According to the "Paradise Papers" — more than 13.4 million documents leaked to Süddeutsche Zeitung and shared with media organizations through the International Consortium of Investigative Journalists — Simons is a longtime client of Appleby, a global law firm based in Bermuda that has offices in most of the world's tax havens. Simons was a math professor in 1974 when his family received a gift of $100,000; a Colombian friend subsequently created a trust on his behalf in Bermuda called the Lord Jim Trust. In time, the majority of the trust's assets were invested in Renaissance Technologies, a "quantitative" hedge fund launched by Simons in 1982 whose proprietary trading algorithms generated spectacular returns, enabling Simons and his partners to amass a multibillion-dollar fortune. Considered a foreign entity by U.S. tax authorities, the trust's assets were not subject to taxation by the Internal Revenue Service, and over time the astounding success of Renaissance led to the explosive growth of the trust's assets. While Appleby didn't create the trust, now one of the largest in the world, it did provide legal advice to Simons.
Simons told the Times that his share of the trust today is held by a Bermuda-based offshore charity, Simons Foundation International (SFI), not to be confused with the New York-based Simons Foundation, which has about $3 billion in assets. According to another source, SFI has about $8 billion in assets, which would rank it among the ten largest foundations in the United States. According to Simons, domiciling the trust in Bermuda makes it easier to give to non-U.S. charities — and to avoid the 5 percent annual payout requirement for U.S. foundations. "So far it has not been very active," he wrote in response to questions from the Times. "In future years, as my income decreases and ultimately ceases, SFI will play an increasingly larger role in funding."
The leaked documents also reveal the offshore holdings of prominent Democrats such as Open Society Foundations founder George Soros and former Commerce Secretary Penny Pritzker; casino magnate Sheldon Adelson and private equity investor Carl Icahn, both Republicans; Microsoft co-founder and philanthropist Paul G. Allen; celebrities such as Madonna and U2 frontman Bono; and various royals, including Queen Elizabeth II and members of the Qatari ruling family.
According to Gabriel Zucman, an economist at the University of California, Berkeley, billionaires' fortunes in recent years have grown by an average of 7 percent to 8 percent annually, while total wealth has grown 3 percent. Along with globalization, deregulation, and a declining tax burden, "the rise of the global, cross-border wealth management industry" has been an important factor in that disparity, said Zucman.
Simons and his wife, Marilyn, gave $291 million to charity in 2016, ranking eighth among the biggest givers in the U.S., Forbes reports. Simons, whose net worth is estimated to be $18.5 billion, also has become one of the top political donors in the U.S., giving more than $26 million, nearly all of it to Democrats, during the 2016 election cycle. His business partner and Renaissance Technologies' departing co-CEO, Robert Mercer, was an influential backer of Donald Trump's presidential campaign, contributing more than $3 million. The Times also notes that, in 2014, a Senate committee accused Renaissance Technologies and another hedge fund of using a complex accounting maneuver to improperly avoid taxes; Renaissance is still fighting the resulting tax bill, which some estimates put at $6.8 billion.
Michael G. Pfeifer, a lawyer who specializes in estate planning for the wealthy and helped write the tax rules governing overseas trusts, told the Times that Simons had simply followed the rules. "I would have told the guy, 'You've got this money offshore — just leave it offshore'. And he did."