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A former associate dean of MIT’s Sloan School of Management and his son have pleaded guilty to securities fraud and obstruction of justice after allegedly losing $140 million of investors’ money in hedge funds.

Gabriel Bitran PhD ’75, a 69-year-old Newton resident, and his son Marco Bitran ’97, allegedly attracted investors from 2005 through 2011 by promising to invest using a complex mathematical trading model developed by Gabriel Bitran at MIT. They brought in $500 million, but in reality invested much of the money in other hedge funds, according U.S. Attorney Carmen M. Ortiz in Boston.

As the financial crisis hit in the fall of 2008, several of the Bitrans’ hedge funds had “disastrous losses,” according to Ortiz’s office, resulting in investors losing 50 percent to 75 percent of their principal. Some of the money was invested with New York financier Bernard Madoff, who was convicted in 2009 of defrauding investors of billions of dollars and was sentenced to 150 years in prison.

Meanwhile, the Bitrans withdrew about $12 million of their own money from the hedge funds, prosecutors allege, while forcing customers to wait to redeem money from their GMB Capital Management, later renamed ClearStream Investments.

“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,’’ Ortiz’s office said in a press release.

In addition, the US attorney said the Bitrans paid themselves millions of dollars in management fees.

The Bitrans falsely told investors they had delivered average annual returns of 16 percent to 23 percent for over eight years, prosecutors said. Father and son acknowledged to each other in e-mails, cited by the US attorney, that they had misled investors.

In July 2009, Gabriel Bitran said to his son in an e-mail, “We have mislead (sic) a lot of people with a range of statements that were incorrect simply to increase our income.’’

The pair previously settled similar civil charges with the Securities and Exchange Commission in 2012, agreeing to pay $4.8 million.

During the SEC’s investigation, the Bitrans made false statements to the examiners, according to the U.S. attorney.

If the plea agreements are accepted by the judge in the criminal case, the Bitrans will be sentenced to two to five years in jail, as well as a period of up to three years of supervised release, and will have to repay $10 million of their gains.