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San Diego’s Unrelenting Philanthropist

by Drew Beal

“How many peoples’ lives have been affected positively – that’s where I get my jollies,” said Ernest Rady, founding donor of the Rady School of Management, from across a mammoth desk in the executive office at his firm, American Assets Trust (AAT), on a recent Tuesday. Mr. Rady had just returned that morning from a week in Europe.

The Rady School of Management’s founding donor hadn’t been on vacation. In fact, barring the occasional golf trip, Mr. Rady isn’t really the vacationing type. AAT, which in 2011 underwent a $564 million IPO, today controls more than 5.8 million square feet of retail and office space in the western U.S. As executive chairman, Mr. Rady had been across the Atlantic on an eight-day business development roadshow. The typical day packed eight meetings into 15 hours, starting at sunrise. Seated behind that intimidating desk, next to shelves stocked with a globe and encyclopedias, Mr. Rady showed no signs of jet lag. He’s not the jet lag type either.

Mr. Rady, 75, sets a grueling pace at AAT. “Ernest has found the fountain of youth, and that is staying active in business,” says John Chamberlain, AAT’s CEO and president.

Having forged a long and at times tumultuous career in San Diego entrepreneurship, Mr. Rady has since 2003 been applying an increasing portion of his substantial energy to the establishment of a legacy. That legacy, including the children’s hospital and business school that bear his name, is both marked and strengthened by the turns Mr. Rady’s life has taken over the past decade.

Since moving his family to San Diego in 1966, Mr. Rady has become an integral part of the local business community. He made his fortune as an entrepreneur, managing companies in real estate, banking, and insurance.

One of his first deals came in 1967: a $35,000 investment to finish an apartment building in El Cajon.The success of that project and other real estate deals led to the formation of American Assets. In 1972, Mr. Rady founded Western Thrift & Loan. Starting with an office in an Orange County trailer and $850,000, the company would later change its name to Westcorp and ultimately be sold to Wachovia for $3.9 billion in 2005.

Mr. Rady also got his feet wet in the automobile loan industry, starting an independent company in 1973. Later renamed WFS Financial, the company underwent an IPO in 1995 and is currently a subsidiary of Wells Fargo.

By the early 2000s, Mr. Rady’s success had put him in a position to begin building a legacy. At the time, San Diego was the largest metropolitan area in the U.S. without a top-tier business school. It had MBA programs, but none that ranked in Bloomberg Businessweek’s top 50.

Amid the dot-com boom, UC San Diego was considering ways to invigorate business education in San Diego. A proposed UC San Diego school of management would develop a new wave of entrepreneurial managers to lead technology startups.

Founding dean Robert Sullivan had taken it as his mission “to convince the world that a 45-year-old, science-focused public university can assemble a business program that carries the same heft as old-guard schools like the University of Pennsylvania’s Wharton or Northwestern’s Kellogg.”1

But dot-com optimism gave way to hardship as the bubble burst. By the time the University of California green-lighted the UC San Diego business school in 2001, funds had become scarce. By August of 2003, the school had received only $23 million in commitments toward its goal of $115 million.

Enter Ernest Rady.

Having arrived in San Diego when UC San Diego was in just its sixth year, Mr. Rady had watched the school grow in stature over the decades. The university would have been an attractive place for him to cement his legacy, but it was a memory from his childhood in Winnipeg that led him to open his checkbook. “My parents taught me that you can’t always take,” he told a group of students during a recent appearance at Rady. “You have to give back to the communities that support you.”

In January of 2004, Mr. Rady made a $30 million gift to support UC San Diego’s School of Management. The donation was the largest naming gift in school history and the second-largest philanthropic gift, second only to a $110 million pledge made by Joan and Irwin Jacobs in 2003.

At the time of his gift to the school, Mr. Rady was about to strike one of the most prominent deals of his career. In 2005, Wachovia announced a deal to acquire Westcorp. Serving as chairman and CEO, Mr. Rady saw Westcorp originate more than $6.5 billion in auto loans that year, and the acquisition was expected to make Wachovia the ninth-largest auto loan originator in the country.2 All told, Westcorp was expected to sell for $3.9 billion in Wachovia stock.3

The next year, Forbes ranked Mr. Rady No. 140 on its catalog of “Richest Americans,” listing his net worth at $2.2 billion.

With his wealth at a new high, Mr. Rady once again turned to philanthropy, making a donation that ranks among the top 10 gifts in San Diego County history: $60 million to the Children’s Hospital and Health Center. Mr. Rady, whose father was a doctor, had been volunteering on the board of directors for 20 years. With a school and a children’s hospital now bearing his name, Mr. Rady’s philanthropic renown was secure. Unfortunately, his home, wealth, and family life were not. The dizzying heights Mr. Rady enjoyed in 2006 would give way to a period, beginning in 2007, that he now refers to as the “worst four years of [his] life.” In February of 2007, a home invader broke in to Mr. Rady’s house and Tasered him and his wife. The pair was then bound and gagged, along with the housekeeper, as the burglar searched for a floor safe.

Mr. Rady offered money to the robber – but to no avail. In that moment of crisis, Mr. Rady’s Canadian heritage provided an unexpected boon. The thief needed American currency and wanted nothing to do with the wads of Canadian dollars locked away in the bedroom. The robber left with $43 in cash.

Mr. Rady’s ill fortune continued the following year. Just two months after buying Westcorp, Wachovia had purchased Golden West, the second-largest savings and loan in the country, for $24 billion. In the crisis of 2008, it became clear that Wachovia had expanded its mortgage business at the peak of the housing bubble. Analysts suggested that Wachovia would end up losing as much as $11 billion on the Golden West deal.

The disaster for Wachovia became a disaster for Mr. Rady. When Wachovia acquired Westcorp for $3.9 billion in 2006, the deal left him with nearly 36 million shares in Wachovia. At the time, the shares were worth about $2 billion. Two years later, the shares were worth $125 million.

Mr. Rady’s financial troubles compounded in 2009 when family members sued him in what became very public court cases. Seven nieces and nephews filed a lawsuit worth $200 million, alleging that Mr. Rady had in 2007 offered to buy each of them out of the family business. Amid the Wachovia fallout, he could no longer afford to live up to his offer. In 2012, courts resolved the family dispute in his favor.

Recent years have provided something of a turnaround for Mr. Rady. In 2012, the San Diego Nice Guys, which annually honors a community-oriented San Diegan as its “Nice Guy of the Year,” was planning to recognize Mr. Rady at its black-tie awards gala. Mr. Rady agreed to accept the award on one condition – all of the money raised was to be split between the Rady Children’s Hospital and the Rady School of Management. “They ended up raising more money than ever before,” said Robert Sullivan, the school’s dean. The Rady School of Management allocated the funds toward fellowships for students with economic need.

“Ernest turns down 95 to 98 percent of appearance requests,” said Robert Barton, AAT’s CFO. “But he’ll do it if it helps open channels for others.”

A career spent evaluating deals prompts Mr. Rady to examine his philanthropy in an investor’s terms. When he made his $30 million donation to the business school, he saw the gift as more of a long-term play. “I hope at some time my grandchildren will go down and see ‘Rady’ and say, ‘That’s what my grandfather did,'” he said.

The payoff is coming faster than that. In his wildest dreams, Mr. Rady said, he never could have expected to realize a return on the business school during his own lifetime.

But he saw an early dividend three years in. At a graduation dinner for the school’s first cohort, the FlexWeekend class of 2006, a group of students in their mid-30s approached his table and introduced themselves as “Radies.”

“He loved it,” remembered Sullivan.

Mr. Rady said he has always held a strong belief that the Rady School of Management is capable of great things. He expects that, over time, the school will graduate individuals who will have a huge positive impact on their communities. As Mr. Rady has experienced the swings of fortune that are extreme even among entrepreneurs, the school he helped launch has experienced its own fitful progress.

Today, the Rady School of Management is still setting ambitious growth targets – Sullivan expects the number of full-time faculty to more than double in the coming decade. The framework is in place to attract and retain the best of the best: The Financial Times ranked the school in the top 20 globally for faculty research and the top 10 for entrepreneurship.

Mr. Rady’s final assessment of his namesake school reflects the standard by which he measures his own activities at this stage in his career – how many lives he affects positively: “It’s been a plethora of benefit for everyone involved.”

Drew Beal (Rady MBA, 2013) is the co-founder and executive director of Social Ventures for Sustainability, a nonprofit that works with campuses and communities to encourage sustainable behavior changes. Drew’s background is in financial services, and his interests include entrepreneurship, consumer behavior, and sustainability. Drew’s hometown is Toms River, N.J.


  1. Rachel Laing. “Breaking New Ground: Founding dean hopes to assemble an MBA program at UCSD that will compete with the nation’s old-guard best.” San Diego Union-Tribune, August17, 2003.
  2. “Wachovia Corporation to Acquire Westcorp and WFS Financial Inc in $3.91 Billion Transaction.” Wachovia Corp. press release, September 12, 2005. PR Newswire website. Accessed June 9, 2013. and-wfs-financial-inc-in-391-billion-transaction-54876587.html.
  3. Reckard, E. Scott. “Wachovia to Buy Westcorp.” Los Angeles Times, September 13, 2005. Accessed June 9, 2013.