Thursday, December 31, 2015

Final Breakfast Bitran of 2015

Related: Bitran a Bit Player

"Former MIT dean, son sentenced for hedge fund scheme" by Travis Andersen Globe Staff  December 16, 2015

A former associate dean at the Massachusetts Institute of Technology’s Sloan School of Business and his son have been sentenced to nearly four years in prison for their roles in a hedge fund scheme, US Attorney Carmen M. Ortiz’s office said on Wednesday.

Gabriel Bitran, 70, of Newton, and his son, Marco, 40, of Brookline, each received 45-month prison terms on Monday in US District Court in Boston, Ortiz’s office said in a statement.

The pair had pleaded guilty last year to securities fraud and obstruction of justice after losing more than $140 million of investors’ money in hedge funds.

According to Ortiz’s office, the Bitrans duped investors into placing over $500 million in their hedge fund and investment advisory businesses between 2005 and 2011. They claimed falsely that they delivered average annual returns ranging from 16 percent to 23 percent, with no down years, over an extended period, prosecutors said.

Father and son paid themselves millions in management fees, according to Ortiz’s office, but their businesses collapsed when the financial crisis hit in fall 2008.

Several of their funds suffered disastrous losses, and investors forfeited between 50 and 70 percent of their principal in many instances, according to Ortiz’s statement.

“Nonetheless, as their funds were experiencing these losses, Gabriel and Marco Bitran redeemed approximately $12 million of their own money from these hedge funds, while deferring other investors’ requests for redemption,” the statement said. “The Bitrans thereby extracted much of the value of their own investments while leaving other investors to suffer more losses as the funds’ values declined precipitously.”

Anybody hear a ringing?

In January 2009, the Bitrans found themselves in the crosshairs of SEC officials, who while investigating potential victims of Bernie Madoff’s Ponzi scheme, learned of the Bitrans’ investment performance claims and requested supporting documentation, Ortiz’s office said.

Oh, it tracks back to that.

The pair lied to SEC investigators and provided fabricated records in an effort to cover their tracks, according to the government.

Government hates it when you act like them.

In addition, the two men admitted their misconduct in e-mail correspondence.

“We have mislead [sic] a lot of people with a range of statements that were incorrect simply to increase our income,” Gabriel Bitran wrote to his son in July 2009, according to an excerpt provided by Ortiz’s office. “A person with the experience and knowledge of the financial sector and a veteran professor of MIT should not have engaged in this type of behavior.”

Gabriel Bitran’s lawyer, Nicholas C. Theodorou, had requested a two-year prison term and wrote in a recent court filing that his client had “no prior history of criminal activity and a record of impeccable academic achievement and ethical behavior.”

An attorney for Marco Bitran, Dana M. McSherry, also asked for a two-year sentence and said in court papers that Bitran is “a truly good man . . . who deeply regrets and takes full responsibility for the misrepresentations he made to investors and the SEC and is eager to make amends.”

Hey, it's a New Year, right?


Please pardon me.