Danny Schechter - ColdType

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For years Madoff remained in the shadows even as a shadow
banking system emerged on a giant scale building his network
of victims through referrals and from so-called “feeder
funds” which sent him customers for part of the take.
Of all the reporting on Madoff, few have probed as deeply
as Mark Mitchell, a reporter with controversial businessman
Patrick Byrne’s Deep Capture website. (Disclosure: Sam Antar
and journalist Gary Weiss with whom I have spoken both
denounced Byrne and claim he is engaging in nefarious practices.)
While I have no way of verifying Mitchell’s allegations that
link Madoff to other criminal enterprises, they deserve to be
scrutinized by financial reporters with far more access.
Mitchell writes:
Madoff’s brokerages engaged in naked short selling (offloading
stock that had not been borrowed or purchased – phantom
stock), likely on behalf of miscreant hedge funds looking
to drive down prices. In fact, Madoff successfully lobbied
the SEC to enact a rule that allowed market makers, such as
himself, to engage in naked short selling. At the SEC, this rule
was called “The Madoff Exception.”
… in other words, Madoff’s operation was not just the largest
known swindle in history. It was also a phantom stock
machine. And that makes it but one participant in a much
bigger scandal – a crime that might have brought us to the
brink of a second Great Depression.
… it was no surprise to learn that one of Madoff’s most
important “feeders” was Fairfield Greenwich Group, partowned
by a “prominent investor” named Philip Taub. Philip’s
father, Said Taub, a “prominent investor” from Europe, had
been an important “feeder,” along with Michael Milken’s cronies
and other people affiliated with the Genovese Mafia, for
the Investors Overseas Services Ponzi.
Another Madoff “feeder” (and a partner with Madoff in a bro-