• Politics

How a Reclusive Hedge-Fund Boss and His Daughter Are Reshaping the Republican Party

17 minute read

When Donald Trump accepted the Republican nomination in Cleveland, some of the most powerful people in the party had a ticket to watch from Suite 245 in Quicken Loans Arena. Invited to the cushy skybox were financiers, real estate developers, a supermarket magnate and an ambassador. Hardly anyone knew it at the time, but the list also included a pair of political insiders who would soon take control of the Trump campaign: Kellyanne Conway, a consultant who had spent the GOP primary toiling for his top rival, and Steve Bannon, the boss of Breitbart News. Both were guests of a woman named Rebekah Mercer.

Bannon and Conway are hardly the only Republicans who rely on Mercer as a benefactor. To help pay for the convention, the family foundation Mercer runs wrote a $500,000 check–pocket change compared with the tens of millions of dollars it has showered on a sprawling web of conservative foundations, political networks and research institutions. That’s not counting the family’s reputed eight-figure investment in Breitbart, the house organ of the right-wing populist movement that fueled Trump’s ascent, and in Cambridge Analytica, a controversial data firm hired by a growing number of GOP candidates. Rebekah’s father Robert Mercer, a New York hedge-fund executive, has forked over more than $20 million in the 2016 election, which makes him the single largest Republican donor this cycle. Before the Mercers backed Trump, they bankrolled Texas Senator Ted Cruz through a family super PAC that employed Conway.

But the full scope of the Mercers’ clout wouldn’t be clear until a few weeks later, when Rebekah Mercer’s entourage took control of Trump’s campaign. Shortly after an August discussion with Mercer, Trump ousted his top operative, Paul Manafort, and installed Conway and Bannon as his new campaign manager and CEO. The younger Mercer assumed day-to-day control of the family’s new pro-Trump super PAC, replacing GOP activist and family ally David Bossie, who became Conway’s deputy. “They’ve bought their way in,” says a Trump ally. “The people in charge are all Mercer people.”

Over the course of the 2016 presidential contest, the Mercers have become two of the most pivotal and least understood behind-the-scenes players in American politics. Robert Mercer is a reclusive figure who has never spoken publicly about his political beliefs. Daughter Rebekah, a former Wall Street trader who runs an online gourmet-cookie company with her sisters, is described as the activist investor behind the family’s vast political concerns. Together they form a link between Trump’s campaign and super PAC, armed with the cash and clout to shape everything from his staff to his data operation to his super PAC strategy. “It’s hard to think of anybody like them,” says Larry Noble of the nonpartisan Campaign Legal Center.

Or to imagine this influence fading. Whether by molding Trump’s policies as President or battling for control of the shattered party he leaves behind, the Mercers are now outsize stakeholders in the future of the Grand Old Party. Which raises a question few Republicans are able to answer: What do the Mercers really want?

One possible motive is money. The theory dates back to September 2010, when attack ads began to blanket the airwaves in the southwest Oregon House district represented by Democrat Peter DeFazio. They were paid for by a group called Concerned Taxpayers of America, one of the very first super PACs. Nearly $600,000 poured into the contest. The source of the onslaught was a mystery. “We were like, wow,” DeFazio recalls. “Where is all this money coming from?”

It turned out the “concerned taxpayers” numbered just two. One of the group’s donors was a construction baron from Baltimore, who was using the super PAC to funnel cash into a House race on Maryland’s Eastern Shore. The other was Robert Mercer, the sole donor behind the bid to defeat DeFazio, who has represented the district since 1987. The Congressman had never heard of Mercer. But he had suspected that taxes might explain the spending binge.

DeFazio had just proposed a transaction tax that would impact the bottom line of Mercer’s hedge fund, Renaissance Technologies. “It’s anathema to Mercer,” DeFazio says now, “because it would squeeze out the flash traders.” If this was the reason, it makes sense that Mercer has bankrolled Republicans challenging Hillary Clinton, who proposed a new tax on some profits from lightning-quick trading that critics call unfair. Certainly Mercer has nursed the grudge against DeFazio: the Long Island hedge-fund boss has financed challenges to the Oregon Democrat for four election cycles running. “DeFazio pissed him off,” says a Republican consultant who has worked with Mercer.

Colleagues from both parties know the danger of wandering into Mercer’s crosshairs. In 2014, Arizona Senator John McCain was the ranking Republican on a Senate panel that investigated Renaissance for its use of so-called basket options. The accounting maneuver converts short-term capital gains into long-term profits, which are subject to lower tax rates, and the Senators alleged Renaissance had used the gambit to skirt nearly $7 billion in taxes. (Renaissance, which has spent more than $3 million on Washington lobbying since 2010, says the practice was lawful.)

As the IRS investigated the firm, Mercer gave half a million dollars to a conservative organization that was suing the agency. (It’s unclear if the donation supported the lawsuit.) Last summer, with McCain locked in a tough primary fight, the financier cut a $200,000 check to a group supporting McCain’s right-wing challenger. “We issued a scathing report about this guy evading taxes–his firm. I’m sure there’s no connection,” McCain quipped.

But the theory that the Mercers are simply driven by self-interest leaves out other important clues. One of the biggest is on the North Shore of Long Island, some 60 miles east of Wall Street, in a sleepy hamlet called East Setauket. This is the home of Renaissance Technologies, one of the most profitable hedge funds in history. Founded by Jim Simons, a math whiz and former NSA code breaker, it has more than $30 billion under management. Simons was a pioneer in the field of quantitative trading, building intricate algorithms that predict market swings. Guided by its models, Renaissance executes entirely computerized trades, often holding positions for mere seconds. Its flagship fund, Medallion, averaged 72% annual returns, before fees, from 1994 to 2014. Yet Renaissance is as famous for its secrecy as for its success. It’s been compared to “the Firm” of John Grisham’s novel, a secluded and lucrative operation that imposes nondisclosure and noncompete clauses on employees to preserve the mystique of its algorithms. The firm shuns Wall Street traders, instead recruiting pure quants like math and physics Ph.D.s.

Which is why they scooped up Mercer in 1993. Until then, the New Mexico native had only ever wanted to be a programmer. He started writing code as a teen, before he even owned a computer. While studying math and physics at the state’s flagship university, he took a part-time job at Kirtland Air Force Base, where he devised a computer shortcut–only to watch superiors run more complicated computations instead. “I took this as an indication that one of the most important goals of government-financed research is not so much to get answers as it is to consume the computer budget,” he once said, “which has left me ever since with a jaundiced view of government-financed research.”

After earning a Ph.D. in computer science from the University of Illinois, Mercer spent two decades at IBM Research. There he won renown as part of a team that revolutionized computerized language translation. In their breakthrough experiment, Mercer and his colleagues fed reams of Canadian parliamentary transcripts into computers and taught the machines to detect correlations between English and French. Without their work, “Google Translate would not have been possible,” says Gertjan van Noord, a professor at the University of Groningen in the Netherlands, who presented Mercer with a 2014 lifetime-achievement award from the Association for Computational Linguistics.

Renaissance thought this technical innovation could inform its own market forecasts. At the time, Mercer and his wife were laboring to put their children through college. (Rebekah and her older sister Jennifer went to Stanford; their younger sister Heather graduated from Duke, from which she won a $2 million gender-discrimination lawsuit in 2000 after the aspiring female placekicker was cut from the men’s football team.) Mercer made the jump to Renaissance along with IBM colleagues and threw himself into his new career. “Bob and I both lived at our offices for the first year” at Renaissance, fellow IBM recruit Peter Brown said in 2013. “Because everything is hush-hush, we lost all contact with the outside world.” Mercer and Brown spearheaded an effort to refine Renaissance’s equity-trading models. Both men rose quickly, and they were named co-CEOs in 2010. According to Institutional Investor’s ranking of best-paid hedge-fund managers, Mercer netted $135 million in 2015.

The first thing friends will tell you about Robert Leroy Mercer, now 70, is that he’s not much of a talker. “I’m happy going through my life without saying anything to anybody,” he told the Wall Street Journal in a rare 2010 interview. Accepting an award four years later, he noted his prepared remarks were “more than I typically talk in a month.” Yet there was one subject he often held forth about in the company cafeteria. “Bob may not be much of an extrovert, but he talked a lot about politics,” says Nick Patterson, an MIT and Harvard geneticist who recruited Mercer to Renaissance in the 1990s. “I would say [he’s] ultraconservative. He really did not like Bill or Hillary Clinton.”

Mercer’s pattern of political spending can be perplexing. What makes one sponsor a website like Breitbart, which crusades against global trade agreements and immigration reform, while writing huge checks to free-market groups that favor both? Why does a renowned scientist give millions to climate skeptics? How can he spend $13.5 million to seed a super PAC supporting a 100-proof conservative like Cruz, only to throw his allegiance to Trump, who treats ideology as an inconvenience? “It’s the conundrum of the year,” says GOP strategist Rick Tyler, a former Cruz aide.

People who know or have worked with Mercer portray him as a strong-willed thinker who mixes conservative doctrine–limited government, a robust national defense–with some fringier ideas. Like many libertarians, Mercer questions the sturdiness of the U.S. monetary system and seeks a return to the gold standard. He has bankrolled a conservative activist who crusades against Agenda 21, a U.N. plan to encourage sustainable development that conspiracy theorists call a secret plot to abridge private-property rights. And he has sponsored an annual conference on disaster preparedness run by an Arizona physician who suggested government authorities may have had a role in the 2015 San Bernardino, Calif., massacre.

Mercer isn’t afraid of risk. He’s been known to plunk down $100,000 to enter a single poker tournament. He owns a 203-ft. yacht called Sea Owl, outfitted with intricate frescoes, a four-story mural carved from Peruvian mahogany and a chandelier of Venetian glass. In the basement of the Owl’s Nest, Mercer’s mansion abutting Long Island Sound, he installed a $2.7 million model railway–then sued the builder, claiming he’d been overcharged. He’s also a man of exacting standards: in 2013 he settled a lawsuit brought by Owl’s Nest staffers who claimed Mercer had docked their pay for infractions like failing to refill shampoo bottles, level picture frames or close doors.

“You wouldn’t find him unusual unless you started talking mathematics or something,” says Arthur Robinson, an Oregon biochemist whose scientific research and political aspirations Mercer has spent several million dollars supporting. “You learn to recognize genius when you see it.” At first he knew Mercer only as a fellow scientist who subscribed to his newsletter and donated to his lab. But in 2011, when Robinson began stockpiling thousands of human urine samples on his sheep ranch–part of a project he says will revolutionize diagnostic medicine–Mercer chipped in $965,000 for cryogenic storage and vials. With Mercer’s support, Robinson has run for DeFazio’s House seat four times, including this year. Yet he says he can only speculate about his benefactor’s beliefs. “We’ve had lunch or dinner two or three times, and I don’t think a word of politics passed over the table,” he says. “We talk about science.”

Robinson recalls writing a research paper that tried to calculate the costs of shuttering a California nuclear power station. It claimed the lost energy could have desalinated enough seawater to help ease the state’s drought. After publishing his findings, he got a note from Mercer, a fellow advocate of nuclear energy, who had run the numbers and spotted a mistake in the math. “And of course,” Robinson says, “he was right.”

The Mercers stand out among well-heeled donors for their habit of targeting Republican stalwarts. In 2014, Robert Mercer shelled out $300,000 to a super PAC opposing Tennessee Senator Lamar Alexander and $1.1 million to a group vying to replace Mississippi Republican Thad Cochran with a Tea Party challenger. Breitbart has aggressively attacked GOP congressional leaders, including Senate Republican boss Mitch McConnell, House Speaker Paul Ryan and Ryan’s predecessor John Boehner, for choosing compromise over confrontation. One Senate candidate, who benefited from a six-figure Mercer super PAC donation, recalls being pressed about whether the candidate would defer to the wishes of Senate leadership or serve as a check on its power. “They think Washington is filled with career politicians who have no intention of honoring their promises,” says Brent Bozell, a veteran conservative activist whose organization, the Media Research Center, received nearly $9 million in Mercer grants from 2012 to 2014.

This populist bent can create friction. At one 2013 gathering of the Club for Growth, MSNBC host and former Republican Congressman Joe Scarborough was invited to deliver remarks. Scarborough had recently slammed Cruz, calling the conservative insurgent a “carnival barker.” According to a source present at the meeting, when Scarborough finished speaking, Rebekah Mercer angrily confronted him about the criticism.

And so the family set to building a political operation of its own. One of the cornerstones is the investment in Cambridge, a London-based tech firm with an audacious marketing pitch. Most data shops target voters based on information culled from consumer behavior and public records. Cambridge approaches the matter as a question of psychology, building so-called psychographic profiles peppered with revelations that voters may not even know about themselves. The Mercers’ investment in Cambridge may be a play for a share of the booming market in political analytics, especially among Republicans, who have long trailed the Democrats in tech mastery. When the family ponies up cash for a candidate, the politician often hires Cambridge to do the data mining for the coming campaign. Among its clients in 2016 are Cruz and now Trump, who previously dismissed the use of big data in politics as “overrated.”

Another Mercer staple is creating race-specific super PACs, like the one designed to oust DeFazio. Since 2010, Mercer has contributed $100,000 or more to at least 29 different super PACs. Sometimes Bob Mercer is the group’s only donor or by far its largest; in other cases the family installs a loyal treasurer and political strategist to oversee its investment. To accommodate the Mercers, Cruz allies created a series of interlocking super PACs, one per megadonor, which afforded each a tighter grip on how the cash was spent. “Mercer is the guy that invented the modern-day super PAC,” says Scott Reed, who managed Bob Dole’s 1996 presidential campaign. “He controlled the money. It was brilliant.”

Not long after Cruz dropped out of the race in May, Rebekah Mercer sat down for a meeting with Trump’s daughter Ivanka and his son-in-law Jared Kushner. Tall, with black horn-rimmed glasses, Mercer is described by associates as a no-nonsense operator. “It’s impossible to pull the wool over her eyes,” says Bozell. “Woe to the person who might have tried.” Now she wanted to take the measure of the Trumps. And she evidently liked what she heard. The Mercer family, which had recast the remnants of its pro-Cruz super PAC into an anti-Clinton group, turned their focus to supporting Trump. Some aides to the GOP nominee–who had no real high-dollar fundraising operation until this summer–welcomed the support of conservative kingpins who seemed ready to open their wallets. Others were more wary. “We viewed them as a boarding party,” says a Trump ally.

A gesture of loyalty lifted their stock at Trump Tower. When Cruz declined to endorse his former rival during a speech at the Republican Convention in late July, the Mercers issued a rare statement. “We need ‘all hands on deck’ to ensure that Mr. Trump prevails,” they wrote. “Unfortunately, Senator Cruz has chosen to remain in his bunk below, a decision both regrettable and revealing.”

As Trump’s poll numbers sagged in August, Rebekah Mercer huddled with the candidate at a Hamptons fundraiser to discuss possible replacements for Manafort, his embattled campaign chief. Days later Trump made the move. Trump may market himself as impervious to donors’ affections, but the deep-pocketed father-daughter duo had gone from strangers to players in mere months. When Cruz finally endorsed Trump on Sept. 23, observers credited the Mercers with helping to coax the conversion.

Yet among Republicans, there is still scarce agreement about what Bob and Rebekah Mercer are after. Some observers speculate that the pair, who through a spokesman declined to comment for this story, are driven by a thirst for power or access. “They want to be players,” says one Republican consultant. Others say they’re spurred by party loyalty, or ideology, or antipathy to Clinton. One suggests the Mercers’ real interest was making money on Cambridge. Still another theorizes the alliance with the candidate and Bannon signals interest in backing a prospective Trump-branded television network, which some GOP observers believe is in the offing if the candidate loses. Trump’s own explanation is simpler. “Rebekah and her father Robert are tremendous people,” he said in a statement to TIME on Sept. 27. “Their greatest desire is to make America great again. Our country is lucky to have their support.”

Whatever their motivations, the Mercers are in important ways the shape of things to come. In an increasingly atomized GOP, wealthy donors are building their own bespoke political machines, outfitted with everything from data shops to voter files. And they’re wiping away the boundaries between campaigns and their backers. “It’s hard to look at what the Mercers are doing and say it’s what the Supreme Court envisioned” in its Citizens United ruling, says the Campaign Legal Center’s Noble.

Yet this sweeping influence comes as no surprise to their targets. When he learned the identity of the mystery donor placing TV ads in his district, back in 2010, DeFazio made his way to a gray townhouse behind a power plant at the edge of Capitol Hill. Here was the address on file for Concerned Taxpayers of America, the Mercers’ first super PAC. It had been registered by the group’s treasurer, a Republican consultant named Jason Miller. Today he is Donald Trump’s senior spokesman.


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Write to Alex Altman at alex_altman@timemagazine.com