REUTER'S FOCUS REPORT
English Report Summaries-Available German Titles
Music Center of the
|This Advisory's GUIDING PRINCIPLE: "True ethical responsibility requires and absolute commitment to honorable behavior and practices, even at the sacrifice of personal advantage" (Code of Ethics -- American Federation of Violin and Bow Makers, Inc.)|
|SUMMARY of Advisory: Hidden
from public view, violin, viola and cello teachers of the Music Center of the North Shore
(Winnetka, Illinois) have been, for several decades, free to abuse youngsters through a scam of major
proportions. Moreover, they've apparently done this with the tacit consent of both the
and a majority of the Trustees. While students and their parents have been (and are) kept ignorant, faculty
members have abused them -- financially -- by operating as covert "commission" salesmen for various violin
*2. Reprinted below, therefore, are two unaltered letters which were accorded no written answer. They are dated, respectively, 28 November and 8 December 1992. We addressed the first to Dr. Frank Little (the Center's Executive Director) -- and the second to Trustees and Friends of the Center. In effect, our correspondence asked:
*3. "Who has allowed moral dry rot to infest your noble institution? How have some members of the String Faculty been permitted to turn the Music Center of the North Shore into a den of ill repute?"
Dr. Frank Little
MUSIC CENTER OF THE NORTH SHORE
300 Green Bay Road
Winnetka, Illinois 60093 (847-446-3822)
Dear Dr. Little:
*5. Thank you for the generous gift of your time during our recent phone conversation. I would like to repeat what I emphasized then. I view the Music Center and its illustrious Board of Trustees as a true cultural beacon for Chicago's North Shore.
*6. Even before receiving the Center's presentation folder, I was already fascinated by your institution's history and current programs. Most certainly, I was deeply impressed by the extensive professional backgrounds of those whom I saw listed as members of the String Faculty.
*7. Perhaps because I had been so favorably impressed, one of your comments during our conversation emphatically caught my attention. I found it surprising -- as well as revealing -- to be told that those individuals listed as members of the faculty are, in effect, simply using the facilities of the Music Center as a base for their work as self-employed tutors and musicians. In other words, the business relationship between the Music Center and those it considers its faculty could, if I am correct, be characterized as that of an independent contractor to independent subcontractors. The Music Center provides facilities and administrative services to individual faculty members, in return for a percentage of the tuition monies which students pay out for their instruction.
*8. I wonder if this does not highlight a contrast -- a rather sharp one -- between common-sensical expectations and the Center's actual operations. In the public's mind, references to "faculty" appear almost linked to an assumption that faculty members are full-fledged employees of an institution and, therefore, subject to its laws, by-laws, and any current code of ethics. Yet, if have understood you correctly, it appears that this kind of professional and academic interrelationship (what a lot of us think of a system of checks and balances) just does not exist at the Music Center. Is it possible, I would ask, that the Center's membership in both the National Association of Schools of Music and in the National Guild of Community Schools of the Arts could -- in future deliberations -- supply guidelines for rethinking and, perhaps, rectifying this situation?
*9. In any case, your revelation has proven immediately helpful to me. It has enabled me, at least partially, to explain the peculiar difficulties we have had with people who are considered -- and consider themselves -- members of the Center's faculty. A related explanation of these difficulties may flow from a situation described in the prologue of our 1972 booklet, "How to Buy a Violin". There, we were talking about students (and, often, their parents) when they are offered what they believe to be fiduciary advice -- a teacher's recommendation that instruments, bows, accessories, and repairs be purchased from some specific firm or individual:
*10. More than ninety percent (90%) of all violin teachers (viola & cello teachers [included]), orchestra and band directors, and a large number of music administrators in public and private schools, music schools, and universities are employed on a commission basis (kick-back, finders fee, bribes, etc.) by one or more musical instrument dealers.
*11. We, at Fritz Reuter & Sons, Inc., seem to be the only violin dealers who personally adhere to the wise adage found in the Torah: "You are not to accept [or pay] a bribe for the bribe blinds clear-sighted men and can distort the words of a righteous man". We have never thought it either ethical or honorable to secretly employ a student's violin teacher as a salesperson who guides a student's purchase of an instrument, bow, repair service, etc. Yet my own observations tell me that most members of your string faculty -- without their students' knowledge -- participate in this highly lucrative scheme by working in collusion with dealers.
*12. Since I now understand that the Music Center is not responsible for the "external" activities in which its faculty members engage, I have a suggestion. What I urge would, I believe, help students and their parents. Both would benefit from learning facts that have long been familiar to most music teachers and dealers. Student and parents, it seems to me, have a right to know that most string teachers profit more from helping violin dealers sell instruments than from actual teaching. People have a right to know that, too often, the assumed fiduciary relationship between student and teacher is a convenient illusion. This illusion is perpetuated by dealers and teachers alike for the sake of concealing their scam. Indeed, this very illusion is even enhanced by teachers' use of the good name of bodies such as the Music Center and its impressive Board of Trustees.
*13. The practices I have described may not have been called to your attention, Dr. Little; but most teachers engaged by the Center could, I think, support my assertions. It is simply a fact that significant numbers of your faculty do these things. Working with various sellers, they divide easily-gotten, inflated profits from instrument sales. And this raises important questions. Shouldn't the rights of tuition-paying parents (and their children) be recognized? Shouldn't these persons be informed? Shouldn't they be "let in" on the inner workings of the business of music? Doesn't the Center have a responsibility to those who turn to your institution for their children's musical education -- and to the children themselves? And what about the highly respected citizens who serve as members of your Board? If Trustees were aware of the schemes I have described, would they wish to have their good names and reputations associated with them? Moreover, once they became aware, on whom would they place primary blame for what is, at best, an indiscretion -- the Center's students and their parents, its faculty, or its administration?
*14. I do not raise these questions for trivial reasons. The firm for which I speak, Fritz Reuter & Sons, is Chicagoland's oldest establishment of violin makers and dealers. As a firm, we have endured dubious practices -- those which are the subject of this letter -- for nearly three decades. In reality, the cumulative effects of these practices have added up to a silent boycott of our business. Because of this, we feel compelled to fight this form of discrimination and restraint of trade, first through consumer education -- and, if necessary, through the courts.
*15. The prices charged for stringed instruments, especially antique ones, have become totally arbitrary -- largely because of the secret arrangements which reward teachers and dealers who collaborate in bilking unsuspecting students and their families. Under such covert arrangements, instrument prices are determined on the ability of the parent to pay. The market forces of supply and demand hardly enter the picture. No objective factors restrain the cost of a violin, for real competition does not exist at the retail level. The only competition is that among dealers -- dealers who hand over constantly inflating sums for instruments which, when resold at even more absurd dollar amounts, temporarily slake the constantly increasing greed of their kickback conscious salesmen-teachers.
*16. It is not hard to find justification for all this. Excuses reflected in "share the wealth" slogans are common. I have heard it said, in essence, that those living on the North Shore can afford to pay artificially inflated prices for instruments -- and pay without feeling any pain. Of course, anyone can ask whether or not this is really right. My own answer is obvious, but we can also ask further questions. Under the cozy sales arrangements of the kickback scam, what safeguards protect the buyer? What assurances make it likely that these high-priced instruments still have essential parts which are original? And what further assurances guarantee the physical condition of these original parts (if they are original)? What testifies to the integrity of the instrument itself, and to its consequent Fair Market Value? The most plausible answer is, Nothing.
*17. I have gone into detail on all these things because I truly appreciate your openness in informing me of the arms-length relation between the Music Center and its faculty. At this point, I hope I may make a suggestion. It would be prudent (and beneficial) for the Music Center to inform the parents of its students about possible, if hidden, business relationships between violin dealers and members of the string faculty. I am sure there is more than one way to do this. But the basic idea is to protect young musicians and their families from injuries flowing from a fundamental conflict of interest. It is, after all, nearly impossible for a musician-teacher to speak without prejudice when the same teacher is secretly on commission from a musician-dealer.
*18. I would be happy to supply you with any further information, in any format you desire. I would welcome a chance to continue our discussions on a one-to-one basis, in a presentation to your faculty, or in a parallel presentation to your students and their parents. I would be equally glad to speak with your renowned Board of Trustees. In some ways, they may be least likely to know that the potentially scandalous practices of salesmen-teacher even exist. And they, as Trustees, may have the most immediate investment in distancing themselves from such flagrantly dishonorable activities.
*19. I note that this letter has already grown considerably longer than I had planned, and I thank you in advance for your willingness to consider my view. Without question, I hope I may hear from you in the near future.
Sincerely yours, (signed)
Fritz Reuter, Jr.
|*20. When I found myself without a written response
to the letter you have just read,
I addressed the following to others at the Music Center:
*24. Dr. Little appears unwilling to open these moral-ethical questions to the oversight and consideration of the Music Center's Board of Trustees. For this reason, I feel compelled to make my side of the correspondence publicly available as an OPEN LETTER.
Fritz Reuter, Jr.
cc: National Association of Schools of Music
National Guild of Community Schools of the Arts
*25. This Advisory's COMMENTARY: The above correspondence raises serious questions meriting serious consideration. They are questions demanding more -- far more -- than dismissive silence!
*26. CONSIDER THE ISSUE: Has your violin teacher abused YOU financially? Have you been "taken"?
*27. Now consider a valid response: Granted, it's hard to address such questions without a method of getting at the inner workings of the violin business, without solid information. Just how can a customer tell if his or her violin teacher is participating in a scam? Working secretly
as a sales agent for this or that violin dealer?
|*28. However concealed the information, it's not so hard to apply --
once customers have it. Thus, violin makers and violin dealers who pay layers of kickbacks
-- so called finder fees, bribes, commissions, and the like -- almost never provide buyers with
guarantees covering the purchase of master made instruments and bows. Meaningful,
written CASH-BUY-BACK guarantees are provided only by those dealers who -- as
genuine professionals -- DO NOT PAY KICKBACKS, ETC. For genuine professionals act in
harmony with the principles mandated by the Code of Ethics of the American Federation of
Violin and Bow Makers, Inc. Such professional dealers emphatically do issue a "Bill
of Sale and Warranty." This not only states the CASH-BUY-BACK
amount which the seller will pay to the buyer (should the
buyer wish to sell back the master-made instrument or bow). It also stipulates the trade-in value and the
manufacturing classification of the specific instrument or bow.
*29. And there's another protection. Legitimate warranties will always affirm: "We further warrant that no third party will receive a commission, finders fee, or any remuneration, from the purchase price."
*30. In this regard, the policy of Fritz Reuter & Sons, Inc., should be of particular interest -- but especially to all who wish to buy, repair, or rent stringed instruments. For Reuter & Sons has NEVER made clandestine payments to teachers or to any other third parties (whether through money or in-kind merchandise) for giving students our name as a reference -- whether those students are out to purchase instruments or bows or accessories or repairs, or to arrange for a rental. Not only have we never made such payments -- we NEVER WILL.
|*31. This alone would make us professionally unique. Without question,
our sales practices are distinctive. We differ from other local violin dealers such as:
*32. Unlike Fritz Reuter & Sons, these operations issue no "Bill of Sale and Warranty." The obvious question is : WHY? Could it be that they can not affirm what legitimate warranties always do affirm? Could it be that their "creative" business practices actually include pay-offs [kickbacks] to teachers who are sales agents in disguise?
*33. As an initial, tentative follow up to Dr. Frank Little's suggestion -- namely, that queries in this matter be addressed to individual members of his String Faculty -- permit me to mention the sales team of Roland and Almita Vamos. They have become quite wealthy. In their lucrative association with prominent local dealers (and with other violin dealers) they must have been critically influential in producing millions of dollars of student instrumental purchases.
|*34. There are plenty of us who do not find this amusing, who would like
to know more. At the very least, we at
Reuter & Sons are more than slightly curious -- as must be all other violin makers and
dealers who subscribe to the ethical code of the American Federation of Violin and Bow Makers. And, certainly, there must be considerable interest among all those associated
with the Music Center: donors, students, parents of students, and others. For,
some Music Center faculty, there are strong suspicions of conduct which we would minimally
characterize as conflict of interest -- perhaps even as deception and/or fraud. Indeed, in
some jurisdiction, these practices are viewed as felonies. The conviction of one of
Japan's most famous violinists and teachers illustrates the point. Mr. Yoshio Unno was actually
incarcerated for accepting violin dealer's bribes.
*35. The following link will show a reproduction of our present "TITLE and GOLDEN WARRANTY", which -- for the last 33 years -- has been issued by Reuter & Sons with every sale of an instrument and/or bow. True, I could argue my case more fully. But this document should drive home the contrast between suspect dealers, and legitimate maker-dealers such as Fritz Reuter & Sons, Inc.
*36. Now that my FOCUS REPORT readers can evaluate the "TITLE and GOLDEN WARRANTY" on their own, I would like to close with some simple questions. Are you confident of the CASH-BUY-BACK value of your own violin? Wouldn't a query -- addressed to the very person who sold it to you -- be appropriate? For isn't this a case where the facts truly speak (so far as widespread dishonesty within the violin business is concerned) for themselves? Is further proof really needed?
Copyright © Fritz Reuter and Sons, Inc. 1994, 1996-2002 All rights reserved