Former Associate Dean at MIT's Sloan School of Management Pleads Guilty in Hedge Fund Scam

A former Massachusetts Institute of Technology professor and his son have agreed to plead guilty (DOJ) to running a $500 million hedge-fund scam that was uncovered by investigators probing Bernard Madoff’s Ponzi scheme.

Gabriel Bitran, who was a chair professor and associate dean at MIT’s Sloan School of Management (VisualCV), and his son, Marco, told investors that their money management firm GMB Capital Management LLC had a successful real world track record, when in fact they simply assembled back data that would show a spectacular track record.

The men, who raised more than $500 million from 2005 to 2011, meanwhile put money into “funds of funds,” (Blm) which rely on investments by other hedge funds, mostly Bernie Madoff’s firm and Madoff feeder funds, according to prosecutors.

The Bitrans’ funds suffered losses of more than $140 million. The professor paid himself and his son as much as $16 million in management fees over the life of the businesses and recovered $12 million of their own investments when the funds were doing poorly, the U.S. said, adding that the two discussed their scheme in e-mail exchanges.