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The fight of Richard Rainwater’s life

November 7, 2011, 10:00 AM UTC
Photograph by Mary Ellen Mark

By Peter Elkind and Patricia Sellers, with Doris Burke

Billionaire Richard Rainwater, one of the great dealmakers of the modern business era, died on Sunday morning at his home in Fort Worth, Texas. Rainwater, 71, succumbed after a long, debilitating battle with a rare and fatal brain disease called progressive supranuclear palsy. A philanthropist and mentor to a generation of top private equity investors, Rainwater was the son of a wholesale grocer and department-store clerk and became the architect of the fortune of the Bass family of Texas. Rainwater multiplied a $50 million oil stake into about $5 billion through spectacular investments in public companies. After his diagnosis in 2009, he spent tens of millions of dollars, through his family foundation, on research aimed at finding a cure to brain diseases, including Alzheimer’s. Rainwater, who had three children and was married to Darla Moore, herself a successful and prominent business figure, made no public appearances after 2010. Based on interviews with family and friends, Fortune, in 2011, wrote this detailed account of Rainwater’s struggle with the disease—and his impact.


FORTUNE — In March 2009, Dr. Bruce Miller, head of the Memory and Aging Center at the University of California’s medical school in San Francisco, received a call from a doctor in New York City, asking him to see a patient named Richard Rainwater.

A behavioral neurologist and scholar of dementia, Miller had never heard of Rainwater, a silver-haired Texas billionaire and a legend in the world of dealmaking. But he was accustomed to such calls. Decades of research into the human brain had made him a go-to man for the rich and powerful with neurological mysteries.

Rainwater, then 64, arrived at Miller’s clinic after months of unexplained woes. Ordinarily gregarious, he had sat through most of a dinner party in a haze — awake but with his eyes closed. Naturally athletic — Rainwater had run marathons — he’d endured a string of nasty falls. And although Rainwater had been a drag-racing champ in high school, he was racking up fender-benders in his BMW X5. “His car looked like he’d been through a gunfight,” recalls his wife, former banker Darla Moore. Rainwater had been a hyper-animated man, emotional, robust, and upbeat. Now he spent hours in a listless funk. He moved with a flat-footed shuffle.

Moore and Rainwater had begun their medical odyssey in New York City. They went to psychiatrists, who prescribed drugs for depression. They saw neurologists, who made lists of possible disorders. No one could figure it out.

In San Francisco, Miller and his team took a detailed history from Rainwater and the entourage he’d brought along. The group included Moore; Dan Stern, a Rainwater protégé who now ran a $4 billion private equity fund of his own; Dr. Robert Kenet, a New York cardiologist who served as one of Rainwater’s primary-care doctors; and Courtney Rainwater, one of his three adult children. Rainwater underwent a physical exam and tests including blood work, brain scans, and measurements of his eye movements to track his ability to follow a dot of light.

After two days, Miller summoned Rainwater’s group back to his office. Soft-spoken and professorial, Miller explained that the billionaire had something called “progressive supranuclear palsy.” Palsy? Moore and Stern recall breathing a sigh of relief. That didn’t sound so bad.

Rainwater on his 66th birthday at his Fort Worth office in June 2010.

“No, no,” Miller told them. “You don’t understand.” PSP is a fast-moving, degenerative brain disease, with no treatment and no cure. The typical life expectancy from diagnosis: 4 1⁄2 years. “In the world I live in,” the doctor told Rainwater’s friends and family, “this is the worst disease I see.”

Legacy of a dealmaker

Of all life’s cruelties, it seems especially tragic that Richard Rainwater would suffer from this affliction. Rainwater is a self-made billionaire, a Texas incarnation of the Horatio Alger story. But he hasn’t built a chain of discount stores or a computer company or even a private equity firm to leave behind. No, Rainwater’s business genius has always been his energy and imagination — his uncanny ability to see where the world is going and find a way to exploit that turn. It was his personal magic that made big deals happen: his ability to pick the right opportunity, the right partners, the right CEO, and then to provide inspiration. The billion-dollar edifice he built was all in his head.

And now it’s crumbling away.

Today Rainwater requires 24-hour care. He is unable to walk unassisted. He has trouble swallowing. His speech is almost impossible to understand. “Of anybody I ever met, Richard was the most charismatic, the most outgoing, most hands-on, huggy, high-fiving, jumping-up-and-down, vivacious executive,” says Michael Eisner, whom Rainwater helped install as CEO of the Walt Disney Co. (DIS) “And then to have him relegated to this condition that incapacitates him? It’s the irony of human existence.”

Though Rainwater has usually operated behind the scenes, his impact on the world of business has been immense. He helped create or fix a string of companies, ranging from entertainment (Disney) and health care (Columbia/HCA) to energy (Mesa, Ensco) and real estate (Crescent). Many regard Rainwater as the father of the modern private equity business. “He may be the best deal guy ever,” says David Bonderman, co-founder of TPG Capital, the private equity giant. “Richard figured out there was a place for private capital to do aggressive deals, and he did it better than anybody else.” Rainwater has been something of a pied piper, too, launching and salvaging careers and helping others build personal fortunes. The list ranges from George W. Bush and Sears Holdings chairman Eddie Lampert to former Dallas Cowboys quarterback Roger Staubach and Florida governor Rick Scott.

The latest chapter of Rainwater’s story, told here for the first time, makes painfully clear the democracy of disease. Battling for his life, Rainwater has bankrolled an extraordinary, and characteristically creative, campaign to seek a cure for his rare affliction. But the odds are long. In all probability, there isn’t enough time or enough money, even for a one-of-a-kind billionaire.

The golden age of Rainwater Inc.

When Richard Rainwater was once asked that proverbial Barbara Walters question — What sea animal would you like to be? — he had a ready answer: “A dolphin. I’m an arrogant mammal in the sea just having a good time.”

In the shark-infested waters of Wall Street, Rainwater was instinctive and playful. At the peak of his powers, he personally made Fort Worth, Texas, his hometown, an improbable financial center. Moguls and wheeler-dealers regularly passed through town for a dose of the Rainwater magic. Ambitious young Turks came and stayed for years, learning the deal business before going out on their own.

Rainwater grew up middle-class. His father worked in the family wholesale business, started by his Lebanese immigrant grandfather, which sold combs and other dry goods to retail stores. His mother worked in boys’ clothing at J.C. Penney (JCP) for 25 years. The youngest of two sons — his older brother, Walter, became an engineer — Rainwater attended public schools and the University of Texas before accepting a scholarship to attend Stanford Business School.

Rainwater first got rich working for the Bass family of Fort Worth. Sid Bass, eldest of four brothers and Rainwater’s Stanford classmate, hired him to manage the family’s money in 1970, when Rainwater was 26. In 16 years the two men turned the Basses’ $50 million oil fortune into about $5 billion, mostly through spectacular investments in public companies. Their flagship deal was Disney — perhaps “the best deal ever,” says Bonderman. Their $478 million investment in the floundering company in 1984 became billions after they used their leverage to install new management. Rainwater had done his due diligence, seeking advice on the entertainment business from Star Wars director George Lucas, among others. So he was ready when Michael Eisner, former studio chief at Paramount Pictures, called to pitch himself for the top job, preaching the virtues of picking someone from the creative side. “The speech was five to seven minutes,” recalls Eisner. “It wasn’t prepared. There was a three-second delay. And Richard says, ‘Okay, sounds right. Great! Let’s do it that way.’ He made decisions in a nanosecond.”

In 1986, tiring of not having the final say (Bass was a more conservative investor), Rainwater took his $75 million share and set up his own shop, 12 floors below where he worked with Sid. That ushered in the golden age of Rainwater Inc., a dealmaking mecca and an investment business unlike any other. Everything about the place was freewheeling, informal, and eclectic. The offices had glass walls without doors, conference rooms lined with whiteboard, and a fitness center. Lunch was catered every day. Rainwater’s mom regularly stopped by with homemade Lebanese shortbread cookies. Rainwater leased an entire floor, far more space than he needed, so there were extra offices for whoever might drop in — for a day, for a few weeks, for a few years. Among the 20 or so people in the office at any one time, few were actually on the payroll. Most were cooking up projects as part of Rainwater’s loose confederation of aspiring dealmakers.

Rainwater had a gift for spotting young talent. “We’re his capitalist offspring,” says Ken Hersh, a self-described “punk” when Rainwater made him co-manager of a $300 million energy fund at 25. “His fingerprints are all over the success that we’ve had.” Hersh is now CEO of NGP Energy Capital Management, a $9.5 billion family of funds.

Rainwater met Eddie Lampert, a 25-year-old Goldman Sachs (GS) trainee, on the beach in Nantucket, Mass. Within days he brought him into the fold, inviting him to dinner with Sen. John Heinz and his wife, Teresa. Lampert left Goldman Sachs and set up shop with Rainwater. “I went there for five minutes,” says Lampert. “I stayed there for five years.” Lampert now runs a $14 billion hedge fund whose assets include Sears Holdings (SHLD).

When Rainwater met 28-year-old John Goff, he was an outside CPA working for the Basses. After signing on with Rainwater, Goff played a key role in restructuring the commercial real estate business of Roger Staubach. (Their $1 million investment in Staubach’s company returned more than $70 million.) Together with Rainwater, Goff built Crescent Real Estate Holdings, which owns resorts, hotels, and 17 million square feet of office space; Goff, who has his own investment shop, runs Crescent today.

Some of Rainwater’s “capitalist offspring” used the fortunes they made to go into politics. Al Checchi, a key lieutenant on the Disney deal, spent $40 million in an unsuccessful 1998 primary race for California governor. Rainwater helped Rick Scott, a Dallas lawyer, build Columbia/HCA Healthcare Corp. into the nation’s biggest hospital chain, with revenue of $20 billion in 1996. Scott was elected governor of Florida in 2010. And then there’s George W. Bush. Back in the 1980s — before he’d won a single campaign — Bush parked his boots in Rainwater’s offices while working on a scheme to buy the Texas Rangers baseball club. Orchestrated by Rainwater and Dallas investor Rusty Rose, that acquisition, and stakes in other Rainwater deals, generated the bulk of Bush’s personal wealth.

David Bonderman, who trained as a lawyer, credits Rainwater with helping launch him in the deal business. After Sid Bass’s brother Robert hired Bonderman in 1983 to handle his share of the family stake, Bonderman accepted Rainwater’s invitation to look over his shoulder for several months. “I didn’t know anything about the investment business,” recalls Bonderman, in a rare interview. “I learned everything I know from sitting in Richard’s office and watching how he operated. I figured out what would work for me and what wouldn’t.”

Rainwater also surrounded himself with elder statesmen. Mort Meyerson, Ross Perot’s ex-right-hand man, spent six years watching the show in Rainwater’s Fort Worth offices after serving as president of EDS. “Richard is a collector of people that he perceives have a talent,” says Meyerson, now 73, who evaluated management issues for Rainwater. He recalls getting to know Rainwater as “a bright young star — he kind of glowed. Richard seemed to naturally go to the right place on an investment. That is his genius.”

It’s easy to find the talent that Rainwater shaped. It’s harder to understand his brilliance as an investor. Rainwater did his homework but was guided by instinct. He began each day with a perfectly clean desk, nothing on it but a yellow legal pad, a felt-tip pen, and a pair of speakerphones. Pursuing the germ of an idea — most likely something that had occurred to him reading the newspaper — he’d start making calls to the CEO of General Motors (GM), perhaps, or to David Geffen, as others wandered in and out of his office. Often he’d carry on three or four conversations at once, each involving a different deal. “Every day was a pickup basketball game,” says Goff.

Each summer Rainwater decamped to Nantucket, where he operated from the Cliffside Beach Club resort. Lampert, who accompanied him, was grinding away next door to Rainwater’s suite one day when carpenters showed up to cut a hole between their rooms. “We’re putting in a door,” they explained. “Richard wants to visit you.” “Eddie!” Rainwater excitedly told him. “We’re going to be together.” Rainwater regularly rounded up everyone for an afternoon game of “ragball” — like baseball but with a softer ball and without gloves. Says Lampert: “Richard made everything seem like fun.” Adds Bonderman: “You wouldn’t be surprised to see Richard standing up on his desk if you walked in his office.”

Rainwater’s deals were just as eclectic and creative. But a pattern quickly emerged. Rainwater always looked for a big event. A blowup in energy prices. A revolution in health care reimbursements. A real estate bubble. Then he looked for a powerful way to exploit the upheaval — not just to bet the trend but to turbocharge the bet. To snatch up drilling assets at panic-sale prices and hand them to the oil patch’s most astute operator. To build a chain of super-efficient hospitals. To buy premium downtown office space (the quickest to bounce back) on the cheap after a market crash. “He always wanted to find something sick,” says Rainwater friend Rusty Rose. “And then he was generally very knowledgeable in figuring out if he could fix it. He didn’t want anything just undervalued. He wanted it undervalued with an opportunity attached to it. He wanted the guy he was negotiating with to be pretty beat up.”

Rainwater had a keen instinct for the big picture. He’d identify his idea and put the right CEO in place. “Find the guy,” Rainwater preached. “Don’t try to be the guy.” Hersh sums up his mentor’s philosophy this way: “Our job is to help them get filthy rich, and if they get filthy rich, we’ll do just fine.” And indeed, that’s what happened. Rainwater is now worth an estimated $2 billion.

Rainwater with wife Darla Moore in February 2010 at Stanford, where he received an award from the business school .Photograph by Steve Castillo — Stanford University

Rainwater’s life abruptly changed when he met Darla Dee Moore in late 1990. A blond, blunt-talking banker from tiny Lake City, S.C., Moore had made her way to the high-finance circles of New York City, where she became known as the Queen of DIP. As a pioneer of “debtor-in-possession financing” for Chemical Bank, she was earning more than $1 million annually helping companies rise out of bankruptcy. At the time, Rainwater was at the height of his dealmaking skill, but his 25-year marriage to his high school sweetheart, Karen, with whom he had two sons and a daughter (ages 14 to 20), was falling apart.

Moore remembers the day she arrived at his Fort Worth office to discuss a deal to finance a bankrupt underwear company: “Into the room swirls and twirls, with great energy, Richard. He proceeds to suck all the air out of the room, dominate the entire conversation. I can remember getting goose bumps when I first met him. It was like watching an Olympian do something you could not do. It was so powerful. You almost felt privileged to be in the presence of that.”

Rainwater was 46. Moore was 36, unconventional, and unbridled. “I think he was taken with me because I was female, Southern, and talking about deals,” Moore says. To her ear, it sounded romantic when he said, “I view you like an equity investment.” He spoke of their union as “a merger” and couldn’t wait to close the deal. Canceling plans for a fancy wedding (invitations were already out), they married on a rainy Friday the 13th in December 1991 in Manhattan, less than two months after his divorce was final.

The couple joked about BD and AD: before and after Darla. The Richard who had been so homebound that anybody he cared to see typically came to Fort Worth was suddenly all over the map. He nested in Manhattan with Darla. He exercised at Canyon Ranch in Arizona (he so loved the resort that he bought it). He purchased a mansion in Montecito, Calif., and he acquired Pebble Beach with a bunch of wealthy golfers, including Clint Eastwood. He still spent part of his time in Fort Worth, but the Rainwater Deal Academy was shut down.

With Rainwater in semiretirement, Moore left her banking career in 1994 to become CEO of Rainwater Inc. Everything the couple bought or sold — a company, a house, a tractor for one of their properties — they did as partners, and when the partnership made a profit, Moore collected a cut. Moore’s new role brought a sharp edge to how the Rainwater wealth was managed. Where Rainwater hated to fire people, she lit up to the challenge. In 1996, after Rainwater bought into deeply troubled Mesa Petroleum, she booted T. Boone Pickens from the company he’d built, telling him that he was “unfinanceable.” After Rick Scott’s giant hospital company, Columbia/HCA, became the target of a federal Medicare fraud investigation, Moore led the brigade to oust him as CEO. (Scott didn’t face charges in the investigation, though the company paid record fines of $1.7 billion.)

By the time Rainwater hit his mid-fifties, the couple had tripled their net worth and were ready to alter their investment approach. “We went from a get-rich strategy to a stay-rich strategy,” Moore says. In 2001, Moore even persuaded Rainwater — who’d always managed his own fortune — to farm out $600 million to two other investment managers, Dan Stern and Barry Volpert.

By this point their marriage was genuinely becoming more like a business partnership. Resolving to have more fun in his life, Rainwater collected a handful of spirited male buddies to hang around with, naming the group “the Rascals.” He spent long stretches of time with them in California and Arizona, following the balmy weather.

Darla, meanwhile, preferred her hometown of Lake City, where she dove into projects to restore the downtown and improve public education. She gave $70 million to her alma mater, the University of South Carolina, which renamed its business school the Darla Moore School of Business. Rainwater and Moore spoke often, he visited her in South Carolina in the spring and fall, and they spent holidays together. But most of the time they lived apart.

Their alliance also involved a highly unusual insurance arrangement. Moore’s share of their joint deals would eventually generate hundreds of millions in wealth for her. But at the time she left her job at the bank, she fretted about her financial fate if something should happen to her husband. In his will, Rainwater planned to give the vast majority of his fortune to his personal charitable foundation; there was no provision for his wife. So one day Moore bluntly asked him to resolve this financial uncertainty. And he did, on the spot. Grabbing a sheet of paper, he tore it into five pieces and scrawled a different number on each. Into a baseball cap (Texas Rangers, of course) went the scraps. Moore picked one from the hat. She won’t say what she actually picked, but clearly the queen of financial workouts did not earn that reputation for nothing. Moore ended up with “a nice number,” she says — explaining that, after some further negotiation, Rainwater bestowed upon her the most valuable scrap, worth about $60 million. This number was incorporated into his will. A tidy sum, to be sure, but a relative sliver of the $2 billion estate Rainwater will leave upon his death.

The nightmare of PSP

Even after retreating from dealmaking, Rainwater wasn’t through making Texas-size wagers. In December 2005 a Fortune story, “The Rainwater Prophecy,” reported that the billionaire, anticipating a catastrophic oil shortage, had gone long on energy stocks and oil futures, to the tune of several hundred million dollars.

To those who knew Rainwater, this play was somehow … different. In Fortune, Rainwater vented his concern about “the survivability of mankind.” He worried openly about sounding like a nut, but he had Moore install an emergency generator and 500-gallon tanks for diesel fuel and water on her South Carolina farm, just in case.

As it happens, like most of Rainwater’s bets, this one paid off. Energy prices climbed, and Rainwater, deciding that a crisis wasn’t imminent, unloaded his holdings for a handsome profit. But looking back, Moore wonders whether this fixation wasn’t an early sign of her husband’s disease, given that obsessiveness, loss of inhibition, and mood swings are among the psychological effects of PSP. (Rainwater wouldn’t be diagnosed until three years later.)

Progressive supranuclear palsy is a riddle wrapped inside a nightmare. The disease is rare, striking about six people in 100,000, usually in their fifties or sixties. Frequently misdiagnosed as Parkinson’s disease, it wasn’t even identified in medical literature until 1963. Its cause remains unknown, and its effects are devastating.

It’s personal: 5 executives searching for cures

PSP attacks nerve cells in the brain, causing something called tau — a protein that is part of the normal neuron infrastructure — to pile up in clumps. The resulting destruction impairs mental processing, balance, coordination, and vertical eye movement; two hallmarks of the disease are difficulty looking downward and terrible backward falls. Physical stiffness progresses, causing slurred speech, a blank facial stare, and trouble swallowing.

Worst of all for the patient, there’s a painful lag between the deterioration of the brain and the body. Awareness, memory, and thoughts remain largely intact, often bottled up by an inability to wield them. “People are locked out of expressing,” says Dr. Joel Kramer, a neuropsychologist and co-founder of the UCSF dementia center. Over time the dementia worsens. Patients become virtually helpless. Most die from choking, suffocation, or pneumonia.

In March 2009, when Rainwater was diagnosed in San Francisco, there were no treatments for PSP. Rainwater characteristically began scouring the Internet for hope; he found little comfort.

“I’m dying, Precious,” he told Moore.

“We all are,” she replied. “No one can tell you when you’re going to die.”

Accompanied by Dan Stern, Rainwater and Moore traveled to the University of Aberdeen in Scotland, where doctors were treating Alzheimer’s and Parkinson’s patients with methylene blue, an experimental drug. Rainwater began taking the medicine, which was thought to combat the buildup of tau, but it didn’t help.

Around that time, Rainwater’s family began organizing a new research program. Later named the Tau Consortium, it was a classic Rainwater-style deal: creative, ambitious, risky, and collaborative.

The Tau Consortium—the medical luminaries racing to solve the nightmare of PSP huddled in New York in August 2011.Photograph by Michael Weinstein

Moore and Stern asked Miller and Kenet to round up a medical dream team that Rainwater would bankroll. About 25 experts from around the world, ranging from bench scientists to clinicians, gathered in New York City in May 2009 for a three-day meeting to organize a research program. The group, which includes a Nobel Prize winner, has met four times since to share their findings. “I don’t think there’s ever been such a broad group of people focused this way in science,” says Miller. “It has a Manhattan Project quality to it.”

The scientists are attacking PSP on multiple fronts, studying elements of the disease in mice, flies, worms, and human cells — Rainwater’s cells, that is. Skin taken from Rainwater’s leg — presumably containing markers of his particular disease — has been converted to stem cells for testing existing chemical compounds. If lab work shows promise for halting the accumulation of tau, an experimental treatment would be rushed into the clinic — with Rainwater as the first patient.

As personal as all this seems — with more than $20 million committed so far to try to save a single dying man — it is, in actuality, far more likely to help others. Though they are widespread, brain diseases attract little private funding because progress is so difficult; they’re regarded in the philanthropic world as a black hole. Rainwater’s spending is “one of the most significant investments in dementia research by an individual ever,” says Miller.

The research funded by the Tau Consortium assumes that tau is the cause of disease, not merely a byproduct, although that issue remains a subject of scientific debate. Abnormal tau clumps are also present in Alzheimer’s patients. This means that Rainwater’s initiative could contribute to treatments for them too. Says Miller: “We believe tau is the holy grail of dementia. This has broad implications. Treatment for Richard will be a treatment for the world.” He acknowledges, though, that finding a cure in time for Rainwater will be “very difficult.”

A family deals with disease

A very rich man with a debilitating disease. A decidedly unconventional second marriage. Children who hadn’t seen much of him for years. Looking back, it seems inevitable that matters would get complicated.

For one thing: As Rainwater’s health was deteriorating, he and Moore continued to spend most of their time apart, operating as though his disease needn’t alter the pattern of their marriage. Moore says she and Rainwater speak on the phone every day, that her husband is well cared for, and that she can be there on “a moment’s notice.” She says she sees no need to be at Rainwater’s bedside. “We’ve made it work,” says Moore of their 20-year marriage. “We have a bond that’s very powerful. Is it traditional? Of course not.”

The three Rainwater children, in turn, had spent relatively little time with their dad in the years after he divorced their mother, married Moore, and left full-time residence in Fort Worth. Rainwater had provided generously for them, setting up trust accounts with the thought of leaving each child with about $5 million. His success multiplied the children’s stake in his investments far beyond that amount. In a court filing in California in connection with his 2003 divorce, Matthew listed more than $50 million in assets.

None of Rainwater’s children — who declined to speak to Fortune — have followed in their father’s footsteps. Matthew, now 35, has a website for a photography business in which he playfully admits to having no clients. Todd, 39, has been promoting a nonprofit venture: the creation of a Frisbee golf course on Nantucket Island. His wife writes a blog titled “Confessions of a Shopaholic.” Courtney, 41, has been involved in philanthropy and the arts.

In Fort Worth in May 2009, two months after his diagnosis, with older brother Walter and youngest son Matthew, who is now his legal guardian.

In the months after Rainwater’s diagnosis, his 73-year-old brother, Walter, with help from the billionaire’s private security team, served as his primary caregiver. Round-the-clock nursing care was later brought in, and Rainwater’s three children rallied around him, with his youngest son, Matthew, relieving Walter at his side.

In March 2011, the issue of who calls the shots — for Rainwater and his money — moved into court. Rainwater’s estate lawyer filed a petition in probate court in Fort Worth, seeking to declare him incapacitated and requesting the appointment of Matthew as his legal guardian. Under Texas law, a spouse is first in line to fill such a role. But Rainwater had signed a written designation expressing his preference for his son’s appointment.

Ultimately, Moore says, everyone agreed to the selection of Matthew, who was granted limited powers after being named temporary guardian of his father’s “person and estate.” The guardianship resolved shared family concerns that someone might encourage Rainwater, in his diminished state, to rewrite his will. It also clarifies who would be allowed to make immediate medical decisions for him, should a crisis develop.

It is unclear precisely how contentious the probate case has been. To keep the matter confidential, it was filed under Rainwater’s initials, titled “In the matter of Guardianship of R.E.R., an Incapacitated person.” Citing family privacy concerns, a judge ordered the entire case file sealed, and no one directly involved is eager to talk about it. But a docket sheet obtained by Fortune shows substantial activity, listing multiple contested motions, several court hearings, and an order subjecting Rainwater to an independent medical examination.

Moore says no family member has made any bid for personal enrichment. Instead, Fortune is told, the biggest dispute has involved control of the Rainwater Charitable Foundation. Established in 1991, it has quietly donated tens of millions to projects including Teach for America. Rainwater, Moore, and Walter Rainwater have long served as directors of the foundation, along with Melissa Parrish, its treasurer; Rainwater’s three children were added to the board in 2009. The foundation now holds about $50 million in assets.

According to Moore, the conflict centers on how the foundation will allocate its funds during the rest of Rainwater’s lifetime. His children, she says, want to spend more heavily on research into his disease. Moore wants to balance such grants with the foundation’s traditional focus on education and at-risk children.

Rainwater’s will contains a conflict-avoiding provision for the far larger amount of money to be distributed for charitable purposes from his estate. It allocates separate pots for Moore, Walter Rainwater, and the three children to distribute to charity as each sees fit. In preparation for this, Moore has already established a second charitable entity called the Darla Moore and Richard Rainwater Foundation, whose board excludes the children as directors.

In the meantime, lawyers for the squabbling members of Rainwater’s family canceled a hearing scheduled for Oct. 24, in hopes of negotiating a final resolution to the remaining issues in their dispute.

How Rainwater spends his days

In October 2009 — seven months after his diagnosis — about 25 of Rainwater’s old friends gathered at the Deepdale Golf Club on Long Island for a communal outing.

The event was dubbed the “Rainwater Two Ball,” for Richard’s favorite game — he liked to play two balls on every shot. By then, Rainwater’s balance was poor, so he hit only a few shots. Eddie Lampert hovered at his side. Afterward, everyone gathered on the patio for dinner and told funny Rainwater stories. “We were laughing hysterically,” recalls investor Jeff Kelter, who organized the event. “And when we all left, there were guys out in the parking lot crying.”

Rainwater’s most recent public appearance came in February 2010, when he received the Arbuckle Award at Stanford, given annually to a distinguished alumnus of the business school. Rainwater attended the awards dinner dressed in a suit and tie, with a yellow rose in his lapel.

Seated on stage before a crowd of 350, he labored to participate in a friendly discussion about his achievements led by three old friends from his Stanford class of 1968. Rainwater showed flashes of his old wit during the conversation, but his speech was clipped and cryptic, and the disease’s effects on his emotions were on full display. When asked what had prompted his “people orientation” in business, he responded, “My mother,” and started to cry.

Now Rainwater begins most days with a conference call with Darla and a member of his Fort Worth staff to hear about the opening of the stock market, which continues to spark his interest. But his speech has grown virtually incomprehensible, and his visits to the office are less frequent.

Encouraged by friends — one of whom spoke of his “amazing spirit amid this monstrous disease” — Fortune had hoped to visit with Rainwater. Indeed, plans were in motion to make that happen in mid-October, when they were abruptly canceled. Rainwater’s physical decline, Moore explained in an e-mail, made a visit “medically not possible.”

Moore likens her husband’s sad decline to the plight of Charlie in the story Flowers for Algernon. “There was this incredible intellect,” she says, “and then it went away.

“It just went away.”

This article is from the November 7, 2011 issue of Fortune.