If J. Paul Reddam’s original career had stuck, he might have owned horses named Epistemology and Tautology.
Of course, if Reddam’s original career had stuck, he wouldn’t have had the money to buy a Kentucky Derby horse. But on Saturday, the Sunset Beach resident is poised to have two, Great Hunter and another he named Liquidity, both trained by Hollywood Park-based Doug O’Neill.
There are plenty of strange tales at the racetrack, but few as unlikely as Reddam’s.
He began his working life as a philosophy professor, then made a fortune as founder of what is now DiTech.com, the mortgage-loan company he sold for more than $200 million in 1999. He later founded CashCall, a company he still owns and operates that charges interest rates as high as 96% for unsecured loans.
“I have been lucky in business, and I think I have a good intuitive understanding of the borrower because I’ve been in that same position myself,” Reddam said last week, sitting in his company’s Fountain Valley office. “When I was teaching and gambling at the track, I was broke like everyone else.
“I remember once, in a logic class, I started the lecture and about 10 minutes in, I had to stop and say, ‘Listen, let me tell you what happened to me last night at the track. I lost a pick six for 60 grand by a nose, and here’s how it happened.’ I knew I wasn’t long for the teaching world.”
The title of the dissertation he wrote to earn his doctorate at USC and the names of the courses he taught as an associate professor at Cal State Los Angeles in the early 1980s hardly suggested a future in high-risk loans.
“My dissertation was called, ‘Pragmatics and the Language of Belief,’ ” Reddam said. “And what it was about was how, when we think, whether we think in our natural language or in some deeper thought structure that, say, if we spoke different languages, underlying that is the same language.
“Like, say, you have a thought, you’re thinking in English. Now someone is French. Can they have that exact thought?”
What Reddam was often thinking about was racing. In his spare time, he put together harness partnerships or played the pick six at Los Alamitos Race Course.
“Pretty much anyone I knew, I was talking them into putting up five grand or something,” said Reddam, 51, who was born in Canada but moved to California to attend USC. “My landlord. The chairman of the philosophy department. Girlfriends. Everyone was victimized.”
Reddam essentially shrugs when asked about the high interest rates charged by CashCall.
“The only people with a negative reaction to the high interest are people who would never need to borrow the money,” he said.
“Where customers are unhappy with us, is when we decline them. Some credit is just too unforgivable even for CashCall. But to the customer, it’s not about the interest rate, it’s about solving a problem.”
Some borrowers avoid high interest charges by repaying the loans quickly, in a matter of months or even days, Reddam said, adding that minimum-wage earners are not his clientele.
“The typical customer is someone who’s about 40 years old, makes $5,000 a month, give or take, but spends the money as fast as they make it,” he said. “People use the loans to manage their personal cash flow.”
With default rates as high as 20%, virtually every loan is a gamble, making it a business venture that dovetails with Reddam’s passion for a well-studied wager.
In 2004, unable to buy a piece of a Derby horse named Tapit, Reddam bet $50,000 on the colt to win. Tapit finished ninth.
“I played that as insurance, or a hedge. And I lost, but it really didn’t bother me, because I would have lost several million going the other way.”
Great Hunter and Liquidity would be Reddam’s third and fourth Derby horses. He was a part-owner of Ten Most Wanted in 2003 and Wilco in 2005, both also-rans.
Plenty of Reddam’s horses are winners, making him the leading owner in North America with $1,335,412 in earnings this year, although anyone else who claims the Derby winner’s share of as much as $1.45 million figures to overtake him.
Reddam has put some of his company’s money back into the sport, sponsoring the $1-million CashCall Mile -- now Hollywood Park’s richest race, surpassing the $750,000 Gold Cup -- as well as the newly renamed $750,000 CashCall Futurity, formerly the Hollywood Futurity.
It isn’t a matter of marketing to a target audience, Reddam said, but a way to combine his business interest with his passion.
“If I had a board of directors, they’d probably say we were overloaded on horse-racing marketing,” he said. “But it’s kind of a personal synergy for me.”
Martin Panza, racing secretary at Hollywood Park, said he would like to see more owners do the same.
“It’s a huge boost for Hollywood Park,” Panza said. “The CashCall Mile is the richest race for fillies and mares on turf in North America, outside of the Breeders’ Cup. With the Futurity at $750,000, if you win or you’re second, it’s probably enough to qualify for the Derby already.
“I don’t think he’s preying on race fans. His company is massive already. People need money in all walks of life.
“The truth is, it’s cheaper to borrow from your friends at the track.”
A steady rain turned the Churchill Downs track sloppy Thursday, with the forecast for more rain today and a 60% chance of thundershowers for Saturday’s Derby.
“That’s an X factor,” said trainer Todd Pletcher, poised to send five starters to the gate. “My horses don’t have much experience with that kind of surface. Most of these horses don’t. My group handled it well this morning, very well. But galloping in the morning is one thing.
“You really don’t know until you run on it. With 20 horses, some of the ones that get in back will get more slop thrown in their faces than they would if the track turns out to be fast.”
A 25% interest in Teuflesberg has been sold to media buyer Jeff Singer of New York for an undisclosed price. The other owners are trainer Jamie Sanders, her fiance Donnie Kelly, and her father’s best friend, Gary S. Logsdon.
A Johannesburg colt, Teuflesberg was purchased for a mere $9,000 at the 2005 Fasig-Tipton Kentucky October yearling sale.