You may have read my recent article on Mr Rodney Adler titled ‘Rodney Adler talks business’ published on 6 May 2019. During his interview, I asked Rodney to comment on his loan to Ryan Watsford and at the time he said that he would prefer not to talk about it as it had received way too much attention for one loan made to an individual that he had only known for a few years and he appeared embarrassed and upset by the publicity. As the loan received further attention recently, I approached Mr Adler again on the basis that clarification was necessary and he agreed to answer a few questions.
Here is a bit of background on the events and information obtained from Mr Rodney Adler himself.
Ryan Watsford had a real estate licence and was in the business of selling real estate and acting as a broker in organising short-term loans. It appears that he approached Mr Rodney Adler on several occasions to lend money to various companies and that after an assessment none of these loans proceeded to completion. On 18 August 2016 Mr Rodney Adler advanced Ryan Watsford $127,000 so that Ryan could purchase a Maserati that he purchased for a higher value. The loan was for a period of three months and the interest rate was 3% a month. Security was taken over the vehicle, a personal guarantee was given and a charge over his business was obtained. The loan was of course all legally documented.
At the time of the loan, Ryan anticipated receiving a large fee for the sale of a property and that is why he required a short term loan and his file was pristine. Unfortunately, the loan went into default due to non-payment of interest and then principal, an extension was granted but even after that extension no payment was provided so the vehicle was repossessed and sold and the balance remained outstanding. This was being pursued legally in the normal course.
What was a vanilla simple non-performing loan was thrown into turmoil when the borrower Mr Watsford became embroiled in a huge drug bust involving many people and illegal substances (namely cocaine and cigarettes). The Australian Federal police raided many homes and offices including Mr Adler’s office. Mr Adler’s profile meant that he unfairly received significant attention, way beyond what was commensurate for a loan of this nature.
Mr Adler explains” I cannot tell you how mortified and unhappy I was with the press that I received over the following week after the raid”, Rodney explained to me that he accepts that he needs to do a lot of work to rebuild his reputation and he works extremely long hours and tries to conduct himself properly and with as much integrity as possible to offset his past and people’s perception.”I cannot change the past but I am very conscious of it, I can however conduct myself with as much integrity as possible to ensure that the present and the future is in stark contrast to my past and perception”. That is why, Rodney was so distraught with the inference that those articles implied.
After Mr Watsford went to jail, Mr Adler kindly placed a moratorium on the interest being charged understanding that Mr Watsford had a lot more issues to deal with then repaying the loan and interest. Mr Adler was resigned to not having his loan repaid until Mr Watsford was released from jail and probably some years thereafter.
In early March 2019 Mr Adler was advised that Ryan’s mother had died unexpectedly.
Mr Adler placed a caveat on her house to protect his interests and several months later the property was sold. The solicitor for the estate of Mrs Watsford contacted Mr Adler and after two weeks of discussion and negotiation, Mr Adler received his loan repaid in full.
The file was then closed and a non-performing most unpleasant loan became a closed performing loan. Rodney stated ” I was pleased with the outcome in so much as the file was closed and I suffered no economic loss, however I am so frustrated that a lot of hard work that I’ve done over many years to rebuild my reputation and position in society has been hurt by inference and association. I wish I had never advanced Ryan any money, no return on a loan is ever worth the pain, suffering and embarrassment that I experienced.”
I asked Mr Adler did he learn any lessons from the experience and he answered that being a nonconforming lender is a risky occupation and he understands those risks but making an assessment of the character of the borrower is still the hardest job for any financier and considerable more work always needs to be done on the borrower, not just his financial position and his capacity to repay but his occupation, his history, his friends and his attitude.
“One must spend a great deal of time on the intangible assessment of the borrower not just the tangible assessment” Rodney commented.
In summary, we discussed his lending in Australia and he did say that he has deemphasised the division used for this type of lending in his Australian operation, but he is part of a very successful mortgage origination business in America which he is enjoying greatly.
We will keep you updated with any new developments over the coming months.
To find out more about Mr Rodney Adler and his current endeavours, visit his website.