September 20, 2012 (TSR) – One of the world’s leading dealers in sought-after Stradivarius violins has admitted he embezzled money made from the sale of costly instruments entrusted to him by his clients in what appears to be the biggest fraud in violin trade history.
Although 62-year-old Dietmar Machold denied charges of fraud, he confirmed he hid from creditors five rare instruments entrusted to him for sale by clients, including a 1727 Stradivarius violin worth around $3.4 million, Reuters reported.
“All these (instruments) were used illegally. I confess fully,” Machold told a court, saying he needed money after losing a lawsuit brought by a construction company which meant his castle was also at risk. Machold says he is steeped in “gigantic” debts of around 250 million euros.
He has also been accused of hiding his assets from creditors, including a camera collection worth 200,000 euros.
The trial is set to last three days, and if found guilty Machold faces up to ten years in prison.
The dealer told the court his instruments “were my children.” He explained he had “simply forgot” one expensive violin that he failed to report to administrators.
Machold reportedly rejected allegations that he had abused his reputation to overvalue instruments. One example being a cello he claimed was worth $300,000 but which, according to the prosecutor, could be bought on Ebay for $2,000.
Machold dismissed the court-appointed expert’s valuation.
“This man’s name is not known outside of Austria,” he replied. “In all modesty, mine is.”
The fifth-generation violin expert was once the world’s most influential dealer in instruments created by 18th century Italian masters like Antonio Stradivari.
The German bon vivant lived in an Austrian castle where he had a fleet of expensive cars, watches and cameras, as well as a global network of rare instrument dealerships with offices in Zurich, Vienna and New York.
However, when his empire collapsed in 2010, a number of creditors and clients filed claims worth tens of millions of dollars, saying they had been cheated.