Madoff To Rot Behind Bars

The New York Times leads with and the Wall Street Journal banners with news that Bernard Madoff, architect of the largest-ever financial fraud, has been slapped with the maximum sentence of 150 years in prison six months after he confessed to his sons of running a massive Ponzi scheme. A thinner, more haggard-looking Madoff, the NYT notes, "stood impassively" as his sentence was read by U.S. District Court Judge Denny Chin. "The penalty sparked a burst of applause in a courtroom packed with victims of the fraud," the WSJ says. "The sentence far surpasses that of other recent high-profile white-collar crimes and took many noted criminal defense attorneys and former federal prosecutors by surprise," the Washington Post writes, adding: "In handing down the sentence, [Judge Chin] acknowledged that any term above 25 years would be symbolic, given Madoff's advanced age of 71. Nevertheless, the judge said, it was important that the severity of the sentence serve as a deterrent to future offenders." Madoff's lawyer had asked for 12 years, one year less than Madoff's life expectancy.

A criminal investigation is still ongoing, as prosecutors try to figure out who else was involved in the scheme. "So far, only Madoff's accountant has been arrested on criminal charges, but securities regulators have filed civil suits against several of his long-term investors, accusing them of knowingly steering other investors into the fraud scheme for their own gain," the NYT says.

In other fraud news, Allen Stanford spent last night in jail "after U.S. prosecutors told a federal judge that the accused swindler would likely flee the country," Reuters reports. Stanford faces 21 counts of criminal charges for a $7 billion Ponzi scheme. Last week, U.S. Magistrate Judge Frances Stacy said Stanford could leave federal custody as long as he came up with a $500,000 bond, a fifth of which would have to be in cash, and lived with his girlfriend in Houston. The U.S. Justice Department "opposed bail of any sort and sought to keep him in jail until his trial, now set for August," the article says. Stanford, who is 50 years old, faces life in prison.

Also topping the business news today is word that General Motors (GM), following in Chrysler's footsteps, will ask a bankruptcy judge today to allow for the sale of its assets to the Treasury-funded Vehicle Acquisition Holdings LLC—or as Reuters calls it, a "New GM." The request, according to Bloomberg, puts President Barack Obama's administration "almost a month ahead of schedule in its plan to reshape the U.S. auto industry." Despite 750 objections, which will likely be overruled, GM says Vehicle Acquisition Holding is the only potential purchaser. In a featured analysis by the WP, the paper expressed doubt over how much a new GM will repay of loans funded by taxpayers. Right now, the company is subsisting off of a $30 billion loan while it is in bankruptcy court, an amount that will balloon to $50 billion once GM emerges. "For the United States to fully recover its investment, the value of General Motors stock will have to reach levels it has never before attained," the WP writes. In fact, it will have to surpass its 2000 peak of $56 billion by an additional $12 billion. According to GM's internal projections, the company's equity value in 2012 will range from $59 billion to $77 billion, though experts say that will be difficult to attain.

Apple (APPL) founder Steve Jobs returned yesterday from medical leave, a move that was greeted by a muted reaction from investors. "Apple, up 67 percent since Jobs went on leave Jan. 14, fell 47 cents to $141.97 yesterday in Nasdaq Stock Market trading. That compares with gains in the Standard & Poor's 500 Index and the Nasdaq Composite Index," Bloomberg reports. "Investors have gotten comfortable with Apple's management team and its ability to run the company without Jobs's oversight," Ryan Jacob, head of the Jacob Internet Fund in Los Angeles, told the news service. As previously reported, Jobs underwent a liver transplant during his five-and-a-half-month leave. According to his doctors, Jobs, also a cancer survivor, is recovering well. But the company itself offered no update on his health and didn't say if his responsibilities would change, the WSJ says. Jobs' return, the paper says, will "fuel debate over the company's disclosure practices," which have drawn the attention of the Securities and Exchange Commission. The SEC opened an informal probe earlier this year and is continuing to look at the issue.

In another front-page story, the WSJ reports that Wall Street is poised to log its best quarter since the credit crisis began, with large firms citing basic operations, such as trading and underwriting, as the fuel that stoked performance. Equity offerings in the second quarter reached nearly $260 billion—"almost four times the amount recorded during the first quarter, and the highest since 2008's second quarter," the paper says. In addition, "the gap between bid and offer prices on fixed-income assets remained wide through most of the quarter, boosting profits from buying and selling these securities." Fixed-income trading drives much of Wall Street's profits. Bloomberg reports that Treasuries fell yesterday, "heading for their steepest first-half loss in three decades."  The plunge precedes a report expected to show that "U.S. consumer confidence is rebounding and as rising stocks sapped demand for the safety of fixed-income assets." The MSCI World Index rose 0.4 percent, making for an overall increase of 42 percent since its 2009 low in March. The yield on government notes has been rising, but recent confidence "shows there is demand for 10-year Treasuries at 4 percent," Christoph Rieger, a fixed-income strategist at Commerzbank AG in Frankfurt, told Bloomberg.