A former professor at Massachusetts Institute of Technology and his son pleaded guilty to securities fraud, wire fraud and obstruction of justice after being caught for running a $500 million hedge fund scam discovered by those investigating Bernie Madoff’s fraudulent investment operations, the U.S. Attorney’s Office of the District of Massachusetts announced Tuesday.
Gabriel Bitran, a former professor at MIT and associate dean of its Sloan School of Business, and his son Marco Bitran, himself a graduate of Harvard Business School, ran their hedge fund business known as GMB Capital Management and GMB Capital Partners. In 2005, when they launched GMB, the Bitrans attracted investors by promising them that their money would be invested according to a complex mathematical trading model developed by the elder Bitran, according to a statement by the Department of Justice. But in reality, the two simply put the $500 million into funds of funds dependent on investments of other hedge funds.
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