Gabriel Bitran

The former deputy dean of MIT's business school and his son agreed to plead guilty Tuesday to operating a $500 million hedge fund scam. Gabriel Bitran, 69, who taught at MIT for 35 years and served as deputy dean at the Sloan School of Business for five, allegedly lied to clients about the return on investments his hedge fund GMB Capital Partners was delivering. His son Marco Bitran, 39, a Harvard MBA, will also plead guilty to the same charges, said U.S. District Attorney Carmen Ortiz. The Bitrans falsely told clients that their hedge fund was delivering annual returns between 16% and 23%, according to federal prosecutors, enticing investors to entrust more than $500 million with them. They also falsely claimed that the money would be invested using a complex trading model based on research Gabriel Bitran conducted at MIT. In fact, they placed investor money with Bernie Madoff and the Petters Group Worldwide, both of which were later found to be Ponzi schemes.