I don't know if it's what The_Final_Beast had in mind - but I have been wondering about this one and would love to find out how it's done.
first I cut out 6 square pieces of sturdy cardboard and taped 5 of them together with masking tape to form the box sides and bottom... leaving the 6th one aside for the lid.
I covered the outside of the entire box with felt pieces that only covered each individual square and sewed all of the edges together.
After covering both sides of the lid with felt I sewed it onto the box. For the crank I used a coat hanger bent in a sort of s shape that I poked through the box and secured inside by bending it over and taping it in place.
I also filled the hole it went through with glue to keep it well in place. The ball on the end is a plastic Christmas tree ornament that I painted black and glued to the end of the wire.
After making the clown doll for inside,( he has no legs...just a long torso to reach the bottom of the box) I cut a square piece of black fabric (about an inch larger than the box opening all around) and slit the center large enough to get the doll body through.
After putting him in the box I just sewed the edges of the fabric to the edges of the box and then around his mid section. I painted the skulls on paper and glued them onto the box and sewed the felt frames around them.
Oh and if your interested in his knife... I used cardboard for a base shape and then built it up with paper clay ( I LOVE that stuff) and painted it with acrylics.
The clown will push down into the box and it will close completely but of course the crank isn't functional.
I hope that makes sense!