Did Jim Simons Ever Really Leave the NSA?

Or was it all just an elaborate Russian front? Or was it both?

James Simon (1938-2024)

I began writing about this topic when a reader asked me what I thought. I’m always interested to hear from you and especially paid subscribers.

There are a lot of stories you’re supposed to believe about Renaissance Technologies. I believe all these things even though hedge funder Jim Simons and the rest of RenTec wound up paying one of the largest tax settlements in American history.

“I did a lot of math. I made a lot of money, and I gave almost all of it away,” said Simons. “That’s the story of my life.”

Uh huh.

Simons passed away yesterday at the age of 86 and while it’s in bad taste to speak ill of the dead, it’s total folly to let their myth-making take hold.

I’ve come to believe that this control of who is and who isn’t a hero has begun a national security matter.

Nevertheless I’m a good citizen so publicly I’ve affirmed all of them over the years.

Sure, sure, I think the Medallion Fund really did get those super great trades and that they weren’t a front for the Russian mafia. No, not at all! No mafia connections there!

I began to question the official story about RenTec when I learned that the scion of a grocery story family was invested in the Medallion Fund. Say what?!

I later learned that his mother was Russian. A picture started to emerge. What if the reason that the Medallion Fund was restricted was because it was scheme for enriching foreign assets within the United States?

I believe all these things even though Simons and the rest of RenTec wound up paying one of the largest tax settlements in American history. Yes, I am repeating myself.

Yeah, I suppose that is great that Simons funded the Simons Genome Diversity Project which included the whole genome sequencing of 300 genomes from diverse present-day people around the world.

You’re supposed to ignore Rebekah Mercer’s ex-husband being a Franco-Russian. You’re not supposed to ask questions about her trying to invest money into satellite companies like Umbra or financial service companies like Stripe. You’re not supposed to ask about her relationship with human smuggler (and Greg Abbott donor) Matt Michelsen who weirdly tried to broker a peace deal with Facebook.

You can’t talk about how Parler’s servers were in Russia and how when I offered to move them to the United States she sent me a “yuck” emoji. Or how Hoan Ton-That and Richard Schwartz met with Mercer to fund Clearview.AI — only for her to avoid the company entirely when she found out I was involved.

Here’s the way global capital flows really work. The U.S. dollar is the world’s reserve currency. The Russians get those dollars and then try to reinvest them in the United States. Given how corrupt Russia is that’s often done by the Russian mob.

Yes, the Russian-Jewish mob is a lot more involved in every day life than you’d think, especially if you’re smart.

They study you. They track you. They try to coopt you. Hell yes, this stuff is scary. And I have lived a lot more of it than I talk about publicly because it’s terrifying. If you mess about with it they’ll kill you. They park money behind you, sometimes without you even knowing it.

If your family is pro-Russian deep state but anti-Russian mafia — as mine is — these mobsters watch you and try to rip you off by appointing other people to run your companies once they’ve been derisked. The companies never grow into what they could have been but that isn’t really the point. The post is to move cash while weakening state capacity.

What they especially like to do is compromise the children of spies. You see this especially with Gen X who came of age during the drug years. The United Arab Emirates often acts as the front here but there are others as well. An Indian friend of mine in tech got a strange call from a Russian he had met at a party asking him to “hold some investments” once the Ukraine War got under way.

Returning to Renaissance for a bit, Jim Simons ran the Democratic side of things while his partner in business and maybe in crime Bob Mercer ran the Republican side with his daughter Rebekah Mercer. It’s always more dangerous to be a Republican than a Democrat and so Mercer family has essentially become the new Sackler family and driven from public view.

You’ve be forgiven if you thought that a lot of these oh so complicated maths were really the means by which our Jews could talk to the Soviet Jews. That seems to be how chess and bridge worked for years, too, and how classical music (still) works.

There are a whole lot of fake becauses for people to get together and talk to one another. In the main I’m supportive of these sorts of efforts. I prefer jaw, jaw, jaw rather than war, war, war.

Jim Simons once said in a speech that the only people who tried to steal IP from RenTec were Russians “and that’s why we no longer hire Russians.”

Maybe. Or maybe the Russians stole all there was that was worth stealing.

Here’s this key detail from the Austrian Financial Review.

Around that time another of Renaissance's Russian-born researchers, Alexey Kononenko, who received his Ph.D. from Penn State in 1997 and had also done a brief stint on Wall Street, was promoted within the equities group.

Senior staffers ended up discussing Kononenko's advancement during one of their regular dinners at Simons's house. One person familiar with the situation says the scientists were just questioning why he had moved ahead of colleagues who had been there much longer, much the way an academic might complain about a younger colleague getting tenure.

Other people with knowledge of the firm say Kononenko's promotion was a significant event in Renaissance's history and that the Russian had actually executed a power play.

So that’s the Russian angle.

What of the British?

There a key player emerges Nick Patterson. There’s a lot worth noting here so read it.

In 1972, Dr. Patterson began working at the Government Communications Headquarters, where his research remains classified. He absorbed through his mentors the mathematical philosophy of Alan Turing, the genius whose crew at Bletchley Park — the headquarters’ predecessor — broke Germany’s encryption codes during World War II. The biggest lesson he learned from Dr. Turing’s work, he said, was “an attitude of how you look at data and do statistics.”

In particular, Dr. Turing was an innovator in Bayesian statistics, which regard probability as dependent upon one’s opinion about the odds of something occurring, and which allows for updating that opinion with new data. In the 1970s, cryptographers at the communications headquarters were harnessing this approach, Dr. Patterson said, even while academics considered flexible Bayesian rules heretical.

In 1980, Dr. Patterson moved with his wife and children to Princeton, N.J., to join the Center for Communications Research, the cryptography branch of the Institute for Defense Analyses, a nonprofit research center financed by the Department of Defense. His work earned him a name in the cryptography circle. “You can probably pick out two or three people who’ve really stood out, and he’s one of them,” said Alan Richter, a longtime scientist at the defense institute.

In 1993 Dr. Patterson moved to Renaissance Technologies, a $200 million hedge fund, at the invitation of its founder, James H. Simons, a mathematician and former cryptographer at the institute. The fund made trades based on a mathematical model. Dr. Patterson knew little about money, but the statistical methods matched those used in code breaking, Dr. Simons said: analyzing a series of data — in this case daily stock price changes — and predicting the next number. Their methods apparently worked. In Dr. Patterson’s time with the hedge fund, its assets reached $4 billion.

By 2000, Dr. Patterson was restless. One day, he ran into Jill P. Mesirov, another former defense institute cryptographer, and mentioned his interest in biology. Dr. Mesirov, then director of computational biology at the Whitehead/M.I.T. Center for Genome Research, which later became the Broad Institute, hired him.

“Really, what we do for a living is to decrypt genomes,” Dr. Mesirov said. Cryptographers look at messages encoded as binary strings of zeros and ones, then extract underlying signals they can interpret, Dr. Mesirov said. The job calls for pattern recognition and mathematical modeling to explain the data. The same applies for analyzing DNA sequences, she said.

Patterson was important in hiring the two co-CEOs of RenTec — Peter Brown and Robert Mercer. (Brown is now CEO after Mercer was pushed out for funding the far right.)

Here’s Jane Mayer in the New Yorker in 2017.

Patterson kept asking Mercer and Brown to join Renaissance. He thought that their technique of extracting patterns from huge amounts of data could be applied to the pile of numbers generated daily by the global trade in stocks, bonds, commodities, and currencies. The patterns could generate predictive financial models that would give traders a decisive edge.

In the spring of 1993, Mercer experienced two devastating losses: his mother was killed, in a car crash, and his father, a biologist, died six weeks later. With life’s precariousness made painfully clear, and with tuition bills mounting, he decided to leave I.B.M. for a higher-paying job at Renaissance. Brown made the leap, too.

RenTec got in serious trouble with the IRS in 2014 — right around the time that Putin invaded Crimea. Effectively their models didn’t account for the change in tax law and ceased to work. More plausibly I think the IRS, arm of the Deep State, was putting pressure on Russian assets in America and abroad.

My sense is that a lot of this stuff started to break down as Putin seized Crimea— a moment that I date as the collapse of globalization alongside Brexit and the election of Donald Trump. It became more and more obvious that many of these weird deals were just money laundering plays and that they were no longer used to build interesting technology but to run foreign ops within the United States. What started as an effort to collect the world’s smartest people became a kind of scam, which ultimately couldn’t really be surmounted.

And deadly one at that. Supposedly Simons was worth billions and his two sons died under unusual circumstances. One died while riding a bicycle on Long Island and another drowned in Bali.

It’s kind of gauche to ask if they were murdered but you do have to wonder. All that money, all that regret…

One always got the sense that Simons was a reluctant servant of the U.S. Deep State communing with the Russian mafia.

Still Simons’s passing raises a larger series of questions:

Who has replaced him? And is that even possible?

Simons having a smoke on the sidewalk

There’s a lot of work left to do, especially in genomics.

Perhaps the replacement of Sergei Shoigu with Andrey Belousov as Minister of Defense will be an opportunity for America and Russia to work together on core technical issues once more?