Former MIT professor, son plead guilty in hedge fund scam that cost investors $140M

Industries Associated Press

A former Massachusetts Institute of Technology professor and his son who ran hedge funds have pleaded guilty to securities fraud charges that federal prosecutors say cost their investors $140 million.

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Federal prosecutors said 69-year-old Gabriel Bitran and 39-year-old Marco Bitran pleaded guilty Wednesday to conspiracy to commit securities fraud, wire fraud and obstruction of justice in connection with their hedge fund businesses, GMB Capital Management and GMB Capital Partners. Prosecutors announced a plea deal in August. Sentencing is set for March 2015.

Prosecutors say the men told investors they had a history of earning money with a formula developed by Gabriel Bitran, a former professor and associate dean of MIT's Sloan School.

Prosecutors say some investors lost as much as 75 percent of their principal.