Bannon's Daddy Warbucks on the hot seat
by digby
Robert Mercer, a hedge fund executive and GOP mega-donor, is stepping down as co-chief-executive of the hedge fund Renaissance Technologies and selling his stake in the conservative website Breitbart News to his daughters, he announced Thursday.
In a letter to investors reviewed by The Washington Post, Mercer noted he has come under intense scrutiny for his financing of Breitbart, his relationship with former White House strategist Stephen K. Bannon and his backing of conservative provocateur Milo Yiannopoulos.
“Of the many mischaracterizations made of me by the press, the most repugnant to me have been the intimations that I am a white supremacist or a member of some other noxious group,” Mercer wrote. “Discrimination on the basis of race, ethnicity, gender, creed, or anything of that sort is abhorrent to me. But more than that, it is ignorant.”
Mercer and his middle daughter, Rebekah Mercer, have been two of the most influential donors in President Trump’s orbit. During the 2016 presidential campaign, they financed and ran a super PAC supporting Trump. A data science firm that Mercer invested in, Cambridge Analytica, worked for Trump’s campaign.
Since 2009, Mercer, a former IBM language-recognition specialist, has been at the helm of Renaissance Technologies, one of the most successful hedge funds on Wall Street. The fund manages more than $50 billion in assets using complex mathematical equations to make bets on the markets.
On Jan. 1, Mercer plans to step down from his position as co-chief-executive and resign from the fund’s board of directors, but he intends to remain a part of its technical staff, he wrote.
The 71-year-old, who eschews media attention, has been thrust into the spotlight because of his backing of Breitbart, the pugilistic conservative website run by Bannon. Before Bannon served as a top adviser to Trump, he functioned as the Mercers’ political strategist and advised them on investments, according to people familiar with their relationship. Together, they built a power base aimed at sowing distrust of big government and eroding the dominance of the major news media.
The Internal Revenue Service is demanding a whopping $7 billion or more in back taxes from the world’s most profitable hedge fund, whose boss’s wealth and cyber savvy helped Donald Trump pole-vault into the White House.
Suddenly, the government’s seven-year pursuit of Renaissance Technologies LLC is blanketed in political intrigue, now that the hedge fund’s reclusive, anti-establishment co-chief executive, Robert Mercer, has morphed into a political force who might be owed a big presidential favor.
With Trump in the Oval Office, Mercer and his daughter Rebekah, who has become his public voice, seem armed with political firepower every which way you look – and that’s even though presidential adviser Stephen Bannon, their former senior executive and political strategist, appears to have recently lost influence.
Since the IRS found in 2010 that a complicated banking method used by Renaissance and about 10 other hedge funds was a tax-avoidance scheme, Mercer has gotten increasingly active in politics. According to data from the Center for Responsive Politics, he doled out more than $22 million to outside conservative groups seeking to influence last year’s elections, while advocating the abolition of the IRS and much of the federal government.
The Mercer Family Foundation, run by Rebekah Mercer, also has donated millions of dollars to conservative nonprofit groups that have called for the firing of IRS Commissioner John Koskinen, an Obama administration holdover whose five-year term expires in November.
One of them, the Heritage Foundation, received $1.5 million from the Mercer foundation from 2013 through 2015, according to its most recent public tax filings.
IRS leader Koskinen has said publicly that he intends to finish his term. On his watch, the agency hasn’t been cowed by the Mercers.
The IRS recently released a little-noticed advisory stating that its top targets in future business audits will include so-called “basket options,” the instruments that Renaissance and some other hedge funds have used to convert short-term capital gains to long-term profits that have lower tax rates.
But Renaissance, with assets estimated at $97 billion on Dec. 31, 2016, has shown no signs of buckling to the IRS’s demands.
Nor has there been a hint as to whether Trump, a real estate developer who has refused to make his tax returns public, will intercede. The White House declined to respond to questions about the matter.
Richard Painter, chief White House ethics adviser under President George W. Bush, said the optics surrounding the Mercers’ political connections and the IRS case “are terrible.”
“The guy’s got a big case in front of the IRS,” said Painter, now a University of Minnesota law professor who is also vice chairman of Citizens for Responsibility and Ethics in Washington. “He’s trying to put someone in there who’s going to drop the case. Is the president of the United States going to succumb to that or is he not?”