Machold

[skiingfiddler]

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.

My purpose in putting up post #98 was just to summarize what I thought the Spiegel articles stated about Machold, since some of those articles are in German and not necessarily accessible to everybody. My post wasn't an attempt to give an exhaustive list of Machold's possible crimes. Jacob's post #83 does a good job of that.

Machold's valuations of the Axelrod instruments which went to the New Jersey Symphony Orchestra and the Smithsonian Institute were definitely very high, higher than other experts were willing to support, but offering high valuations, while it may be highly unethical, is not a criminal offense. (Well maybe it is at least a tax problem when the valuation is being used as a tax write off.) But there's a lot of subjectivity a dealer can hide behind in offering attributions and valuations.

But accepting a client's property for the purpose of selling it and then being able to offer neither the property back to the client nor the money it was supposed to fetch is another kind of legal problem entirely, which looks like fraud, theft or something criminal. There's very little subjectivity in that situation. This point is the one that the most recent Spiegel article in German (April 15, 2011) makes most clearly.

This point is covered as #1 of Jacob's post #83.

Jacob's points 2 and 3 in post #83, that Machold may have misrepresented instruments used for loan collateral and that Machold may have accepted payment for the creation of a pool of investment instruments for players' use but never created that pool, are points I didn't find in the Spiegel articles, but maybe that's my oversight. Those certainly are important points, more complex than point 1, and they may well suggest criminal activity.

[skiingfiddler]

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.

I didn't realize that the Dorotheum was a pawnshop. (That's the American term for a pawn broker's business.) That explains the abundance of low end items of every conceivable kind being sold there on a continual basis, including low end violins. As I remember, the auctions occurred once each month at the Dorotheum.

The items in American pawnshops are not usually sold by auction, but by an individual buyer haggling with the pawn broker, once the item is put up for sale. But the Dorotheum is such a large enterprise housed in a very official looking, palatial building, that the size of it probably makes frequent public auctions the best way to get rid of all the stuff.

[Flyboy]

My purpose in putting up post #98 was just to summarize what I thought the Spiegel articles stated about Machold, since some of those articles are in German and not necessarily accessible to everybody. My post wasn't an attempt to give an exhaustive list of Machold's possible crimes. Jacob's post #83 does a good job of that.

Machold's valuations of the Axelrod instruments which went to the New Jersey Symphony Orchestra and the Smithsonian Institute were definitely very high, higher than other experts were willing to support, but offering high valuations, while it may be highly unethical, is not a criminal offense. (Well maybe it is at least a tax problem when the valuation is being used as a tax write off.) But there's a lot of subjectivity a dealer can hide behind in offering attributions and valuations.

But accepting a client's property for the purpose of selling it and then being able to offer neither the property back to the client nor the money it was supposed to fetch is another kind of legal problem entirely, which looks like fraud, theft or something criminal. There's very little subjectivity in that situation. This point is the one that the most recent Spiegel article in German (April 15, 2011) makes most clearly.

This point is covered as #1 of Jacob's post #83.

Jacob's points 2 and 3 in post #83, that Machold may have misrepresented instruments used for loan collateral and that Machold may have accepted payment for the creation of a pool of investment instruments for players' use but never created that pool, are points I didn't find in the Spiegel articles, but maybe that's my oversight. Those certainly are important points, more complex than point 1, and they may well suggest criminal activity.

Machold is broke, but at least in the Koeckert situation, he did finally pay up. I'm not clear on all that transpired, but that probably would have been a civil lawsuit (at least in the US).

Machold is now arrested on charges of embezzlement and fraud, criminal offenses. It's important to understand the anatomy of the fraud, and I think the unrealistically high valuations were central. They enabled Machold to secure massive loans from banks to keep financing his violin-kiting scheme (and potentially hid losses). I suspect after the global credit crisis Machold's line of credit to the banks dried up and was no longer able to borrow from bank B to cover debts to bank A (or dealer K).

That's what I get out of reading the latest Die Spiegel article. It's not an exaggeration that most of the frauds we've heard about recently (Sholam Weiss, the mortgage crisis) high appraisals played a central role.

[jacobsaunders]

Machold is broke, but at least in the Koeckert situation, he did finally pay up. I'm not clear on all that transpired, but that probably would have been a civil lawsuit (at least in the US).

Machold is now arrested on charges of embezzlement and fraud, criminal offenses.

I only cited the Koeckert/Leg & Fushi incident as a single example amongst others, representing one of three groups of accusations raised by the Austrian authorities, since it is published in print for anybody to read.

I believe that the boundary between Criminal and Civil law is fairly fluid.

My advice to the bank with the junk Cello, my example (again, amongst others)of the second group of accusations that I mentioned in my Posting #83 was that they had three options:

1) They could scream “F**k!” chuck the cello away and forget it and write off the loan.

2) They could sue in the civil courts, which would involve paying a lawyer good money to probably achieve nothing, or

3) They could go to the Police and complain that they had been maliciously deceived, in which case the public prosecutor would have to instruct the police to investigate a possible fraud, at the expense of the Republic.

The last time that I, in a situation thoroughly without any Machold involvement, used option 3, I was invited to visit the police station and fetch my violin within a matter of days.

I realise that America does have a different legal system, of which I am quite ignorant. Nevertheless, giving Mr. Weiss 10 years off his 845 year sentence (posting #100) seems to be, what I would call in British English, taking the piss.

[skiingfiddler]

Machold is broke, but at least in the Koeckert situation, he did finally pay up. I'm not clear on all that transpired, but that probably would have been a civil lawsuit (at least in the US).

I only cited the Koeckert/Leg & Fushi incident as a single example amongst others, representing one of three groups of accusations raised by the Austrian authorities, since it is published in print for anybody to read.

As Jacob indicated, there are other instances cited where Machold has neither paid up nor returned instruments. The April 15, 2011, Spiegel article cites an instance of a Dutch resident of London who gave Machold 1.75 million euros worth of instruments. This Dutch resident has gotten neither money nor instruments from Machold, and thus reported Machold to the Austrian authorities. A spokesman for the Vienna "Staatsanwaltschaft" (the prosecutor's office, I assume) says more accusations of wrong doing are coming in constantly.

One of the most interesting instances cited in that Spiegel article is the one which concerns an Austrian actress Kyra Sator who wants 50 million euros from Machold for the instruments she alleges Machold wrongfully took from her. Her efforts have gone nowhere because she lacks proof of ownership of the instruments.

The lesson there for me is that if you're going to consign an instrument for sale to a dealer -- be that dealer ever so well regarded -- make sure that consignment is done on more than a handshake, that a document is drawn up which identifies the instrument exactly, identifies who owns the instrument, the value of the instrument, when the owner might retrieve the instrument if a sale doesn't occur, when payment to you, the former owner, will occur in the event of a sale, and any other details which might be important to you. With such a document in place, everybody knows, including the dealer, that, at any given time and within a reasonable length of time, the dealer has to be able to produce either the instrument or the money for it.

[scordatura]

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

I wonder if Madoff ever diversified into violins

[Flyboy]

As Jacob indicated, there are other instances cited where Machold has neither paid up nor returned instruments. The April 15, 2011, Spiegel article cites an instance of a Dutch resident of London who gave Machold 1.75 million euros worth of instruments. This Dutch resident has gotten neither money nor instruments from Machold, and thus reported Machold to the Austrian authorities. A spokesman for the Vienna "Staatsanwaltschaft" (the prosecutor's office, I assume) says more accusations of wrong doing are coming in constantly.

One of the most interesting instances cited in that Spiegel article is the one which concerns an Austrian actress Kyra Sator who wants 50 million euros from Machold for the instruments she alleges Machold wrongfully took from her. Her efforts have gone nowhere because she lacks proof of ownership of the instruments.

The lesson there for me is that if you're going to consign an instrument for sale to a dealer -- be that dealer ever so well regarded -- make sure that consignment is done on more than a handshake, that a document is drawn up which identifies the instrument exactly, identifies who owns the instrument, the value of the instrument, when the owner might retrieve the instrument if a sale doesn't occur, when payment to you, the former owner, will occur in the event of a sale, and any other details which might be important to you. With such a document in place, everybody knows, including the dealer, that, at any given time and within a reasonable length of time, the dealer has to be able to produce either the instrument or the money for it.

Regarding Sator, the scenario you depict may very well have happened the way you suggest. As I don't speak German I pretty much have to rely on Google's not-so-stellar translations (and Fritz Reuter's clearer translations), so it's not really clear to me what happened in her case. The only thing that's clear to me is she apparently exhausted all her legal avenues in Austria (she lost her case in the highest civil courts there). It's not clear to me what the transaction was. As far as I can make out Sator wanted to trade 7 instruments for 4. No receipt of the original 7 instruments were ever produced (or apparently written). A receipt for the 4 instruments (the trade-up), valued by Machold at US$21.3M was produced, so how is it that Machold wasn't on the hook for those 4 instruments?

http://www.kyra-sator-vs-dietmar-machold.com/

http://www.fritz-reuter.com/theheist/

Perhaps someone with more familiarity with the Sator case can explain what transpired.

It's particularly interesting to me that Machold sits on the board of Mannheimer Insurance where the four instruments were "insured." High valuations + "insider" insurance + unclear title + approx. 200 unaccounted instruments. You do the math.

[Flyboy]

It turns out a link (http://www.kyra-sator-vs-dietmar-machold.com/) I referred to in my earlier post (#107) is a Machold PR job. I should have know better. Taken in already.

[jacobsaunders]

Regarding Sator, the scenario you depict may very well have happened the way you suggest. As I don't speak German I pretty much have to rely on Google's not-so-stellar translations (and Fritz Reuter's clearer translations), so it's not really clear to me what happened in her case. The only thing that's clear to me is she apparently exhausted all her legal avenues in Austria (she lost her case in the highest civil courts there). It's not clear to me what the transaction was. As far as I can make out Sator wanted to trade 7 instruments for 4. No receipt of the original 7 instruments were ever produced (or apparently written). A receipt for the 4 instruments (the trade-up), valued by Machold at US$21.3M was produced, so how is it that Machold wasn't on the hook for those 4 instruments?

http://www.kyra-sator-vs-dietmar-machold.com/

http://www.fritz-reuter.com/theheist/

Perhaps someone with more familiarity with the Sator case can explain what transpired.

It's particularly interesting to me that Machold sits on the board of Mannheimer Insurance where the four instruments were "insured." High valuations + "insider" insurance + unclear title + approx. 200 unaccounted instruments. You do the math.

As far as Mrs. Sator is concerned, my understanding was not that she had “exhausted all her legal avenues” but rather that they had had to be adjourned because Machold had filed for bankruptcy. I note that the court has appointed her to be a member of the Creditors committee.

It transpired that the rubbish firewood Cello that I had to appraise for the local bank in my capacity as a “beeideter und gerichtlich zertifizierter Sachverständiger” (see postings #83 & #104) with the Machold appraisal for $300.000 is part of her prodigal collection. She sent me, via a mutual acquaintance (I asked her years ago not to visit my workshop) a folder, prominently featuring this Cello (and others). The Cello is valued here, when restored, for an absolutely loony €1.3m. Comically the folder included a photo-copy of a page from the Hamma archive with an Alberti Viola, just in case you don’t know what a proper one looks like. She is convinced that I have made a “mistake” re. Appraisal (you can rest assured that I haven’t). The policeman who is investigating the Machold complex even had to go to my colleague, Peter Tunkowitsch, the only other “beeideter und gerichtlich zertifizierter Sachverständiger” (Court certified expert, there are only two of us is Austria for violins), who gave exactly the same opinion as I did, as usual. I refuse to extrapolate from this instrument to judge any others in her collection that I haven’t seen, since one has to judge each instrument separately on its merits, but I would have a hard time being cross with anybody who did.

[Flyboy]

As far as Mrs. Sator is concerned, my understanding was not that she had “exhausted all her legal avenues” but rather that they had had to be adjourned because Machold had filed for bankruptcy. I note that the court has appointed her to be a member of the Creditors committee.

OK, this makes much more sense. Thanks for clearing that up. What do you make of Machold's "contract" with Mr. Toifl on those very four instruments, dated one day after Ms. Sator's receipt?

It transpired that the rubbish firewood Cello that I had to appraise for the local bank in my capacity as a “beeideter und gerichtlich zertifizierter Sachverständiger” (see postings #83 & #104) with the Machold appraisal for $300.000 is part of her prodigal collection. She sent me, via a mutual acquaintance (I asked her years ago not to visit my workshop) a folder, prominently featuring this Cello (and others). The Cello is valued here, when restored, for an absolutely loony €1.3m. Comically the folder included a photo-copy of a page from the Hamma archive with an Alberti Viola, just in case you don’t know what a proper one looks like. She is convinced that I have made a “mistake” re. Appraisal (you can rest assured that I haven’t). The policeman who is investigating the Machold complex even had to go to my colleague, Peter Tunkowitsch, the only other “beeideter und gerichtlich zertifizierter Sachverständiger” (Court certified expert, there are only two of us is Austria for violins), who gave exactly the same opinion as I did, as usual. I refuse to extrapolate from this instrument to judge any others in her collection that I haven’t seen, since one has to judge each instrument separately on its merits, but I would have a hard time being cross with anybody who did.

Yeah, that part (the cello you referred to earlier originated with Sator) wasn't all that hard to figure out. But it's nice to get confirmation.

So am I now being too paranoid to say the fox is now guarding the hen-house?

[jacobsaunders]

So am I now being too paranoid to say the fox is now guarding the hen-house?

If you would like me to understand you're metaphor, you will have to tell me first who you have cast as fox, and who as hen!

Quick inteligence test, just for fun:

Who does the crumby cello belong too now?

1.The Bank

2.Frau Sator

3.Dietmar

and how much money does who owe whom?

PS.I'm afraid I am unaware of any contract with any Teufl, perhaps you could send a copy (via Profile)

[Flyboy]

PS.I'm afraid I am unaware of any contract with any Teufl, perhaps you could send a copy (via Profile)

http://www.fritz-reuter.com/theheist/Vertrag%20Machold-Toifl%20Sator-Instrumente.pdf

Google translate minced up this document too. I'm assuming in this document Toifl assigned Machold to be trustee of the four instruments.

[jacobsaunders]

I have printed myself the German original version out. I'm not quite sure what you want to know. Would it help if I did a "human" translation?

[Flyboy]

I have printed myself the German original version out. I'm not quite sure what you want to know. Would it help if I did a "human" translation?

For now, I just want to verify in that document Toifl assigned Machold to be trustee of the 4 instruments, and not the other way around. I don't want to rely on an iffy translation to get the trustee relationship reversed.

[jacobsaunders]

For now, I just want to verify in that document Toifl assigned Machold to be trustee of the 4 instruments, and not the other way around. I don't want to rely on an iffy translation to get the trustee relationship reversed.

It reads:

"I, Klaus Toifl, Schwedenplatz 2,1010 Vienna, confirm that I have acnowledged that the 4 violins listed below:

Strad

Strad

Guarn.

Guarn.

are the property of Mr. Prof. D.M. I, Klaus Toifl am acting only as an agent, representing Prof. D.M. and am enpowered within the bounds of this representation vis-a-vis 3rd. parties to present myself as owner of the instruments.

Vienna 5. June 2003"

Does it fit in your puzzle now?

Have you had time to do my inteligence test yet?

[Flyboy]

It reads:

"I, Klaus Toifl, Schwedenplatz 2,1010 Vienna, confirm that I have acnowledged that the 4 violins listed below:

Strad

Strad

Guarn.

Guarn.

are the property of Mr. Prof. D.M. I, Klaus Toifl am acting only as an agent, representing Prof. D.M. and am enpowered within the bounds of this representation vis-a-vis 3rd. parties to present myself as owner of the instruments.

Vienna 5. June 2003"

Does it fit in your puzzle now?

Have you had time to do my inteligence test yet?

Check your PM when you have a chance.

[robheys]

Admit it, this is all from Dan Browns next bestseller.

Del Gesus pass from the "Creator" (http://en.wikipedia.org/wiki/Sator_square) to the Devil (Teufl = German for Devil) via Mr. Machold within 48 hours.

Jacob, will you be played by Tom Hanks in the forthcoming film?

[jacobsaunders]

Admit it, this is all from Dan Browns next bestseller.

Del Gesus pass from the "Creator" (http://en.wikipedia.org/wiki/Sator_square) to the Devil (Teufl = German for Devil) via Mr. Machold within 48 hours.

Jacob, will you be played by Tom Hanks in the forthcoming film?

Yes, I think Tom Hanks would be just great!

Would it be a cops and robbers, a tragody or a melodrama?

May I encorage you (AND EVERYBODY ELSE) to participate in the "inteligence test" that I set for "Flyboy" (posting #111). Not that I immagine for a second that I am particularly inteligent. Having thought about it, I think the multiple choice list should be extended with:

4) The Republic of Austria

[Flyboy]

Yes, I think Tom Hanks would be just great!

Would it be a cops and robbers, a tragody or a melodrama?

May I encorage you (AND EVERYBODY ELSE) to participate in the "inteligence test" that I set for "Flyboy" (posting #111). Not that I immagine for a second that I am particularly inteligent. Having thought about it, I think the multiple choice list should be extended with:

4) The Republic of Austria

I agree with Jacob. The key to untying this Gordian Knot is to determine who has proper title at the end of day of June 5, 2003, to the "Toifl" instruments and the "Sator" cello. I'd be interested in all legal theories. Where is Carla Shapreau when we need her?

Jacob, do you know whether it was Machold or Sator who secured the loan from the bank using the Sator cello as collateral? (In other words, whose name appears on the loan documents?)

[jacobsaunders]

Where is Carla Shapreau when we need her?

Jacob, do you know whether it was Machold or Sator who secured the loan from the bank using the Sator cello as collateral? (In other words, whose name appears on the loan documents?)

Sorry, but I'm afraid I can't possibly go around to the Volksbank and ask to have a brouse through there loan book, they would tell me to F... off and mind my own business. I can however quote "Der Standard" (a viennese daily paper) from 31st. March, that the Volksbank Niederösterreich Mitte have sued Machold for ca. €200.000

[Philip Ihle]

I will have a go with the intelligence test:

1. Frau Sator has lost her cello because she has no receipt.

2. The Bank have lost the money thy gave out to Machold as a guarantee for the cello, they own the cello though.

3. Dietmar lost his reputation and faces a trial.

4. The Austrian government looses out in maintaining the legal systhem.

All lost, if money can be sourced through a fine on Dietmar it should be distributed as follows:

1. Cost of the trial to the Austrian government

2. The cello should go back the Frau Sator

3. Whatever he owes to the bank should go to the bank

Other solutions?

[Flyboy]

I will have a go with the intelligence test:

1. Frau Sator has lost her cello because she has no receipt.

2. The Bank have lost the money thy gave out to Machold as a guarantee for the cello, they own the cello though.

3. Dietmar lost his reputation and faces a trial.

4. The Austrian government looses out in maintaining the legal systhem.

All lost, if money can be sourced through a fine on Dietmar it should be distributed as follows:

1. Cost of the trial to the Austrian government

2. The cello should go back the Frau Sator

3. Whatever he owes to the bank should go to the bank

Other solutions?

What about Ms. Sator's "receipt of safekeeping" from Machold on the 4 "Toifl" violins? How does that figure in the overall settlement? Do you think she should get a piece of that?

[Craig Tucker]

Other solutions?

Simple.

Appropriate criminal charges should be imposed and enforced for any criminal activities - in a perfect world, wealth and/or ”influence” whould not be a factor in the "penalty phase" of the trial.

This should prove interesting.

[Roger Hargrave]

I will have a go with the intelligence test:

1. Frau Sator has lost her cello because she has no receipt.

2. The Bank have lost the money thy gave out to Machold as a guarantee for the cello, they own the cello though.

3. Dietmar lost his reputation and faces a trial.

4. The Austrian government looses out in maintaining the legal systhem.

All lost, if money can be sourced through a fine on Dietmar it should be distributed as follows:

1. Cost of the trial to the Austrian government

2. The cello should go back the Frau Sator

3. Whatever he owes to the bank should go to the bank

Other solutions?

It strikes me that there might be a further possibility. Perhaps the cello that Frau Sator gave to Machold was not the same cello that went to the bank. I have personally seen a couple of Strads that were deposited by the man in a bank that weren't Strads in spite of Macholds own certificates stating that they were. In addition I know that Frau Sator has often been ridiculed, (by Machold and the press who were taken in by macholds stories all too often and too easily) but she is the one who like a terrier has held on to Macholds leg when no-one else was interested or too afraid to act. She has spent almost everything trying to get justice and she should be respected for that alone.

[Flyboy]

It strikes me that there might be a further possibility. Perhaps the cello that Frau Sator gave to Machold was not the same cello that went to the bank. I have personally seen a couple of Strads that were deposited by the man in a bank that weren't Strads in spite of Macholds own certificates stating that they were. In addition I know that Frau Sator has often been ridiculed, (by Machold and the press who were taken in by macholds stories all too often and too easily) but she is the one who like a terrier has held on to Macholds leg when no-one else was interested or too afraid to act. She has spent almost everything trying to get justice and she should be respected for that alone.

Yeah, this is a good possibility which didn't occur to me but should have been obvious now that you mention it. I also agree that Ms. Sator is the key person who managed to stop Machold's ludicrous actions.