Susan Sward, Chronicle Staff Writer

Sunday, January 4, 2009

Eric Von der Porten seemed to have it all.

He was an investment manager who had the courage to challenge Wall Street analysts. He won praise as a champion of local schools. He was admired for being smart, honorable, kind and even-headed. And he had a lovely home and family in the suburbs.

But one day in early December, alone at home, he killed himself. He was 50 years old.

In his circle of friends dating to his days in Stanford University's graduate business program and in the Peninsula town of San Carlos where he lived, many people found it hard to fathom what had happened.

How could someone who seemed so golden have ended his own life?

The answer to such a question is never simple. In Von der Porten's case, a man suffering from a deep depression came to feel suicide was his only option at a time when he was being pummeled by the financial turmoil that has swept the nation and world in recent months.

While innumerable fund managers, analysts and investors in the nation's financial sector have endured emotional distress as millions and sometimes billions in investments vanished overnight, for Von der Porten the market's disintegration was intolerable.

The story of how he came to take his own life - pieced together through interviews with family and friends - is a cautionary one about the power of an event like the market's crumbling to pull a vulnerable man into a cave where he saw only one exit.

"It is clear to me that the economic downturn was a key part" of his suicide, said his brother, Mike, who is an accountant for Kendall-Jackson winery in Santa Rosa.

"What I read into this is that Eric cared a lot about his work and felt responsible for people who had invested with him who were his friends or acquaintances," his brother said.

He added that without the immense pressure that the market collapse placed on Eric, he believed his brother "would have worked things out."

There was something else, though, gnawing at Eric Von der Porten.

Very few knew it, but he had fought off brief bouts of deep depression in the past. He had gone on, though, to be very successful in his business for many years, said his wife, Cathy Von der Porten. It appeared to many as if he had everything the way he always had to have it - under control and spot-on when it came to evaluating the market's fluctuations.

But when the market went into free fall and took his fund with it, Von der Porten - a perfectionist who could be his own harshest critic - felt he should have seen earlier the credit problems that were set off by the subprime lending crisis and moved to put the portfolio in a position where it would have been better protected. He killed himself on Dec. 2.

"The market was a big trigger - it took him down," his wife said. "But it didn't have to happen."

The beginning

When Eric was 2 years old, his family moved to Santa Rosa from Vallejo after his father was hired to teach history in Santa Rosa's public schools. The family - father Ed, mother Saryl, Mike, 3, and Eric - took up residence in a two-bedroom home in the city where Saryl was descended from an old area family named the Corricks.

Ed Von der Porten taught history at the high school and set up Santa Rosa Junior College's archaeology program. When Eric was older, he went on a couple of digs with his father.

Santa Rosa had 31,000 inhabitants while Eric was growing up, compared with the 158,000 it has today. The brothers played football in the street, rode bikes all over town and climbed in nearby hills.

In high school, Eric was on the tennis team. He attended the University of Chicago, was an editor on the student newspaper, and received an undergraduate degree in political science.

Mike Von der Porten said he never saw anything in his brother's life that hinted at how it would end. "For us, we lived a normal, easygoing childhood," Mike said.

In 1980, Eric Von der Porten, then a staffer in Texas congressman Phil Gramm's office, met Cathy Coons, an analyst for the Small Business Administration, at a pickup baseball game in front of the Smithsonian Museum in Washington.

When he got accepted to Stanford's graduate business program, the couple moved to California, and he received his master's degree in business administration in 1984. They were married the same year. As they raised Peter, born in 1989, and Laura, born in 1991, Von der Porten became increasingly interested in San Carlos' public school system and served eight years on its school board.

"Eric was an incredible public servant," said Carrie Du Bois, a Realtor who served on the board with him. "He was very thoughtful, steady, intelligent, friendly, and because he was from the financial industry, he really understood money matters. He helped win passage of two school-financing measures."

The reformer

When Von der Porten tackled a company's financial records to determine whether its stock value was properly calculated, he did so with relish.

Ed Von der Porten said his son "would analyze what he thought were problems in the financial world and would pass it on to reporters he knew. He was concerned that a lot of people were being cheated by unscrupulous operators and that regulators weren't following up. He felt that analysts on Wall Street were lying or not doing their job."

Von der Porten's campaign to focus the attention of the Securities and Exchange Commission and others on such problems earned him a passage in a 2005 book by Charles Gasparino entitled "Blood on the Street: The Sensational Inside Story of How Wall Street Analysts Duped a Generation of Investors."

Gasparino described how Von der Porten tried for years without success to get regulators to focus on holding Wall Street analysts accountable for mistakes and hyped research - until one day he finally was summoned to Washington to brief 10 investigators on the shortcomings he saw with Wall Street's research.

After working at Bank of America, Berkeley International and elsewhere, gaining experience in commercial lending, mergers and acquisitions and leveraged buyouts, Von der Porten started an investment fund in 1997, Leeward Investments, which specialized in buying shares in small companies at low prices.

The type of investment portfolio that Von der Porten managed is called a hedge fund. Managers of these funds generally use a wider range of investment strategies than a traditional fund and are able to take bigger risks - mostly because they are unregulated money managers. Hedge fund managers use fancy footwork at times to get their investors big returns, including methods such as short selling, which allows them to make money when a stock's value drops.

"We were very patient investors," said his partner, Kent Rowett. "Eric was a phenomenal analyst, and after he found out as much as he could about a stock, we'd buy it cheap and hold it."

During this period, Von der Porten was able to keep his depression in check most of the time, his wife said. Once in 2006, though, he had an intense, market-sparked depression when he felt his fund wasn't performing well enough, Cathy Von der Porten said, and he acknowledged to her that he needed to make changes in his business life to reduce the pressures on him. He took antidepressants for a while and felt in control, so he kept managing the fund and didn't make the changes he had said he would. About half a year after the incident, he stopped taking the medication because he felt he was coping.

When the market took its dive a few months ago, most of Leeward Investment's holdings were locked in shares of small companies that could not be readily sold, Rowett said.

By September, fund holdings had dropped 20 percent in value from the start of the year, and by early December they were down 42 to 43 percent. Of course, Von der Porten's losses were not much different from those endured by every index in 2008, and even with those losses, his fund's performance since its creation was still well ahead of the market, Rowett said. At the time of Von der Porten's death, he added, the Standard & Poor's 500 index was down 39 percent for the year. The sad truth of it is that his partner had little reason to be upset with himself, Rowett said.

Describing his partner and friend, Rowett said, "You could not find a person who had higher integrity in his business dealings. Barack Obama would have wanted to people Wall Street with guys like Eric. But Eric felt he failed.

"Had Eric been on the right medication, and had it been given time to work, Eric would have been perfectly capable of dealing with the downturn. I had seen him face depression in the past, and then with the right medication come back in a short time period and deal very effectively with the same problems that had been the trigger of his depression. His passing is such a tragedy because it didn't have to happen."

As it was, "Eric wasn't protected against a major market collapse like this," Rowett said. "We lost a considerable amount of the gains he had racked up over the years." This time around, "the market's collapse in October put him in a downward spiral emotionally."

The end

Two weeks before Von der Porten died, he attended a Stanford-USC football game with a good friend, Kenneth Frier, the chief investment officer for Hewlett-Packard. The two had been in the 1984 Stanford MBA class, and once a month they got together with other men from their class to play poker. Von der Porten, tiring of the group's pizza diet, started bringing Belgian ales and high-end sausages and steaks to the get-togethers.

Though Frier was one of the few who knew that Von der Porten had sometimes struggled with depression, that day in the football stadium, Frier said, he noticed nothing unusual in his friend's behavior.

"He hid his depression quite well," Frier said. "He never let on to me how depressed he was. We talked about the market, politics, the game, sports, how his family was. In that time I didn't detect any difference from the guy I have known all those years."

In fact, Von der Porten was disguising his real state of mind.

As the market kept tumbling, Von der Porten went every day to the office he had in a historic building in downtown San Carlos. "He would watch the market get worse" while looking at daily results on his computer, his wife said. "Every day he'd be getting pounded.

"He was very isolated in the end, and people who talked to him then had no idea." But she was worried, and when she called his office on Nov. 25 and got no answer, she drove there and found him collapsed from an overdose of pills. He was hospitalized. After a few days, she said, her husband - who had been on medication for depression since October - was discharged.

"Eric thought he had things under control and was trying to cope with the pressures he was facing," she said. "But he suffered from chronic depression, and he never accepted it was a life-threatening illness - particularly in the business he was in."

Once in 1995 and again in 2006, she said, he had been suicidal. He left home in 2006 but called from Half Moon Bay and didn't want to take his life. "Those were cries for help," she said. "When he got out of the hospital Dec. 1 after the Nov. 25 incident, he wasn't ready to be released, but he wanted out and couldn't be kept there against his will. Before being discharged, he agreed to continue treatment."

On Dec. 2, his wife said, "I left him for one hour. I left him briefly unsupervised, and he took the first opportunity he had and took his life. He was gone. It was a suicide. I believe if he'd been in the hospital a few more days, he would have been stabilized and possibly he would still be with us."

The Chronicle deferred to the family's request that the circumstances of the death not be described.

Close friends said Von der Porten's death was like losing a family member. Bob Thronson, a Silicon Valley software executive from the same Stanford graduate business class, said that when Von der Porten's friends gathered to play poker after his death, they lit a candle in his memory. But it would never be the same, he said, without Von der Porten's card-playing moves, his jokes, his knowledge of the probabilities of poker, his excellent bluffing style and his irritating habit of winning regularly.

"When the market went sideways, we all had our own concerns," Thronson said. "Maybe we should have realized he was more vulnerable to what was happening because he had been depressed before. It made me feel, frankly, like what could I have done?"

Two years ago, Thronson said, he went through a rough time himself when he felt for a while "like things were closing in on me. Of all my friends, Eric reached out to me the most. He took me aside at the poker game one night and talked to me, and he kept calling me for weeks. I think he wanted to make sure I didn't go down the same road he had been on."

One of those stunned by the news of Von der Porten's suicide was Herb Greenberg, a former Chronicle business columnist who had relied on him as a valued source. Greenberg had respected Von der Porten for his tips and his analyses of companies' balance sheets.

When Greenberg thought about the Von der Porten he had known, the one who had taken on the Wall Street analysts and spotted trends in the market before others saw them, he said he also thought about the harsh realities of a fund manager's job: It was an occupation where you stood to make large amounts of money if you bet on investments that turned out well, but in a bad year when you took losses, you made no salary.

With the market collapse, Greenberg said, "The world as we knew it economically and stock market-wise came unglued, and Eric happened to be a guy in that world who was very serious about his business. He liked to be right.

"We are talking here about a guy who was very smart and very measured," said Greenberg, who now runs a small research firm after years with MarketWatch.com and TheStreet.com. "He is the last guy in a million years I would have expected would do this. But if you told his story in the investment community, many would see themselves in this.

"In the end, when you manage money, I believe it is a lonely job in that it is your decision how you are going to spend someone else's money, and we are talking here about millions of dollars."

On Saturday, more than 450 people came to Sequoia High School's Carrington Hall in Redwood City to honor Von der Porten. His son, Peter, spoke at the memorial service, praising his father as a loving family man. He also acknowledged that his father "never was one to discuss deep emotional issues" with others.

As a montage of pictures flashed on a movie screen during the memorial service, Simon and Garfunkel's song "I Am a Rock" played. Its final words are: "I am a rock, I am an island. And a rock feels no pain, and an island never cries."

In an earlier interview, Von der Porten's wife, Cathy, said she hoped that people hearing of her husband's death would "go home and hug your spouse and your kids. Connect and talk to one another. Don't be afraid to ask for help, because depression is treatable. For Eric, asking for help and accepting help was very difficult. He was on medication again and thought he had everything under control. But it wasn't enough."

Cautionary story of fund manager's suicide

The beginning

The reformer

The end

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