.

Th German bank realised they had been conned when they invited violin maker Roger Hargrave, 64, from the nearby town of Schwanewede in Lower Saxony, to look at the instruments in their possession that had been used as security against alone. He told German magazine Spiegel: "The Bremen bankers were completely shocked - there was no oxygen left in the room." One of then, he said, urged him to exercise discretion. "They were extremely embarrassed to have fallen for such a huge scam."

Joerg Beirer, the administrator in the bankruptcy proceedings, said he had pieced together a picture of a businessman who was probably cash-strapped for years and sold violins he had taken in commission for millions - often failing to pass on the proceeds to the instruments' owners or to banks, allegedly using the money to pay off other debts instead.

Machold's plan to leave his business to his son Lueder one day is no longer an option. When questioned, Machold revealed that he had already told his son years ago that he would first have to "do some serious cleaning up" at the companies. That was probably an understatement.

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