Machold

[Flyboy]

If this was a car, the back half of the chassis would be a Ferrari, the front half a Renault with a Renault engine, the rest a Bugati....

At least it doesn't have any parts from Jaguar. If that were the case, it'd be in the shop all the time.

[jacobsaunders]

www.spiegel.de/kultur/gesellschaft/0,1518,755895,00.html

or:

derStandard.at (put "Geigenhändler" in the search box)

Practise you're German!

[violinfan]

www.spiegel.de/kultur/gesellschaft/0,1518,755895,00.html

or:

derStandard.at (put "Geigenhändler" in the search box)

Jacob, thanks for the links! Care to share any insider Machold stories?

For those of us who don't know German, here are the Google translations of Jacob's links. It seems that the authorities can't locate all the violins that Machold pledged to the banks.

http://translate.googleusercontent.com/translate_c?rurl=translate.google.com&sl=de&tl=en&twu=1&u=http://www.spiegel.de/kultur/gesellschaft/0,1518,755895,00.html&usg=ALkJrhgLLgvUPBhvcUI2lkNvzymGsgCVUw

http://translate.google.com/translate?sl=de&tl=en&u=http://derstandard.at/1301874229426/Verschwundene-Geigen-Kameras-statt-Stradivaris

http://translate.google.com/translate?sl=de&tl=en&u=http://derstandard.at/1301874013316/Ermittlungen-Causa-Stradivari-200-Geigen-abgaengig

http://translate.google.com/translate?sl=de&tl=en&u=http://derstandard.at/1297822099086/Haendlerpleite-Bawag-sucht-verpfaendete-Geigen

[Janito]

"By 2004 I was a millionaire," said Machold SPIEGEL ONLINE. Then it went downhill. It began the period in which the authority took the honorary professor in the industry severely. The Munich-based violin dealer Renate Koeckert offered him a Guarneri del Gesu, which he sold for 2.6 million €. It was one of those classic corner store of the violin trade. Machold did not know that Koeckert had received the precious piece of leg & Fushi in Chicago. Geoffrey Fushi, co-owner did not know that they landed at Machold. Machold was numb and could not pass on the proceeds. Fushi and Koeckert who wanted to earn hard on the deal threatened to empty-handed - as the owner, a prominent American violinist."

Brilliant!

[skiingfiddler]

"By 2004 I was a millionaire," said Machold SPIEGEL ONLINE. Then it went downhill. It began the period in which the authority took the honorary professor in the industry severely. The Munich-based violin dealer Renate Koeckert offered him a Guarneri del Gesu, which he sold for 2.6 million €. It was one of those classic corner store of the violin trade. Machold did not know that Koeckert had received the precious piece of leg & Fushi in Chicago. Geoffrey Fushi, co-owner did not know that they landed at Machold. Machold was numb and could not pass on the proceeds. Fushi and Koeckert who wanted to earn hard on the deal threatened to empty-handed - as the owner, a prominent American violinist."

Brilliant!

Lot's of funny stuff. The best is "Bein and Fushi" means "leg and Fushi" for a machine translating German, which, of course, "Bein and Fushi" does mean for a thoughtless machine. It's good to know that at least for translating languages, humans still top machines.

I wonder how the machine translates "humans still top machines" into German. Maybe "Ze person put quiet za bottom of his on za apparatus. Verboten in Alabama."

By the way, does anybody know if Dietmar Machold is related to Oskar Machold, violin maker in Chemnitz, Germany, in the 1920s, 30s, and 40s, and prominently photographed in Jalovec's German and Austrian Violin Makers?

[Julian Cossmann Cooke]

I was going to write you privately Ben since I didn't want to derail this thread but now Jezzupe has brought this up I'll state the basics.

Tire blowout, explosion-hit a fence after swerving right-flipped into the air and spun by the metal fence as it twisted and broke apart, high speed rolling bouncing abot 4 times down a steep hill- clutched the steering tight with my knees arms and tucked my head and held on until everything stopped. concussion, l shoulder injury many bruises and lot of pain, amnesia and persistent headaches and confusion about time. I should have died but I didn't. I will be well in the future as long as I "rest my brain" from the concussion.

Write me privately for more or go to facebook. There's more to this story but I'll leave it for outside this forum. Thank you all for your concern.

Glad you are still with us, Dean. We don't know each other, but I have always detected (and appreciated) a great deal of humanity in your posts. Best wishes for your continued recovery.

[Julian Cossmann Cooke]

The Machold imbroglio -- interesting though it is on many other levels -- in the end brings me back to what my short experience and meager knowledge tell me is one of the fundamentals of our craft: question everything. That admonition is at the core of becoming an ever better maker. Questioning from a position of humility enables us to improve our craft while still being respectful of the years of devoted study that those who have gone before us have dedicated to the pursuit of our shared passion. Maestronet is enriched by the presence of a slew of folks who decline to be satisfied by received wisdom -- that is one of the things that keeps many of us coming back to this community for more -- and by the relative dearth of people who take umbrage when their treasured theories are subjected to probing.

[jacobsaunders]

Jacob, thanks for the links! Care to share any insider Machold stories?

For those of us who don't know German, here are the Google translations of Jacob's links. It seems that the authorities can't locate all the violins that Machold pledged to the banks.

http://translate.googleusercontent.com/translate_c?rurl=translate.google.com&sl=de&tl=en&twu=1&u=http://www.spiegel.de/kultur/gesellschaft/0,1518,755895,00.html&usg=ALkJrhgLLgvUPBhvcUI2lkNvzymGsgCVUw

http://translate.google.com/translate?sl=de&tl=en&u=http://derstandard.at/1301874229426/Verschwundene-Geigen-Kameras-statt-Stradivaris

http://translate.google.com/translate?sl=de&tl=en&u=http://derstandard.at/1301874013316/Ermittlungen-Causa-Stradivari-200-Geigen-abgaengig

http://translate.google.com/translate?sl=de&tl=en&u=http://derstandard.at/1297822099086/Haendlerpleite-Bawag-sucht-verpfaendete-Geigen

Dear Violinfan,

Yes, I am one of the „eleven restorers with nine different nationalities“, that Roger mentioned further up this thread (posting #35). How did you know? Do I know you personally?

I can confirm as an eyewitness that Roger’s narrative is more or less correct, particularly the bit about him occasionally being “pretty much unbearable”. This occurred mostly on the occasions when he was obliged to wear a suit. I’m afraid that I couldn’t stop laughing, because it always reminded me of the contemporary (early 80’s) British television advert for PG Tips tea, the one where a team of chimpanzees’ in boiler suits were trying to shift a piano down a narrow staircase.

I left Geigenbau Machold GmbH. at Christmas 1985, after two years and nine months for much the same reasons as Roger did later, although it had taken him longer to come to the same conclusions.

I posted a few links yesterday because having read the whole thread recently; I was struck by the American colleagues hardly being aware of the known facts. I’m afraid I was wholly unaware of what a calamitous pig’s ear Google would make of translating into English from German.

By way of compensation, I will now have a stab, as an Englishman with very rusty English to summarize the known and published facts (hope I’m better than a machine!):

There are three groups of accusations being made by the Austrian authorities against Dietmar:

1- That he took violins for sale on commission (I think you call it consignment in America), sold the instrument and subsequently neglected to pay the original owner (consignee) his or her due money. One notable documented and published occasion when this happened is the “Leg & Fushi” del’ Gesu that he borrowed from Frau Koeckert, sold and didn’t pay out for ages.

2- That he used violins/cellos as collateral for loans with various Banks. These instruments subsequently transpired to be nothing like what they were supposed and described by his certification too be, when the various Banks had written the loan off and wished to sell the instrument to cover any losses. This was, apart from being unbelievably audacious, a cause of considerable unpleasantness. For Instance in April 2010, when a local bank rang and told me that they had an old Cello in their bank vault, which they wished to sell and that they would, to this end, require a valuation from a law courts recognised Appraiser and could I help. I said, yes, please come around with the Cello. A Mr. K. arrived, unpacked the cello and I told him immediately that the Cello was junk, not really worth anything at all, completely useless for a serious Violin-shop and would possibly, with a bit of luck fetch up to 1000 Euros somewhere grotty like ebay. Mr. K. was thoroughly crestfallen and pulled some paperwork out of his briefcase. These included an “Appraisal” from Machold for an Alberti Cello for 300.000 U.S. Dollars and a Certificate from David Hill to similar effect. This leaves one, as an appraiser, in Roger’s “who the hell are you” situation.

3- Dietmar had sold various banks violins as an “investment”. He has, over the past decades or so, at fairly regular intervals, had various magazine articles, even a television documentary, with the pitch that violins appreciate 18% a year etc. etc., also the old chestnut that violins need to be constantly played, otherwise they loose in value. One particularly audacious case, and a cause of ridicule here, was with the “BAWAG”. Unfortunately the Google Translator has excelled itself in making mincemeat out of this “Der Standard” article. If you could excuse me for going of at a tangent, BAWAG stands for “Bank für Arbeit und Wirtschat Aktien Geselschaft”. It is the 5th. Largest Austrian Bank. Until about 5 years ago it was wholly owned by the Austrian Trade Unions (which seem curious “capitalists”). One Sunday evening they lent an astronomic amount of money to an American fund called “Refco” which on the subsequent Monday filled for bankruptcy. The banks then Chairman, Mr. Elsner is currently serving a 10 year prison sentence. Afterwards the Trade Unions had to swallow their pride and sell the bank to an American “locust”, the hedge Fund Cerberus. Dietmar sold violins to this Mr. Elsner and since they “need to be constantly played, otherwise they loose in value”, supplied the appropriate “young artists” to play the violins. I, in my shop just outside Vienna, have never met anyone who plays on a “BAWAG Violin”, the talented young Austrian musicians whom I have asked don’t know of any colleagues that do either. Now that Dietmar has filled for Bankruptcy for 40m Euros in Vienna, where his business was and 80m Euros in lower Austria, where his flat (sorry castle) was, they realise that they won’t get any money, but would be curious to know where the violins that they own are. Dietmar is refusing to inform them where the violins are, incase they put “all the instruments on the market at once, and ruin the prices”. I suppose he has a kind of point there, but please draw your own conclusions. I recently saw a short documentary on CNBC called “alternative investments” where a London Vm. was offering exactly Dietmars “investment” model.

So, I have to go and do some work now even if I don’t feel that I have covered all relevant details.

[Janito]

So, I have to go and do some work now even if I don’t feel that I have covered all relevant details.

Very informative thanks.

[jacobsaunders]

By the way, does anybody know if Dietmar Machold is related to Oskar Machold, violin maker in Chemnitz, Germany, in the 1920s, 30s, and 40s, and prominently photographed in Jalovec's German and Austrian Violin Makers?

Dear Skiingfiddler,

Yes, Grandfather/Grandson

I had a correspondence about this with the gentleman from the Star Ledger:

“ The reality is that Dietmar’s father, Heinz-Joachim, after 7 years in Siberia as a prisoner of war (having been taken prisoner in Stalingrad) founded the firm “Geigenbau Machold” in 1949 in Wiesbaden, moving it to Bremen in 1951, on the recommendation of a customer. His father, Oskar Machold, in turn was a violin maker in Chemnitz, (or “Karl-Marx Stadt” after the war). This firm was, post-war a “Volkeigenen Betrieb” i.e. nationalised or perhaps rather, communalised, in E. Germany, and had nothing whatsoever to do with Geigenbau Machold in Bremen. We all knew this back-to-front, because Machold Sen. (Heinz-Joachim) used to tell us about it ad-nausium, in the Workshop whenever he had nothing better to do (often). I can even remember Roger getting so sick of this that he, with his typical Yorkshire diplomacy, pointed out to him that the Russians hadn’t exactly invited him to come to Stalingrad in the first place. The notion of a great long dynasty goes back to a practical joke, trying to sell Dietmar a rubbish flea market violin, with an especially faked up label of an imaginary ancient ancestor. Alas, North Germans are seldom up to English humour”.

Regarding the constant talk about being in the “5th generation” or “established in 1861” and blah de blah, I wrote:

I was thinking of writing "Established 1901" on the front of my shop, after all my

great grandfather did play the trombone in the band of the 2nd Battalion of

the Royal Scots during the Boer war - I've got the medals to prove it!

[violinfan]

Yes, I am one of the „eleven restorers with nine different nationalities“, that Roger mentioned further up this thread (posting #35). How did you know? Do I know you personally?

You don't know me. Years ago I acquired a Cuypers that had your bridge on it, so I pay attention to your name whenever it comes up.

Among other things, I came across the Strad article about how you recognized that a violin being offered at auction as authentic "by" Guarneri filius Andrea was actually a copy Roger made at Machold. Even after Roger was brought in to confirm your suspicion, some experts still insisted that the article was not a copy. Another "who the hell are you" situation? Did Roger really say "All this fuss got me telly?"

So, I have to go and do some work now even if I don’t feel that I have covered all relevant details.

Thanks for the fascinating perspectives. "Please, sir, I want some more."

[Flyboy]

Yes, I am one of the „eleven restorers with nine different nationalities“, that Roger mentioned further up this thread (posting #35).

Jacob,

Thanks for posting details regarding this sordid affair.

I'd appreciate if you could set the stage first for some of us not all that familiar with events back in the 80s. What was Machold's reputation with the general public, and with the violin trade, just prior you joining his firm? Roger mentioned in his post "every day was his birthday" (which I suppose Roger meant he felt like a kid in a candy shop). Why did so many fine instruments come through Machold's shop at the time? Was it solely because by that time he had assembled a good team of workers, despite having little expertise in identifying instruments himself? Or that he did have expertise but just went rogue?

[violinfan]

This story is awful, and interesting. Does anyone know who he was affiliated with in Seattle?

Machold's biography on his website says "... Only recently he was appointed Chairman of the Conservatory of Music in Seattle, Washington..."

http://www.machold.com/page49.html

(I have a feeling this page will not last. Most of the images are gone.)

Not sure if the biography is referring to the Seattle Conservatory of Music, whose website does not list the post of chairman, or Machold's name in any capacity.

[jacobsaunders]

You don't know me. Years ago I acquired a Cuypers that had your bridge on it, so I pay attention to your name whenever it comes up.

Among other things, I came across the Strad article about how you recognized that a violin being offered at auction as authentic "by" Guarneri filius Andrea was actually a copy Roger made at Machold. Even after Roger was brought in to confirm your suspicion, some experts still insisted that the article was not a copy. Another "who the hell are you" situation? Did Roger really say "All this fuss got me telly?"

Thank-you, it's kind of flatering to think that peope on another continent look out for my name! I'm pleased that the Cuypers has found a good home.

I'm afraid you don't quite have the facts quite right with the "Roger/Guarneri", mind you that isn't your fault, since none of the jounalists did at the time either. Roger wasn't "brought in to confirm my suspicion" (it wasn't a "suspicion", but a mater of fact), the Dorotheum flew Machold in, of all people, not Roger, to ajudicate. I joined him for breakfast at the Intercontinental before he went in and gave him a copy of Rogers flyer, which had a picture of this violin on it, just to be sure, because if that had have gone wrong, I realy would have had a mega "who the hell are you." situation.

I didn't hear Roger saying "All this fuss got me on telly" myself, but the quote sounds extreemly authentic.

[violinfan]

I'm afraid you don't quite have the facts quite right with the "Roger/Guarneri", mind you that isn't your fault, since none of the jounalists did at the time either. Roger wasn't "brought in to confirm my suspicion" (it wasn't a "suspicion", but a mater of fact), the Dorotheum flew Machold in, of all people, not Roger, to ajudicate. I joined him for breakfast at the Intercontinental before he went in and gave him a copy of Rogers flyer, which had a picture of this violin on it, just to be sure, because if that had have gone wrong, I realy would have had a mega "who the hell are you." situation.

Thanks for the clarification.

[skiingfiddler]

By the way, does anybody know if Dietmar Machold is related to Oskar Machold, violin maker in Chemnitz, Germany, in the 1920s, 30s, and 40s, and prominently photographed in Jalovec's German and Austrian Violin Makers?

Dear Skiingfiddler,

Yes, Grandfather/Grandson

I had a correspondence about this with the gentleman from the Star Ledger:

“ The reality is that Dietmar’s father, Heinz-Joachim, after 7 years in Siberia as a prisoner of war (having been taken prisoner in Stalingrad) founded the firm “Geigenbau Machold” in 1949 in Wiesbaden, moving it to Bremen in 1951, on the recommendation of a customer. His father, Oskar Machold, in turn was a violin maker in Chemnitz, (or “Karl-Marx Stadt” after the war). This firm was, post-war a “Volkeigenen Betrieb” i.e. nationalised or perhaps rather, communalised, in E. Germany, and had nothing whatsoever to do with Geigenbau Machold in Bremen. We all knew this back-to-front, because Machold Sen. (Heinz-Joachim) used to tell us about it ad-nausium, in the Workshop whenever he had nothing better to do (often). I can even remember Roger getting so sick of this that he, with his typical Yorkshire diplomacy, pointed out to him that the Russians hadn’t exactly invited him to come to Stalingrad in the first place. The notion of a great long dynasty goes back to a practical joke, trying to sell Dietmar a rubbish flea market violin, with an especially faked up label of an imaginary ancient ancestor. Alas, North Germans are seldom up to English humour”.

Regarding the constant talk about being in the “5th generation” or “established in 1861” and blah de blah, I wrote:

I was thinking of writing "Established 1901" on the front of my shop, after all my

great grandfather did play the trombone in the band of the 2nd Battalion of

the Royal Scots during the Boer war - I've got the medals to prove it!

Jacob,

Thank you for that information.

None of the photos for any of the violins in Jalovec's book are all that clear, but the photos of Oskar Machold's violins look pretty good, with at least three models, Strad, del Gesu, and Maggini. Oskar, as much as one can judge from those photos and Jalovec's description, must have been an accomplished maker.

I wonder if those making skills trickled down to grandson Dietmar through father Heinz.

Concerning the Dorotheum: I spent a couple of years in Vienna in the early 1970s and used to go to the Dorotheum on a monthly basis to look at what was being offered. The offerings at that time were, far and away, inexpensive trade fiddles. It's somewhat surprising that one of Roger Hargrave's instruments would show up there, never mind a Joseph filius Andrea Guarneri.

[jacobsaunders]

Jacob,

Thanks for posting details regarding this sordid affair.

I'd appreciate if you could set the stage first for some of us not all that familiar with events back in the 80s. What was Machold's reputation with the general public, and with the violin trade, just prior you joining his firm? Roger mentioned in his post "every day was his birthday" (which I suppose Roger meant he felt like a kid in a candy shop). Why did so many fine instruments come through Machold's shop at the time? Was it solely because by that time he had assembled a good team of workers, despite having little expertise in identifying instruments himself? Or that he did have expertise but just went rogue?

Dear Flyboy,

Diffucult Question. Before I worked at Machold's, I worked for Zunterer in Munich. I will be eternaly grateful to Herr Zunterer for giving me my first chance in the trade. One day unexpectedly (for me) Roger came to visit. He had brought with him a Gaurneri copy that he had made (yes THAT one!).The fiddle facinated me. I imediatly toyed with the idea of moving to Bremen to work alongside him, to see how he had done it, although I already had a very good post. Within about 3 months I was there. I knew nothing of Macholds "reputation with the general public" and frankly couldn't have given a toss. I presumed that, if Roger was there, everything would be ok, and didn't waste a single thought about it.

I suppose it is far more fun, working with ten other ambitious and talented people, than working on your own, so I can sort of understand what Roger means with birthday, although I think he is gradualy coming to the age where he feels that he has had rather too many birthdays already.

Strangely enough, I don't think that that many "fine instruments" came through the shop. The expensive ones that did, came in, then straight out again in a hurry.

What "having expertise" really is, is I think a question worthy of a seperate Blog. How do you define what a violin "expert" is. My personal definition of a violin "expert" is somebody that I would intuativly ask for a second opinion when I can't recognise an instrument myself. I would be interested how other people define "Violin expert". I'm unsure if I would cross the street to get an opinion from Dietmar (then or now), although in his price range you don't really need to be expert, since the Strads et al have heaps of certificates already.

It might appear slightly perverse, but I actually feel sorry for Dietmar at the moment and would try to help, as long as it didn't involve lieing. I hope that swiss prisons take Gold American Express cards.

[David Burgess]

None of the photos for any of the violins in Jalovec's book are all that clear, but the photos of Oskar Machold's violins look pretty good, with at least three models, Strad, del Gesu, and Maggini. Oskar, as much as one can judge from those photos and Jalovec's description, must have been an accomplished maker.

I wonder if those making skills trickled down to grandson Dietmar through father Heinz.

Concerning the Dorotheum: I spent a couple of years in Vienna in the early 1970s and used to go to the Dorotheum on a monthly basis to look at what was being offered. The offerings at that time were, far and away, inexpensive trade fiddles. It's somewhat surprising that one of Roger Hargrave's instruments would show up there, never mind a Joseph filius Andrea Guarneri.

The plot thickens....

[Magnus Nedregard]

What "having expertise" really is, is I think a question worthy of a seperate Blog.

It is a question worthy of a philosophical treatise of several volumes. Or is it? Is it on the other hand quite simple... Is there such a thing at all as an expert who is not also a dealer? I should say there is, but are they the most respected and "important"?

Aye there's the rub... is it to a certain extent actually the dealing that gives the most famous experts respect and authority, and not the other way around? It certainly leads to fame and makes your name known... and as banks and investors cease to say "and who the hell are you" quite so often, you become an "expert"

People will probably always rather listen to the opinions of those who wear a suit than those who wear an apron... but it is useless to complain about this, I've come to the conclusion it is probably ok like that. They are different responsibilities, different jobs. I can't quite see how you can obtain completely independent experts either, and cases like this one popping up from time to time will keep people alert in the future I should think. Already violin expertise us much more democratized than it used to be, and seems to be advancing further in that direction. For example, now one after another of the nine restorers with eleven different nationalities comes forth, on obscure internet forums and gives us their version of what happened. That would not have happened 50 years ago. Well well, there will always be a few rotten eggs even in a good basket, and I have good hopes for the violin trade in 2311.

[Michael Darnton]

Players often seem to think an expert is the person who can put names on the greatest number of violins, regardless of his batting average on accuracy. I think that a better expert is the person who makes the fewest mistakes.

[jacobsaunders]

Concerning the Dorotheum: I spent a couple of years in Vienna in the early 1970s and used to go to the Dorotheum on a monthly basis to look at what was being offered. The offerings at that time were, far and away, inexpensive trade fiddles. It's somewhat surprising that one of Roger Hargrave's instruments would show up there, never mind a Joseph filius Andrea Guarneri.

I think it is important to know that the Dorotheum is, unlike other Auction Houses, also a "Pfandleihanstalt", in British english a Pawnbrokers, I'm afraid I don't know what you americans call it, I'm sure that you will tell me. This means that, should you be down to your uppers, you can take a television set, camera, jewelry, even a violin along, and borrow one third of the estimated value in cash, and leave the item there. When you go to fetch the item, you have to pay the cash amount back, plus pretty ruinous interest charges. If you never bother to go and fetch your item, they will sooner or later put it up for auction.

In this case a certain Mr. N. dumped the Guarneri/Hargrave in the Pawnbrokers and scarpered to the czechosovakia, so in the fullness of time, they had no other option but to put it up for auction.

[Joseph Liu]

Players often seem to think an expert is the person who can put names on the greatest number of violins, regardless of his batting average on accuracy. I think that a better expert is the person who makes the fewest mistakes.

I totally agree. No one expert knows all the makers that ever exited in history. A dealer could sell thousands of instruments in his or her life time. It is impossible to have the correct names on all the instruments that passed through the shop. For example, experts like Beare's and Warren's might not know about American makers as much as David Bromberg. Additionally, lower price instruments do not get as much care as hight price instruments. Gross negligence and deliberate misrepresentation, however, are what could be considered criminal.

[skiingfiddler]

In reading through the various Der Spiegel articles, it doesn't look like Machold's expertise or misrepresentation of instruments were the issues (although misrepresentation might be documented elsewhere). From those articles, the complaints against Machold seem to be, generally, that people gave him instruments to sell, and those people got back neither money nor instruments. Machold seems to have been into accepting instruments in trade as payment for the ones he was selling, hoping always to trade up. So instruments would go out of the shop with no money coming in. So when the frustrated clients who had given Machold instruments to sell finally lost patience and they wanted either the money or the instruments back, Machold had neither.

[Don Noon]

The all-too-common tale of a high lifestyle supported by Other People's Money.

[Flyboy]

In reading through the various Der Spiegel articles, it doesn't look like Machold's expertise or misrepresentation of instruments were the issues (although misrepresentation might be documented elsewhere). From those articles, the complaints against Machold seem to be, generally, that people gave him instruments to sell, and those people got back neither money nor instruments. Machold seems to have been into accepting instruments in trade as payment for the ones he was selling, hoping always to trade up. So instruments would go out of the shop with no money coming in. So when the frustrated clients who had given Machold instruments to sell finally lost patience and they wanted either the money or the instruments back, Machold had neither.

I'm not so sure about that. From reading all the articles (not only Die Spiegel, but Star Ledger, and some others), and the posts here, I get the distinct impression that Machold wasn't all that interested in proper attribution, but what he can sell instruments as with inflated values. The inflated appraisals are especially problematic.

You may have heard of the story of Sholam Weiss in the news recently. In some ways he created the prototypical template of fraud that Wall St. later "refined" and turned into the mortgage crisis. In 2000 he was convicted of a 845-year sentence, apparently the longest for a white collar crime in the US. He recently complained to a judge that his sentence was too harsh, considering Madoff only got 150 years. Weiss got a 10 year reduction on his sentence.

http://www.orlandosentinel.com/news/crime/os-10-years-off-845-year-sentence-20110414,0,4738078.story

As Roger alluded earlier, the banks are going to come out all right. Other people, including tax payers, are not going to be as fortunate for other people's mis-deeds.