A Vienna court has heard how a man that even prosecutors described as the most famous stringed instrument expert in the world used his reputation to fiddle millions from his clients.
Dietmar Machold married a woman 27-years younger, bought a romantic fairy-tale castle and filled his garage with a fleet of VIP cars to impress his clients – and persuade them to allow him to look after or restore their instruments.
But in reality he had run up massive debts of over 250 million euros because of his jet-set lifestlye, issuing faked certificates of authenticity to say that worthless violins were priceless masterpieces and illegally selling off other instruments that were left in his care.
The total losses from Machold’s insolvency are far in excess of the 4.74 million Euros for which he is curtrently on trial, and prosecutors have received 46 criminal complaints from Australia, the United States, the Netherlands, Belgium and Germany, where he is accused of further frauds.
Opening the case on charges of embezzlement, bankruptcy fraud and grand commercial fraud prosecutor Herbert Harammer said: “He lived the life of a rich and successful man. But now with the benefit of hindsight we realise this was just a facade.”
The court heard how the accused was part of a family of violin builders from Bremen in Germany and in contrast to his father he had let the violin building side of the business gradually fold while he himself moved into the far more lucrative business of dealing in the sale of violins.
He set up an “empire of music” when he married a 27-year younger woman in 1997 in Austria and purchased a historic castle, Schloss Eichbüchl, in Lower Austria, which he used to entertain customers and reinforce the impression that he was a successful businessman.
But his expenditure did not match his income and by 2006 he could no longer meet his creditors, and decided according to prosecutors to meet the debts by taking the money from elsewhere.
But the prosecution said he then constantly needed to repeat the process with ever bigger frauds in order to cover himself. Machold admitted partial responsibility – in that he admits selling illegally violins belonging to customers that have been entrusted into his care or alternatively to use them as security to borrow large amounts of cash. But nevertheless he pleaded not guilty to the charges.
In total the prosecutors say the damage was in the region of €4.74 million. This includes violins worth 3.3 million that he stole and sold. One instrument alone the Stradivari “Cremona” from the year 1727 was worth €1.7 million.
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 and worth 5.5 million Euros.
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 3,000 GBP in total. They filed for a return of the money and Vienna court and Machold’s empire began to unravel.
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 charges to which he is currently in court could see him jailed up to 10 years.
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.