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A refrain typically heard when discussing Jim Simons’ Renaissance Technologies is that it “must” be a Ponzi scheme. Those shouting ‘Ponz’ simply can’t wrap their minds about the eye-popping returns in the Medallion fund-made up mostly of employee money- and the comparatively less stellar performance of RIEF and RIFF. They’re also made nervous by the huge computers housed on RenTec’s campus-esque grounds; throw in a socially awkward CEO who professes to hate human interaction and a couple of unicycles and Ponzi is the only way they can square things away. These people are, of course, imbeciles and the statement “Jim Simons hates the feeling of nicotine in his lungs” would hold more weight. No, the quants at Renaissance are far too intelligent to run some amateur hour scam any hack broker could pull off. They make honestly, through complex algorithms and loopholes in labor laws.
Renaissance Technologies, the $15 billion hedge fund started in 1982 by Simons, 72, was found by the state Labor Department in 2009 to have been mischaracterizing security guards for years, documents show. The case of Simons, a math whiz, versus the state unemployment benefit fund came to light after one guard, Louis Marsicovetere, an ex-NYPD officer, left his job at RenTech’s Third Avenue office in 2008 and filed for unemployment insurance. It was then that Marsicovetere learned RenTech had been classifying him as an independent contractor, not as an employee, state documents show, and that in consequence the company had not made unemployment payments on his behalf and that he was, at first, ineligible for jobless benefits. The move meant the company paid less unemployment insurance and other labor cost payments than it would have if the guards were tabbed as employees. Employment-law experts, noting the number of guards and how much they made, estimated the back taxes, including penalties, might cost RenTech up to $100,000.
After some back and forth, state labor officials ruled in favor of Marsicovetere in April 2009, telling RenTech to amend its quarterly reports on the former guard and “all other persons similarly employed” since 2006, when Marsicovetere first started working there. Documents show the case rests on such minutiae as which party set Marsicovetere’s hours and pay, and whether the outfit he wore to work can be considered a uniform. The former guard claims he was an employee and the uniform each guard wore included a tie with the RenTech logo.
If the Department of Labor thought Jim was just gonna roll over and take it, however, they had another thing coming. Simons appealed the ruling and a hearing is scheduled for today before the state Unemployment Insurance Appeal Board to determine if a precedent will be set vis-a-vis how other hedge funds will make an extra buck in the future, should things tip in Jimbo’s favor.