Did This Billionaire Get Swindled Out of Millions in an Elaborate Art World Scheme?

HIGH DRAMA IN SUNNY MONACO THIS MORNING, where Dmitry Rybolovlev, the Russian oligarch who is the subject of my article for the December/January issue of T&C, was “questioned” by police for an hour and a half, along with his glamorous young lawyer Tetiana Bersheda.

The locals can talk of little else, since in Monaco — population 37,831 — it’s not everyday that the guy who owns the local soccer team (AS Monaco), lives in the principality’s most expensive apartment, and is besties with Prince Albert gets summoned for a q and a by local prosecutors.

The oligarch is dismissing the whole thing as procedural, Bersheda tells me, but Frank Michel, the lawyer who filed charges on behalf of Tania Rappo (close friend-turned-enemy of Rybolovlev) of tampering with police evidence and invasion of privacy tells me it’s serious. “Rybolovlev will be charged,” Michel says, “and then there will be a trial involving one of the most powerful men here. Monaco has never seen the like.”

BERNARD SIDLER

BERNARD SIDLER

Perhaps, but there’s already much about Dmitry Rybolovlev’s story of which we’ve never seen the like.

The billionaire, who is only 48, has in his lifetime faced down murder attempts, a year’s imprisonment in Russia, a divorce (“the world’s most expensive”) so nasty it involved the arrest of his now ex-wife, and now is embroiled in the art scandal of the year, in which he claims he was duped for well over $1 billion by intermediaries he trusted. This is the case that’s riding towards trial in Monte Carlo and in which he’s been accused of evidence manipulation. (He denies this.)

Unsurprisingly (he is a Russian oligarch), he doesn’t speak to the media too often. But for us he made an exception. Below he explains exclusively to T&C how he found himself at the center of so much international controversy:

DMITRY RYBOLOVLEV SELDOM gives interviews. The 49-year-old Russian—one of the richest people in the world, with a net worth estimated at $8.8 billion—is notoriously private, and also notoriously security-conscious, perhaps because back in the 1990s, while building up Uralkali, one of the world’s largest fertilizer companies, he survived a year in a Russian prison and several murder attempts.

To be greeted by a Russian-speaking security team at La Belle Epoque, Rybolovlev’s Monaco residence (reportedly the most expensive apartment in the world, worth $323 million), is not a surprise, then. The three-story penthouse also happens to be the scene of Monaco’s most infamous murder, that of the Lebanese-Brazilian banker Edmond Safra, who was killed in a botched arson attempt by one of his caretakers in 1999. British developers Nick and Christian Candy subsequently renovated the manse to resemble a modern Versailles. My heels click-clack on the marble floors as a pleasant but pale aide-de-camp ushers me into the living room, where Rybolovlev’s young lawyer, Tetiana Bersheda, tall and thin, with diamonds around her neck and wrist, soon comes to fetch me.

“Mr. R would like to meet you in his office,” Bersheda says. “It’s cozier.” We walk down the hall and confront a wooden door without handles. I pause. It slides apart as if we’re in a James Bond movie, and behind it stands Rybolovlev with an unexpectedly warm smile. He’s slim and dressed in a crisp blue-and-white-striped shirt, charcoal pants, and black velvet slippers—a signature Russian touch. “Thank you for coming,” he says. He looks younger than in photographs, and softer, perhaps because he’s not wearing his usual rectangular metal-rimmed spectacles.

The room is oval and intimate. He sits in an armchair, back to flung-open French doors, the yacht-filled harbor of La Condamine beyond. Curiously, since Rybolovlev is the owner of one of the world’s most valuable art collections, not a single work of art is on view. However, books, mainly on business and soccer, line the shelves. When I point out one by Donald Trump, he laughs. “I’ve never read it,” he says. “It was put there by the Candy brothers.” I sit on the sofa close to Bersheda, who is going to translate. Rybolovlev’s trust in the glamorous, brainy 31-year-old lawyer is obvious. They met six years ago in Geneva, where she worked for a law firm that he had retained. He asked her to work for him and she refused, but subsequently she set up her own firm, of which he is now a major client. She and I met last summer at Art Basel, where she gauged whether he should talk to me.

Rybolovlev ultimately invited me to La Belle Epoque because he has a story to tell, or rather explain. For the last year he has been at the center of the most astonishing scandal in the art world in years, an alleged billion-dollar fraud that has dealers, artists, and collectors sweating. At stake may be not just the money of an angry and very powerful man intent on recouping his losses but the thing the art world values more than anything: the freedom to operate in darkness.

Briefly: On New Year’s Eve 2014, Rybolovlev found himself at the Eden Rock St. Bart’s eating with Sandy Heller, a New York art consultant who advises many hedge fund managers. Somewhat obliquely Heller said, “It looks like you bought the Modigliani [we sold].” He was referring to Reclining Nude with Blue Cushion, one of the artist’s most famous canvases, painted in 1917. The painting had belonged to Steven A. Cohen, the founder of SAC Capital Advisors and also one of the richest men in the world.

Until then Rybolovlev, who is known for a certain froideur, had always avoided discussing his art collection, which includes masterpieces by Picasso, Leonardo, Rothko, Gauguin, Matisse, and Rodin. But he had begun to wonder, he says, whether he had been overpaying the man in charge of his acquisitions, and he was beginning to feel a gnawing anxiety familiar to major collectors—namely, that he was not in the driver’s seat of a collection purchased in his name. Art world middlemen—whether private dealers, art advisers, or people seeking a commission for setting up a deal—hold disproportionate power in this incestuous industry, which is largely unregulated and in which enormous deals frequently take place with little paperwork and behind closed doors. Often these middlemen know crucial elements of a deal that their billionaire patrons don’t, such as the selling price of a
painting. (In real estate the equivalent would be if a broker could conceal the sale price of a house—and the size of a commission.)

So, with the help of a girlfriend who speaks better English, the potentate asked Heller, “What price did you sell it for?” The answer: $93 million, $25 million less than Rybolovlev’s trusts had paid for it. Chuckling, Rybolovlev tells me his fellow diners at the Eden Rock “thought I was having a stroke.” Less cheerfully he says it was the worst New Year’s Eve of his life. Within minutes he was on the phone to Bersheda. For years, according to Rybolovlev, he believed he had been paying the middleman who had sold him the Modigliani (above)—as well as 37 other museum-worthy paintings—a commission of 2 percent (in other words, about $2 million for the Modigliani, not $25 million). He was now realizing every collector’s worst fear: He had been fleeced, and the question was, for how long and how much?

A day or so after New Year’s, Rybolovlev asked to meet Heller again. The two men went through the Russian’s entire collection, with Heller giving an estimate of what he believed was each item’s true value. His appraisal would shake the oligarch, and within days Bersheda would file a criminal complaint in Monaco.

A month later the Monte Carlo police arrested one Yves Bouvier, 52, Rybolovlev’s longtime procurer of masterpieces, as Bouvier rang the buzzer at La Belle Epoque. A Geneva businessman described by Vanity Fair’s French edition as “Swiss to the core,” a man who “shuns both the mundane and the extravagant,” Bouvier was well known in art circles as an art transporter and as the owner of mysterious storage facilities known as free ports—not as an art dealer or broker. He had been summoned to Monaco ostensibly to complete a long-delayed deal for his Russian patron, but he wound up in a jail cell instead, facing allegations of fraud and money laundering and the possibility of a long prison sentence.

The police also arrested Tania Rappo, a charismatic Monaco socialite whom officers interrupted in the middle of a massage. Once a member of Rybolovlev’s inner circle, Rappo and her husband Olivier, a retired dentist, had dined with the tycoon and his parents only days before. Now facing charges of money laundering, she would later tell me over dinner how the oligarch had plied her with drink as they chatted in his penthouse.

Both Bouvier and Rappo would deny the charges, hire lawyers, and spend the following months telling their stories to the media. Bouvier’s defense was simple: Yes, he had charged astronomical markups to his client, but, as he told Vanity Fair, “I did not act as intermediary but as the owner [of the art]. I had a right to a profit; it’s the law of busi- ness.” (Bouvier refused to answer questions for this article.)

Rappo’s defense was even simpler: Yes, she had collected commissions from Bouvier on the paintings he had sold to Rybolovlev—an amount Rybolovlev estimates to be $100 million altogether—but she claims not to have sought them, and she says Rybolovlev “never asked.”

“[If ] he would have asked me,” she says, “I would have told him.” The question echoing around the art world is how one of the world’s richest, toughest investors—whose trusts own the penthouse at 15 Central Park West (bought for $88 million in 2012 and occupied by his daughter Ekaterina, a college student at the time); two entire Greek islands (Sparti and Skorpios, famous for hosting Jacqueline Kennedy’s wedding to Aristotle Onassis); the Maison de l’Amitié (a Palm Beach mansion bought from Donald Trump for $95 million, which Rybolovlev reportedly intends to demolish due to mold problems); a $20 million property on Kauai bought from Will Smith; a $100 million yacht; homes in Gstaad, Geneva, Paris, and Monaco; and AS Monaco, the soccer team—could make himself so vulnerable. Was he, like many new billionaires, in such a hurry to build a glittering collection that he failed to “learn art,” as experienced patrons know one must to avoid overpaying? The art market is often described as insider trading conducted by a small but sophisticated network of “experts” who prey upon the naïveté of the nouveau riche. Did Rybolovlev, a famously shrewd and strategic investor, underestimate its ability to confound and deceive? Until now he hadn’t talked.

At our meeting at La Belle Epoque I put it to him: Had he been conned or was he negligent? The answer, he explained, went back to the early 1990s, before he and his family fled Russia. After the fall of communism, Rybolovlev, who originally trained as a cardiologist, switched to finance and became one of the first securities traders in Russia. One of his first moves as a financier was to take a majority stake in Uralkali, the former Soviet fertilizer monopoly, which subsequently increased its productivity five-fold. Boris Yeltsin was president. The economy of Russia was melting down. The rule of law had all but disappeared, and Uralkali’s success made Rybolovlev a target. To protect himself from ambushes he sent a fleet of identical cars with identical license plates registered in his name into Moscow; he also moved Ekaterina and his wife Elena to Geneva.

In 1995 one of Rybolovlev’s business partners was shot and killed in Moscow; Rybolovlev was imprisoned for ordering the hit and spent 11 months in jail. The charges were later dropped, but according to Rybolovlev the experience changed his outlook. He had “risked my life to make a fortune.” He was going to “protect every cent.”

He soon joined Ekaterina and Elena in Geneva. However, in their new home, despite their vast wealth, the Rybolovlevs were isolated. Although Elena eventually learned to speak fluent French, her husband “was always distracted by business. I couldn’t clear my mind,” he says. One of the first friends they made was Tania Rappo, the wife of their dentist, who happened to mention that his wife spoke Russian. (Rappo comes from Bulgaria, where the language is spoken by about a third of the population.)

“We had a sincere friendship,” Rybolovlev says. The two families vacationed together, with the Rybolovlevs often treating the Rappos to trips on private airplanes and their yacht. When Elena gave birth to a second daughter, Tania was asked to be godmother. Meanwhile the Rappos escorted the Rybolovlevs as they began making the rounds, helping them get into an exclusive golf club and chaperoning them to society events. As the Rybolovlevs expanded their real estate empire internationally, Tania Rappo also introduced Rybolovlev to real estate brokers abroad (at his request, she says).

Around 2003 the Rybolovlevs decided to build an art collection—”the best in the world,” Dmitry has been quoted as saying. They had recently moved into a house with light fixtures for art displays, and with the help of Rappo they were making inroads among a Western European elite that spent its considerable wealth on art. Rybolovlev soon settled on his first acquisition: Le Grand Cirque, one of Marc Chagall’s many beloved circus paintings. (The previous owner of the house, who had left the fixtures, owned a Chagall.) He consulted several dealers, and the best price was $8 million, according to Rappo. However, she came up with a way to eliminate the dealers and buy directly from Le Grand Cirque’s owner, lowering the price by more than $2 million—and, pivotally, bringing Rybolovlev into contact with Yves Bouvier.

Over the last decade, economic forces on a global scale have overrun the art world—visibly to all, in the case of the gargantuan bids casually tossed out at the evening sales, but all but imperceptibly (except to a tiny and in-the-know elite) in other areas—and no one has been more at the center of it, or better epitomized its drive for concealment, than the canny Bouvier. In Switzerland a business owned by Bouvier’s family, Natural Le Coultre, is one of the country’s oldest transporters of goods, formerly of all kinds but since the 2000s of fine art exclusively. The shift in strategy was not coincidental. As the Economist and others have pointed out, “collectibles [such as art] have outperformed stocks over the past decade,” aided in part by the world’s string of financial crises. In fact, for some ultra-wealthy individuals art has become the asset of choice, for not only does a Modigliani nude hold or increase its value, it is an easy asset to move or hide.

Over the years Bouvier has shifted his core business from art transportation to building and operating vast, secretive high-tech fortresses used for storing not just artworks but cars, wine, coins, and furniture. Such repositories, known as free ports, have existed for centuries, but until quite recently their primary purpose was to hold raw materials in transit—a shipment of soybeans, say. They were found primarily in transit zones, such as airports and canals, and they usually enjoyed one of the benefits of existence at the jurisdictional margins: tax and duty freedom.

For the collector who sees his 1961 Petrus not as something to drink but as an asset to hoard and potentially sell, Bouvier offered an invaluable service. Items could not only be stored behind the free port’s seven-ton doors, surrounded by laser trip wires and vibration detectors, they could be shown to other collectors there and traded or sold without moving an inch—and taxed only if they left the free port. Perhaps the most attractive aspect of all is that such transactions could take place beyond the prying eyes of a district attorney or a private investigator tracking down assets in a divorce battle. (As a result, many in the art world worry about a tendency for free ports to become “art cemeteries.” The world’s largest free port, at Geneva Airport, is said to hold as much art as the Louvre.)

Chagall’s Le Grand Cirque was stored in the Geneva free port, and Rybolovlev took Rappo with him to view it. Rappo has since said that she remembers that Bouvier appeared in person to greet them and was attentive. Rybolovlev claims to barely recall this. “If he had approached me, I would not have wanted to know him,” he says, citing his habit of shying away from anyone trying to solicit his business.

What happened afterward is important, because whatever their disagreements, Rybolovlev and Bouvier agree that the nature of their relationship—whether Bouvier was an agent working for Rybolovlev on a commission basis or an independent art dealer who bought and sold works for himself, freeing him to charge any markup he liked—was never codified on paper. Rappo says that shortly after their encounter at the Geneva free port, Bouvier called her to ask her to arrange a follow-up meeting.

“I think I can be useful,” Rappo says Bouvier told her. Rybolovlev “jumped,” she says. “He was really very happy.” According to her, the oligarch recognized that Bouvier had some of the best art in the world sitting in his Geneva warehouse. Rybolovlev, for his part, says he scarcely remembers his first meeting with Bouvier, and he took the meeting only because Rappo encouraged him to. He found Bouvier “a regular, likable man,” different from the stereotypical smooth-talking art dealer. And because Rappo, whom he trusted “totally,” had brought them together, Rybolovlev agreed to work with him for, the oligarch claims, a fee of 2 percent—which Bouvier denies, saying that amount was merely for transport and administrative costs.

At first Rybolovlev collected slowly, buying a handful of works, including a Monet water lily painting, Gauguin’s House of Hymns, three Picassos, and three Modiglianis. After 2009, however, the pace quickened. Rybolovlev was no longer interested in decorating his walls with museum pieces, he says, perhaps because the walls themselves were a subject of dispute.

In 2008, Elena Rybolovleva, Dmitry’s wife of 24 years, whom he met on the first day at medical college back in Russia, filed for divorce, citing adultery on an industrial scale, including parties aboard yachts at which Dmitry shared “young conquests with his friends and other oligarchs.” (“He was not a model husband,” a spokesman for Dmitry later told the New York Times. “Mr. Rybolovlev never denied the infidelities, but the wife knew about it for many years and passively accepted it.”) In the wake of what would become an exceptionally acrimonious divorce battle (which included Elena’s being arrested in Cyprus for allegedly stealing a $28 million diamond ring she later proved her ex- husband had given her while they were still married), Dmitry began seeing art as an investment for his daughters’ futures, he says. He subsequently started moving the collection into vaults (trophy works by Matisse, Klimt, Rodin, and Magritte by now had joined the stockpile). The art was owned by trusts, which, Elena complained, were designed to thwart her access to the couple’s fortune in divorce court. The divorce (which, Dmitry confided exclusively to T&C, was finally settled in October for an undisclosed amount) was at one time famous for being the most expensive in the world, after a Geneva judge awarded Elena half of her ex-husband’s fortune, some $4 billion.

Rybolovlev now says he didn’t want his marriage to end—nor, he felt, did Elena. He believes it could have been saved, but Rappo, whom Elena was close to, “pushed her”—his words—not to reconcile, because, he says, Rappo (and Bouvier, with whom he believes Rappo had formed a secret partnership) wanted “the story of my divorce” to cover what he calls Rappo and Bouvier’s unfolding scheme. That alleged plot, which Rappo and Bouvier deny, involved defrauding Rybolovlev—hiding from him the enormous markups on the masterpieces he was acquiring through them—in order to finance an ambitious expansion of Bouvier’s free port empire. And Rybolovlev, even if he found out, would have no choice but to go along.

“They assumed wrongly,” Rybolovlev says, “that because of my divorce my interests would be in line with theirs. They assumed I wouldn’t want to be open about my collection—ever.”

Bouvier’s plans were ambitious indeed. After the 2008 financial crisis, the Obama administration launched an attack on banking secrecy laws around the world, leading to an exodus of foreign cash from Swiss banks and increasing the allure of hoarding Picas- sos inside humidity-controlled vaults. Bouvier announced plans to build the largest, most technologically sophisticated free port ever, in Singapore, where the art protection laws were even more relaxed than Switzerland’s. Not long afterward he announced the construction of another warehouse, in Luxembourg.

Rybolovlev, meanwhile, was only getting richer. In 2007 Uralkali floated on the London Stock Exchange and became the most successful Russian IPO ever. Less than a year later the Putin regime—which is notoriously antagonistic toward Russian oligarchs living abroad, particularly ones whose fortunes derive from buying post-Soviet assets on the cheap—summoned him to a meeting in Moscow,
where Rybolovlev was informed that the Kremlin was reopening a potentially bankrupting investigation into the collapse of a mine belonging to Uralkali. Understanding the government’s interest in his company and that his days of owning it were numbered, Rybolovlev cashed out, leaving his estimated net worth somewhere between $8 billion and $13 billion. He then focused on trolling the world for other investments. In 2010 he moved to Monaco, his trusts buying La Belle Epoque. His trusts also bought a majority stake in the AS Monaco soccer team in 2011. And in 2012 a broker recommended by Rappo sold his trusts the penthouse at 15 Central Park West. Rybolovlev says that Rappo called him as the deal was closing. “I’ve been offered a commission of $100,000,” she told him. “Would you mind if I accepted?”

Tetiana Bersheda warned me that I would find Tania Rappo “captivating.” After I meet her in her lawyer’s office, atop a creaking staircase in a building near the Fairmont Monte Carlo, and later at dinner, accompanied by her husband and her lawyer, at an outdoor French restaurant, I cannot deny it. Dressed casually in a black halter top, jeans, and heels—as well as big pearl earrings—Rappo looks far younger than her years. One of the first things she tells me—then repeats again and again—is that she and Bersheda never got along. Bersheda was always kept away from the art collection, and one senses how much the rivalry between these two women plays a role in the case.

At the restaurant Rappo, who speaks eloquent English as well as French, Russian, and her native Bulgarian, chain-smokes throughout the evening, and although she orders champagne, she scarcely touches it, preferring to talk, talk, and talk. Both her husband, a handsome, quiet man, and her lawyer, “Maître Michel,” occasionally interrupt, telling her, “Tania, no, don’t say that,” but clearly Rappo is not a woman who is told what to do.

Her story, essentially, is that Rybolovlev is using her and Bouvier as pawns. “You cannot understand the story of the art,” she says, waving her cigarette, “unless you understand the story of the divorce.”

Her tale begins, naturally, with a call at four in the morning from Elena in 2008. “Crying like you cannot imagine, she said, ‘Can you please come?’ I say, ‘Is somebody dead?’ She says, ‘No, but please come.’ So at four I wake up, I get my car, I go to the hotel.” There Elena tells her that by accident she came across documents on Dmitry’s computer containing the passport information of various guests visiting the Rybolovlev yacht, including many “girls” and Dmitry’s mistress at the time. This, Rappo says, was the event that triggered the divorce—Elena filed within weeks. (Inciden- tally, aside from advising Elena to consult a lawyer, Rappo denies hastening the breakup. “I tried for about two years to put them together,” she says. It was Dmitry who made reconciliation impossible, she claims: “From the very beginning he said, ‘Tell her she will have nothing.’ “)

For the next few years Rappo’s relationship with Rybolovlev was status quo. It was not a friendship, she says: “I had affection for her. I never had affection for him… He’s a block of ice.” However, she continued to be a liaison between Rybolovlev and Bouvier; and she continued to receive introduction fees from Bouvier, an arrangement for which she says she received around 5 percent whenever a deal closed. She and Elena stopped speaking for a reason Rappo won’t divulge.

Last year, when she found out Elena had been arrested, she says she got nervous; she calls the event a turning point in her relationship with Dmitry. (If so, Rybolovlev says he didn’t notice—Rappo still showed up for events he held.) The arrest had taken place during a visit to Cyprus, where Rybolovlev has considerable financial assets, including at one time a large stake in the country’s biggest bank. Rappo says Rybolovlev told her, “There are three places in the world I can do whatever I want. One is Cyprus, one is Skorpios, and the other is Monaco.” And she claims he had Elena arrested—even though she spent only a short while in custody—to scare her into dropping her lawsuits (filed in several countries) in pursuit of her ex-husband’s money.

“To put the mother of your two children in prison just not to give her money—what kind of person is that?” Rappo says. “This is the style of Mr. Rybolovlev, and that’s exactly what happened to us. He wants to humiliate people and put such stress on them that they give up.” (Rybolovlev brushes all this off and says Elena cannot stand to hear Tania Rappo’s name.) I put it to Rappo: Why would Rybolovlev target her and Bouvier if not for the money he says they owe him?

“There is a saying in French: When you want to get rid of your dog, say it has rabies,” Rappo says. “He wanted to discredit Bouvier.” And as for his putative vendetta against Rappo? She alleges that Rybolovlev and his lawyers have gone after her and not just Bouvier because they “must find a way to link the case to Monaco. The paintings were not sold here.”

At one point I ask Rappo if, knowing Rybolovlev as well as she does, and after all she has gone through, she is ever afraid of him. “Afraid is not the word, but you feel danger,” she replies.

Monaco is tiny—barely three-quarters of a square mile—and densely populated, holding almost 40,000 people inside that area. It was hard to imagine, but a few blocks from the restaurant where I met Rappo was the Rybolovlev penthouse.

“Tania is at the heart of this story,” Rybolovlev tells me when I meet him at La Belle Epoque. “She was a friend, not a business associate. But the friendship was an illusion.”

Rybolovlev says he heard through the grapevine that Rappo had gotten richer, acquiring apartments in Paris, London, and Monaco during the years he had known her. Her explanation, he says, was that she had come into a windfall thanks to her family’s sale of real estate in Bulgaria. Rybolovlev also said she had given money to Bouvier to invest in the Singapore free port (which Rappo denies), and Bouvier had made her a fortune.

But his suspicion was not triggered until Bouvier came to Rybolovlev in 2013 and 2014 to shop two paintings, first Salvator Mundi, a recently discovered Leonardo for which he wanted $127 million, and then No. 6 (Violet, Green and Red), a prized Rothko for which he requested $140 million. Rybolovlev told Bouvier that the family trusts would pay for the Rothko only in installments while Bouvier sold other works, including a Modigliani sculpture Rybolovlev had owned since 2012. Bouvier seemed to have trouble finding a buyer for the Modigliani—or “anything!” Rybolovlev says.

And then Rybolovlev found out about a New York Times article he had missed from months earlier reporting that the Leonardo he had purchased for $127.5 million had been sold not long before for only $75 million to $80 million. The piece also stated that many experts thought the work had been done by an assistant in Leonardo’s studio, not the artist himself.

Rybolovlev says he asked Bouvier about the article directly and Bouvier brushed it off, telling him dealers never give correct sale figures to journalists. He insisted the pieces would sell in time.

Rybolovlev’s suspicion lingered, which is why when Sandy Heller mentioned the Modigliani in St. Bart’s a month later, Rybolovlev asked him how much he had sold it for, something he ordinarily might have been reluctant to ask. (He says Bouvier asked that their transactions be kept confidential for fear that combining art dealing with art storage would be seen as a conflict of interest, a practice the art dealer Larry Gagosian has indeed criticized.) As he sat there stunned in the Eden Rock din- ing room, he says, realizing how much he had overpaid, his first reaction was, “I wanted to call Tania and ask her, ‘Do you know what Yves is doing?’ “

But then, according to Rybolovlev, it struck him that Rappo always seemed to know what Bouvier was doing. Since the very first moment of the relationship, she had been there for nearly every meeting with Bouvier and every viewing in the Geneva free port.

According to Bersheda, the criminal complaint she filed last year was against Bouvier only. Rybolovlev was already hurt and angry, but the serious pain came, he says, when he heard that investigators had found commissions from Bouvier in Rappo’s bank accounts going back to 2004. Rappo knew Rybolovlev to be reserved and wary, he says. He let his guard down around Bouvier because he trusted her. At that point he began to see Rappo, not Bouvier, at the center of the spider’s web. Their falling out has led him to ask what he calls “difficult philosophical questions.” Had it not been for the dentist’s wife he would never have gotten involved with Bouvier.

Rybolovlev says he did not know what was going to happen to Rappo or Bouvier. “I didn’t know the police would arrest them then,” he says in answer to their accusations of a sting at Rybolovlev’s apartment. The police had asked him to act normal, he claims, but “I needed vodka to get through it.” Rappo, he says, was her usual, effervescent self, chattering about the beauty of the Rothko and pressuring Rybolovlev to buy it.

Both Rappo and Bouvier argue that the Monaco prosecution (which is heading toward trial) is in Rybolovlev’s pocket. Rappo has protested that her right to due process was violated. (“You can’t just go and look in the bank accounts of somebody,” she says.) Rybolovlev brushes this off.

The truth, he says, is that he just wanted to hear Rappo say, ” ‘I did it. I’m so sorry.’ I might have forgiven her,” he says. Instead, when they were face to face in the Monaco jail after she had been arrested, he claims she denied everything.

“It’s easy for [Bouvier and Rappo] to paint me as the stereotypical Russian oligarch,” he says. But if he were so interested in hiding his assets from Elena, he says, why would he announce to the world that he had been the victim of a multibillion-dollar scam, in the process letting it be known how much his trusts had overpaid for each of his artworks?

“They underestimated me,” he says.

I ask him if, in the wake of all the misery he claims was inflicted on him by a woman he came to depend on because she spoke Russian, he is thinking of finally learning a new language. Laughing, he says he is trying, but it isn’t going well.

T&C Exclusive: Inside the World’s Most Expensive Divorce

The world’s “most expensive”—and perhaps nastiest—divorce is over.

T&C can exclusively reveal that Dimitry Rybolovlev, the 49-year-old Russian oligarch who made a $9 billion fortune in the fertilizer business, has, after seven long years involving private investigators, battles over  art, multi-million dollar properties—and even an arrest!—been settled “amicably” with all lawsuits dropped. The terms have not been released, but it’s worth mentioning that at one point a Swiss Judge wanted to award Elena Rybolovleva half his fortune, which is what makes this so costly.

That a settlement was coming was revealed exclusively to me in September, during a three-hour interview with the oligarch (in the presence of a translator). Rybolovlev is a taciturn man who rarely gives interviews. But we met at his home in Monaco, the famous triplex penthouse apartment, La Belle Epoque, possibly the world’s most expensive apartment and which also happens to be the infamous crime scene where the late banker Edmond Safra died, locked in a bathroom in 1999. (Rybolovlev, who was not without a sense of humor, told me he had had his priest sprinkle holy water everywhere to get rid of the bad xiu xiu).

We were there to discuss his role at the center of an alleged billion-dollar art fraud, which has recently been water-cooler talk in galleries and auction houses, afraid of what his case might reveal about their shadowy, unregulated industry. Dressed in black velvet slippers, charcoal pants and a blue and white shirt,  Rybolovlev explained how the two stories were entwined, since the people currently facing criminal lawsuits accusing them of illegally enriching themselves as they bought bought art on behalf of his trusts, apparently believed, according to the oligarch, that their greatest ally was his divorce. He says they thought he would stay quiet about the art collection because he wouldn’t want Elena to know what was in it and come after it. “They were wrong. They underestimated me,” he’d later say.

In fact, he said, talking of the divorce, he never really wanted to get divorced at all. (Then again, one must remember he had not had a prenuptial agreement, so financially he had good reason not to.) He had met Elena (whose lawyers did not return calls) back when he was a student cardiologist, before he went into finance and the fertilizer industry and made his fortune. It was never an ordinary marriage with ordinary stresses. In the mid-1990s Russia was in political turmoil post-Perestroika. The success of his fertilizer company, Uralkali, meant he was a target of the government.  He faced death threats and moved Elena to Geneva along with the couple’s eldest daughter Ekaterina; Dmitry subsequently spent almost a year in jail in Russia, allegedly for ordering a hit of one of his business partners. (He would be cleared … but neighbors in Geneva remember Elena having to tell them, in faltering beginner’s French: “He’s in prison for alleged murder.”)

GETTY VALERY HACHE/AFP/GETTY IMAGES

GETTY VALERY HACHE/AFP/GETTY IMAGES

It couldn’t have been easy. Then he got out and commuted between Russia and Geneva. He and Elena had another daughter, Anna, in 2001. Who and what pushed Elena to file for divorce in 2008? For that you’ll need to read my upcoming piece in the December/January issue T&C. She’d accuse him of hiding assets—properties all around the world in trusts—and the case went in and out of courts. Their fight climaxed in a terrible moment last year when Elena was arrested in Cyprus where Dimitry owns a stake in the country’s biggest bank; supposedly she’d stolen a $28 million ring (she would prove he’d given it to her.) It’s hard to think of a divorce where the friction is of a comparable scale. There are those who call this “the Russian way of doing things…”

Yet when I met with Rybolovlev his face softened as he mentioned Elena. He brought up what they agree on; not what they don’t. He told me they were about to settle, though right to the end, sources close to it confided it was touch and go: “A divorce like this is a bit like and M&A deal; it’s not done until it’s done.”

So now it’s over, at least on paper. Anyone who’s been divorced knows that a mix of emotions lingers: relief, bitter-sweet sadness, and also optimism. But I also happen to know the story isn’t over yet for this complicated, reluctantly high-profile family. More news to come.

FOR A LOOK AT WHAT THE WORLD”S MOST EXPENSIVE DIVORCE LOOKS LIKE, SEE HERE JUST SOME OF THE ASSETS BEING FOUGHT OVER:

$88 Million – 15 Central Park West apartment, NYC

$95 Million – Palm Beach mansion bought from Donald Trump, Maison de l’Amitié

$150 Million – Two Greek islands that once belonged to Athina Onassis

$111 Million – “My Anna” yacht

$20 Million – Kauai, Hawaii house purchased from Will Smith

$95 Million – Airbus A319 Jet

$480-800 Million – Art and furniture collection

$138 Million – Gstaad property

$50 Million – Moscow real estate holdings

$24 Million – Paris property

Frank Gehry’s First-Ever Yacht Looks Like Nothing You’ve Ever Seen

Last July, at the end of a Friday afternoon, Frank Gehry landed at Barnstable Municipal Airport, on Cape Cod, accompanied by his son Alejandro and his friend Bobby Shriver. The group drove straight to the Kennedy compound in Hyannis Port, and there the architect first saw her, anchored a little offshore.

A crowd had gathered, since, as Gehry says, “Hyannis Port is a real sailing community,” and because Foggy, whose name (based on an acronym for Frank Owen Gehry) had been etched in Gehry’s sloping scrawl onto its stern, is a sloop like no other. Fashioned out of traditional larch wood but accented with titanium and a glass latticework that glimmers like a school of fish, she looked schizophrenic, a hybrid of past and future.

Gehry is an avid yachtsman, and sailing informs much of his most famous work—think of the billowing motif of the Guggenheim Museum Bilbao, New York’s IAC building, and, most recently, the Louis Vuitton Foundation in Paris. Yet only recently did he undertake his first sailboat design.

TODD EBERLE

TODD EBERLE

“I never had the resources before, and once I did I was busy doing my buildings,” he says. However, in 2008, Gehry found himself mulling the idea of designing a boat. He owns a ­fiberglass-hulled Beneteau First 44.7 (about to be renamed Foggy 1), which he keeps in Marina del Rey, California, and sails on Sunday afternoons, often with the architect Greg Lynn. The wives of both men tend to stay on land. (Lynn even had a boat called Girlfriend.) What if, Gehry wondered, he could design a boat that was both a signature piece and an enticement to his wife Berta?

He mentioned the idea to the developer Richard Cohen. A yachtsman too, Cohen had been wanting to build a large racing boat. After agreeing to work together, the two old friends brought in Germán Frers, an Argentine naval architect known for designing some of the most elegant fast sailboats in the world.

“Don’t let me go too crazy,” Gehry told Frers. “The boat has to work.” As instructed, Frers pushed back on Gehry’s plan for the vessel to have a flat, cabinless deck, which led to the choice of a curved “crown.”

However, when it came to choosing the material for the hull lining, Gehry and Frers drifted apart. Ever concerned with speed, Frers had proposed carbon fiber, the light, brittle material commonly used for racing boats. But Gehry wanted to line the boat with wood, partly because of “boat lore,” partly because he simply loves wood. Frers got a sinking feeling when he heard this, since wood adds weight without function. “I almost gave up hope the project would get done,” he says.

But in 2012, Cohen (who, full disclosure, is my significant other) found a possible compromise: build not just part of the boat with wood but the whole thing. He contacted the Brooklin Boat Yard in Maine, a small operation renowned for its carpentry as well as its engineering. One of its specialties is “cold molding,” a modern process that involves sandwiching wood around a high-tech core and yields lighter, stronger, and more durable craft than traditional planking.

Steve White, 61, the boatyard’s second-generation owner (and a grandson of E.B. White), was excited to work with Frers, but to have a non-boatbuilding architect of ­Gehry’s stature involved was daunting. And then he received ­Gehry’s drawings for the lattice windows on the deck and the stern.

“Bizarre,” was his reaction. In addition to its liberal use of materials like titanium, which few boat engineers have experience with, “there was a story behind every item on the boat—every cleat, doorknob, and showerhead.” And there were concerns that some of the unconventional elements could do more than just slow the yacht down.

“Glass steals a lot of the hull’s strength,” White says, likening Foggy’s windows to “holes in a pipe.” To see if they could withstand wave pressure, he and his team took sample panels to the technology laboratory at the University of Maine in Orono, where they hydraulically flushed the portals until they broke. (The windows turned out to be safe.)

Gehry, aided by his son Sam and a 3-D printer, “had fun” playing with Foggy’s design once he had found, or rather written, the boat’s “language.” “On a boat like this, it’s about romance and romantic encounters,” the architect says. At the heart of that fantasy is the yacht’s saloon, whose soft furnishings include a psychedelically colorful carpet created by Joyce Shin, Gehry’s ­daughter-in-law. It also includes sheepskin coverings for the couches from New Zealand, which turned the space into something between an Austin Powers–style lair and a discotheque.

Bizarre indeed. And yet, after joining Gehry in Hyannis Port and going aboard the sloop, Frers, and later White, had the same reaction. “It works,” both men said with considerable relief.

It also worked the following weekend, when Cohen and a crew tested Foggy in competition. Stripped of binnacles, bowsprit, and any unnecessary weight (even the psychedelic carpet), and fitted with black carbon fiber racing sails, Foggy headed off to ­Martha’s Vineyard and clocked the fastest time in last summer’s running of the 52-mile Round the Island race.

Next, Gehry and Cohen plan to take the boat to Miami, Cuba, and Panama, where Gehry will visit his recently finished Museo de la Biodiversidad, timing the trip to coincide with the historic opening of the Panama Canal’s third set of locks. (It will be a special visit: Berta Gehry is Panamanian, and the Gehrys have yet to visit the much-lauded museum.) Then, after transiting the canal, it will be on to Costa Rica, Baja California (site of another Gehry building), and into the harbor at Marina del Rey, where he plans to race Foggy on Sunday afternoons.

And then?

“We’ll do a spaceship,” Gehry says.

How One Woman Gained and Lost Her Heiress Crown

Five years ago this magazine published a feature about the glamorous lives of Atlanta couple Danielle and Glen Rollins. They were young, blond, and beautiful; Boxwood, their five-acre Regency-style estate in Buckhead, was “the house everyone in Atlanta dreamed about,” according to T&C. Glen was unusual: The third-generation inheritor of an industrial fortune (pesticide giant Rollins Inc., the $6 billion parent company of Orkin), he also had a bona fide track record as a businessman. He, his father Gary, and his uncle Randall ran the publicly owned extermination behemoth, with Glen as president and chief operations officer of Orkin. No other member of Glen’s generation worked for the family business. He was the golden boy and lived in appropriately high style, as the reader saw.

Around the time the story was published I got to know the vivacious Danielle, who was writing a coffee-table book on entertaining. We met at a dinner party in New York hosted by mutual friends, after which I imagined she returned to her dreamlike existence as Glen’s wife.

FRANCESCO LAGNESE

FRANCESCO LAGNESE

Around the time the story was published I got to know the vivacious Danielle, who was writing a coffee-table book on entertaining. We met at a dinner party in New York hosted by mutual friends, after which I imagined she returned to her dreamlike existence as Glen’s wife.

Most of my clients get divorced and that’s it, we’re done. [But] most of my clients are not like the Rollinses.

Around the time the story was published I got to know the vivacious Danielle, who was writing a coffee-table book on entertaining. We met at a dinner party in New York hosted by mutual friends, after which I imagined she returned to her dreamlike existence as Glen’s wife.

But earlier this year Danielle reached out to me on Facebook. She and Glen had split up. No longer living at Boxwood, she had temporarily moved into a house owned by her hairdresser while she struggled through arbitration following a vicious divorce that felt to her like “something out of John Grisham.”

I was not immediately convinced. After all, how much sympathy could either member of this once resplendent couple deserve? But one Sunday evening I found time to look at the deposition of Danielle’s former mother-in-law, Ruthie. It made for uncomfortable reading.

Ruthie had disapproved of Danielle, the daughter of a Dallas electrical engineer and a special education teacher, from the get-go. “I just did not feel they were the right match,” she testified. Danielle “had a pretty complexion,” but before her wedding to Glen, Ruthie offered to pay for a chin lift and a stay at a weight loss camp in Switzerland. Why? Ruthie claims it was “manipulation” by Danielle, who wanted the procedures; Danielle says it was part of her mother-in-law’s campaign to reshape and control her. In any case, according to Danielle, more mother-in-law-funded surgery—to her breasts, stomach, and legs—was to follow over the years. In her deposition Ruthie was also asked whether she had bought much of the decor at Boxwood, from rugs and chandeliers to the services of her longtime decorator, Gordon Little. “I don’t recall,” she responded. “You would have to check with my CPA.”

Exterior modifications weren’t the only changes the family sought to impose, Danielle says. Four times a year every member of the Rollins clan gathered in Atlanta on a Saturday for a compulsory meeting, and there was also an annual weekendlong retreat (usually at a resort such as WaterColor, on the Gulf Coast) at which paid lecturers drilled them in the pitfalls of inherited wealth. Glen’s grandfather the late O. Wayne Rollins had come from a modest farming background and was an apostle of solid, simple values. His sons Gary and Randall structured their children’s trust funds to deter entitled behavior, stipulating that distributions be received only by those engaged in “serious pursuits that are meaningful, respectable, and worthwhile.”

But this, apparently, did not go far enough. In 2010, according to Glen, Gary and Randall proposed amending the trust funds to include a program of credit checks, drug tests, and surveillance by private investigators.

Glen balked. For years, it turns out, he had been having extramarital affairs, including with prostitutes, as he would later admit in the divorce proceedings. He and Danielle sweated it out in therapy, with Glen receiving treatment for sex addiction. (He tells me he is fully recovered.) However, at a Rollins retreat on Amelia Island in 2010, around the time he was being asked to submit to intrusive inspections of his private life, Glen made an unpleasant discovery: Despite having devoted his entire career to Rollins Inc., he had been passed over for a key leadership position in a huge family foundation in favor of an older cousin. Eventually he and his siblings decided to sue the trustees, including his father and uncle, for breach of fiduciary duties related to the trust funds that his grandfather had created for the benefit of Glen and the other grandchildren.

“It wasn’t just for our sake,” Glen says. “We wanted to protect our children from having to live under draconian terms.”

It was in response to his intention to sue, Danielle says, that she strove to make the Boxwood spread, with its across-the- fold images of a koi pond and satin-lined living rooms, as fairy tale–like as possible. “I wanted Glen to see what he had,” she says, so he wouldn’t launch a family civil war.

It wasn’t enough. In September 2010, while T&C readers were still enjoying pictures of domestic bliss at the Rollins manor, Glen filed suit against his father and uncle, who immediately fired him from Orkin. His three siblings stood with him, his five cousins against. His mother swiftly made her choice, filing for divorce from Gary after 45 years of marriage. Glen’s suit is expected to roll through the courts for years.

At home Glen and Danielle fought more bitterly than ever, and in 2012 she too filed for divorce. She subsequently found herself, she says, without a single credit card or bank account she could control, nor any stock or other assets. Under pressure she signed an agreement she now regrets; it provided little that won’t be eaten up by legal bills, which is why she reached out to me. (Glen’s attorney disputes her account.) Her lawyer, Jeffrey Melcher, told me, “Most of my clients get divorced and that’s it, we’re done.” But, he added, “most of my clients are not like the Rollinses.”

So there you have it: the dark side of taking a company public and also attempting to pass it on within the family. One sympathizes with both sides. Nobody wants children to grow up spoiled so they dissipate hard-earned money, but trusts can be destructive to their beneficiaries even when the terms are less authoritarian than the ones Glen and his siblings recoiled at. Meanwhile, Rollins Inc. steams along like a juggernaut.

Gary and Randall, whatever one thinks of the family drama, have been remarkable stewards of the company. So there are no easy conclusions, except possibly this: Bill Gates, who says he wants to leave his kids pretty much nothing when he dies, may be on to something.

Rich, Thin and Selfish in Manhattan

 

city life

The scene: a funeral parlour in New York. Doors clang as a family relative, the ‘black sheep’, saunters in halfway through his brother’s eulogy and brazenly strolls down to the front pew, ignoring the scandalised glances. He’s late, a whisper spreads, because he had a meeting with director James Toback. Wait. James Toback? Lame! The hearse leaves, and the congregants assemble on the street. An attractive brunette in her late forties weeps desolately. Did she know the deceased well? Not at all: she has discovered that someone at the service walked off with her Christian Dior trench and left her with a shabbier coat from a chainstore.

All this happened — about two weeks ago on Upper East Side, where I live, and so, apparently, for a year or two, did Wednesday Martin, PhD. Martin’s controversial ‘memoir’ Primates of Park Avenuesupposedly takes us inside the author’s traumatic experience of moving uptown and trying to fit in to a neigbourhood full of razor-thin, rich, beautiful ‘mommies’ with financier husbands, second and third homes in Aspen and Southampton and children en route, whether they like it or not, to the Ivies. Part of the controversy has been that Martin seems to have made up some of the more scandalous details — not least the eyebrow-raising notion of a ‘wife-bonus’.

Even if you overlook the fabrications — and I’m not suggesting you should — the real problem with Primates is that it does not take us inside anything; not even Martin’s head. If this is a memoir our first job should be to get to know — and empathise with — its author. Martin steadfastly keeps us out: her voice is oddly impersonal and, worse, contrived. She seems unaware that she is as condescending to the ‘tribe’ of rich women she writes about as, she tells us, they are to her.

And what exactly are their crimes? They seem shallow. They drink. They take anti-anxiety pills. They look overdressed at school drop-off at 8 a.m. They compete fiercely for their children. They are terrified of getting fat. She tells us that she is different from them, but nowhere does she show us any evidence of this. Arguably, she behaves worse than her subject material. She dispatches her poor businessman husband all round the world in search of a Birkin bag; at her son’s school she flirts with a married man, a so-called Alpha Dad, in order to set up a play-date.

The insufferable superiority of Martin’s tone here is consistent, and is made worse by scattered lectures likening her neighbours’ doings to various chimp behaviours of the kind Jane Goodall observed. Sadly these interludes are even more boring than the outdated anecdotes she rehashes about certain Upper East Side women: one feels that they’ve been hamfistedly inserted to remind us that Wednesday Martin, is, as the dust-cover says, a PhD: she is an anthropologist. Which is good, because she is most emphatically not a writer.

Manhattan’s very rich, very selfish and very myopic inhabitants have been a treasure chest for writers, among them Henry James, F. Scott Fitzgerald, Edith Wharton, Truman Capote, Tom Wolfe, Jay McInerney and, some might say, Candace Bushnell. What these have in common is that they showed the complexity underneath the nonchalant gloss. It’s a nasty fact that money drives absolutely everything in this town; but the city’s energy — its soul, if you will — comes from the friction created by the need to pretend it does not. New York’s most vivid characters are caught in flux, as if figuring out the answer to a question that hovers permanently and invisibly over their head: are they worth just a bank balance figure, or something more? The ways in which they manifest this quandary on a day-to-day basis are both heartachingly sad and very, very funny, depending on your point of view.

Martin tells us that the people she meets uptown don’t sleep at night because they are so troubled, whether about money, children, infidelity or being overweight. Right there you have the seed of something. Back to the funeral: what makes people cry over a missing raincoat that is so easily replaced? What makes them appear so consumed by the small stuff right after they’ve seen a hearse head for a cemetery?

The answers are not easy — nor, actually, silly. As the character ofGatsby’s Daisy Buchanan shows us, the unwritten role of a moneyed aristocrat is to keep the rest of the world guessing at what is going on internally. The joy of Fitzgerald is that he brings the reader close enough to feel the personal cost of such careful carelessness. The pain of Martin is that she’s far too far removed from her subjects to see anything beyond the surface.

Buyer’s Remorse: Inside the Art World’s Billion-Dollar Rivalry

The rumor sped through the crowd like a missile. It was December, and the art world had gathered under the sun for Art Basel Miami Beach, the industry’s last big celebration of 2014. On Tuesday there was the opening reception; while dealers were putting the finishing touches on their booths at the Miami Beach Convention Center, the Design Miami fair was kicking off in a tent next door, and that was where many of the week’s guests were (the organizers anticipated 73,000), chattering about the night’s dinner options, when the news landed.

Stephen P. Murphy, the fast-talking 60-year-old CEO of Christie’s, who was unexpectedly anointed in 2010—the first American to head the 250-year-old British auction house—had stepped down. Suddenly. He was scheduled to sit on a panel on luxury goods in Miami the next day, but apparently that was no longer happening. The story going around was that he had been fired by Patricia Barbizet, the auction house’s quick-witted 59-year-old chairwoman. Murphy’s tenure at Christie’s had been marked by massive sales of postwar and contemporary art, and supposedly his contract had just been renewed. Nevertheless, later that day a press release thanking Murphy for “his vision, leadership and commitment to Christie’s” went out, and that was that. Officially, no further word was uttered on the subject. Barbizet would take over as CEO, the auctioneer Jussi Pyllkkänen would become global president, and Stephen Brooks, known internally as “the money guy,” would become global COO.

Dom Emmert / AFP / Getty Images

Dom Emmert / AFP / Getty Images

As for Murphy, he was not there to defend himself against the deluge of allegations roiling in the South Florida heat. had some personal transgression been unearthed? Or was the reason the headline-grabbing deals, the red-letter names, and the steadily ascending earnings under Murphy’s leadership, which, in what appears to have been the worst-kept secret in the art world, somehow resulted in less than robust profits for the auction house?

Was something amiss beneath the glossy surface? No one needed reminding that the last time a head of Christie’s abruptly resigned (Christopher Davidge, in 2000), it was because Christie’s and its eternal adversary, Sotheby’s, were about to be laid low in a vast price-fixing investigation that would land former Sotheby’s owner Alfred Taubman in jail.

Months later people are still asking, and not out of mere prurience, what happened to Steven Murphy? And what does his fate—and that of Sotheby’s CEO William Ruprecht, who had announced his resignation just two weeks earlier—mean for the world’s two biggest auction houses?

Steven Murphy arrived at Christie’s during an era of seismic change in the auction of Willem de Kooning. The auction houses knew in whose homes most of these treasures lay, having painstakingly cultivated relationships with well-to-do families and their executors for centuries. (Christie’s was founded in 1766; Sotheby’s in 1744.) Selling art (and jewelry and furniture and watches and wine—the entire range of an estate’s luxury possessions) is not a short-term business. Guy Jennings, the former deputy chairman of Impressionist and Modern Paintings at Christie’s, explained it thus to a slightly different times. Put one person under each tree to catch the fruit when it drops. Shaking the tree will not bring it down any sooner. And rushing around from tree to tree in a mad frenzy when you think the fruit is about to ripen is not the most sensible way of doing it.” Jennings added, “Murphy appeared to think otherwise.”

To be fair, Murphy wasn’t hired to maintain the status quo. He was hired because François Pinault, the 78-year-old luxury goods magnate who owns Christie’s, agreed with both Barbizet and the company’s then-CEO, 54-year-old Brit Edward Dolman, that a “fresh pair of eyes” might be beneficial in a fast-changing business.

Dolman, a former rugby player with sandy hair and a gentle voice, had served Pinault well as CEO for 11 years. The two were close, even though they made an unlikely couple. Dolman has only “dinner-ordering French”; Pinault is not comfortable speaking English. Dolman’s frame is so big he looks awkward in an office chair; Pinault is slight. Dolman is classically British: dry, funny, understated, and seemingly (and only seemingly) half-asleep.

Pinault is openly alert, with a forensic French style. But it was Dolman who, after working his way up from porter to expert, then manager, steered the house through the upheaval of the price-fixing investigation. It was Dolman, furthermore, who quickly returned the house to profitability after the recession in 2001, and again after a dip in 2008.

In an interview in New York in January, Dolman explained that he, Pinault, Barbizet, and Pinault’s “finance team” would meet at least once every quarter to measure, among other things, their results against Sotheby’s. “The French are very scientific,” Dolman said. “I actually thought Sotheby’s [a public company] had an advantage because they couldn’t see our results, whereas I worked for someone who measured us directly with Sotheby’s. Anyone who thinks that Mr. Pinault somehow was so rich that he had no interest in whether Christie’s performed well is deluded. Mr. Pinault is a successful businessman because he wants to run businesses profitably, and that’s certainly what he expected of Christie’s.”

By 2010, Dolman recognized that new challenges faced the industry. A host of rich buyers had emerged in Russia, China, and Qatar. The new buyers wanted exclusively contemporary art, of which there is almost an infinite supply (as opposed to, say, Impressionism), and they didn’t want to wait for seasonal auctions to buy and sell it. As a result, both Christie’s and Sotheby’s increasingly found themselves in the business of private sales—transactions in which the auction house links buyers and consignors who do not want a bidding contest—which had several tricky consequences. One was that the in-house experts, who traditionally had been compensated for deals on a relatively flat basis, could now jostle for large commissions, which created friction. “Usually a sale doesn’t come about just because of one person,” Dolman says.

An even bigger problem, however, was the so-called “guarantees” both Sotheby’s and Christie’s were offering to discourage private sales. With the guarantees—promises to sell items for a minimum price—the houses enabled sophisticated collectors and dealers to exploit the companies’ desperation to create headlines and outgun each other in the public arena. Quickly the demand for guarantees became unaffordable, forcing a dependence on third parties (often top private dealers, sometimes financiers) and leading to industry scuttlebutt about how top collectors had found new ways to enrich themselves and screw the auction houses in the process.

For example, there were tales of friends bidding up each other’s works, and of sellers bidding on their own guaranteed property, all of which was legal as long as the guarantees were disclosed either in tiny legal print in the back of a catalog or in the rushed words of an auctioneer before a sale started. At both houses the staff knew they needed to stay one step ahead of their clients to ensure that they were not fleeced. “You have to be very conscious of the market manipulation that goes on in sales,”Dolman says. It was a new world of sophisticated and abstruse dealmaking, as confusing—perhaps intentionally so—as the world of credit default swaps.

With this in mind, in 2010 Dolman and Barbizet reached out to Steven Murphy. Murphy’s career had been a bit odd: From 1991 to 1998 he helmed the record label EMI. Then he moved into publishing; from 2002 to 2009 he was first president, then CEO, of Rodale Inc., a publisher of wellness magazines and books. (Like several of Pinault’s businesses, it’s a family-owned enterprise.) In 2003 Murphy greatly enhanced Rodale’s bottom line when he released the best-seller The South Beach Diet, which reportedly raked in $100 million. He also published Al Gore’s An Inconvenient Truth. People who worked for him by and large loved him. Josh Deutsch, chairman and CEO of Downtown Records, worked with Murphy at EMI and says he was “the best boss I ever had.”

Dolman thought that, given this history, Murphy would understand the challenge of managing brilliant creative people—in this case the in-house experts, for whom “bagging a public deal, selling a painting in public, and the accompanying cocktail party chatter” are “life and death,” but who are not paid to consider whether a deal’s terms increase or decrease the house’s profits. As Dolman saw it, the CEO’s job was to balance what a 2009 Harvard Business Review article called “irrational” decision making (“decisions made for ego, for public consumption,” as Dolman phrased it) against “rational” decisions that quietly and boringly make money.

That Murphy, an outsider, was unversed in the weblike intricacies connecting contemporary art buyers and dealers (for example,the Mugrabi family is friendly with publisher Peter Brant; between them they control most of the world’s Basquiat and Warhol market) did not overly concern his supporters, not least because when Murphy was hired, Dolman, who was being promoted to chairman,was there to hold his hand. “Murphy was hired to turn us into a great big global brand,” says a very senior executive at Christie’s who always liked Murphy. “He understood media, the internet, PR. He was an aggressive business-getter. But Ed Dolman was the one with decades of experience in the business. Ed was the art world insider. The idea was they’d be a dream team.”

The dream ended quickly. In June 2011, nine months after Murphy’s arrival, Dolman left Christie’s to become director of the Qatar Museums Authority. He now says he quickly found he didn’t like being chairman after all. “I preferred being CEO,” he says. He also wanted to become a shareholder. “One of Mr. Pinault’s great strengths is that he’s very sure about these things, and we had no equity plan at Christie’s,” Dolman says diplomatically. Qatar was “a great opportunity.”

Some of Dolman’s former colleagues are more blunt, saying that, under Murphy, Dolman saw irrational business decisions at Christie’s that he didn’t feel were sustainable. Guy Jennings, the Impressionist expert who would leave Christie’s in 2014 after clashing with Murphy, says, “He wanted to maximize revenue now, now, now, or yesterday if at all possible. I asked him what he was doing for our children, but he wasn’t interested in the long term.”

Murphy embraced the modern way of doing business. He was unafraid of issuing vast guarantees; in fact, he was unafraid period. In 2011 he added Loic Gouzer, 34, to the contemporary art department. A good-looking Breton, Gouzer until 2009 had been at Sotheby’s, where he was seen as a loose cannon, but he was aggressive and had a roster of hip young clients, including neophyte collector Leonardo DiCaprio. Murphy felt Gouzer’s presence was good PR. In May 2014 Gouzer held his own contemporary art sale, called “If I Live I’ll See You Tuesday” (the title was inspired by a Richard Prince painting), which was widely written up—not because it made spectacular profits (it was reported to be a heavily guaranteed sale) but because of its slick packaging, which included a YouTube video of skateboarder Chris Martin maneuvering through Christie’s back offices to the music of Awolnation.

In all, Murphy spent a reported $50 million beefing up Christie’s marketing while modernizing the venerable firm with online auctions and its first public sale in Shanghai. In interview after interview, on television and in print, he also became the public face of Christie’s, and he seemed to revel in his iconoclastic reputation. He spoke often about “democratizing the art business,” which Dolman now calls “sound bite bullshit. How do you democratize a $20 million Warhol?” Yet it all seemed to be working. Starting in 2012, Christie’s contemporary art auctions started to roar.

In the summer of 2013, I met with Steven Murphy. It was a radiant day in London—one of those days the British, strangers to air conditioning, find too hot. Full disclosure: He was interviewing me, not the other way around, for a job, that of “chief content officer,” which he subsequently gave to someone else. Truthfully, I didn’t mind this outcome, not because the job wasn’t worth doing but because to do it well you’d need to be near Murphy, who was based in London. (He and his wife, parenting guru Ann Pleshette Murphy, had relocated there from New York.)

Murphy was dressed in a beige summer suit, and he had the spirit of a playful young Labrador about him. He talked fast and jotted down ideas. Like many Americans new to London he name-dropped a bit, but not annoyingly. He was passionate about taking Christie’s into the publishing business, both digital and print, and the time we spent bouncing ideas around was pleasurable. The meeting concluded with the two of us, both English literature majors, comparing favorite books and him promising to tell me in detail what happened to him during his “gap year,” the time he had spent after leaving Rodale for various parts of the Third World.

I left thinking he’d be a fun person to work with, but also that the job would be all-consuming, rather like a marriage. Barry Diller, the chairman of IAC, famously said a business leader must keep chucking ideas at the wall to see which ones stick. Clearly, this was Murphy’s approach. But I wasn’t sure of the stickiness of his brainwaves. “Maybe this will turn out to be a hugely important conversation,” he said during our meeting, whichI felt was an odd thing to articulate aloud.

I wondered how this effervescent fantasist got on with the taciturn and deadly practical Pinault, who had phoned him in the middle of our interview. “We get on fine,” Murphy had told me, but I was not convinced. I have spent time with Pinault in New York, Paris, and Venice, and I’ve seen the Frenchman’s blue eyes light up, but usually this happens when he sees a piece of modern art, its creator, or a luxury deal. Steven Murphy was none of these.

Hindsight makes it clear that Sotheby’s CEO William Ruprecht reacted all wrong to what he perceived as Murphy’s success. Like Edward Dolman at Christie’s, Ruprecht was a lifer who had ascended from the bottom of the auction house (in his case, a summer job as a typist). Like Dolman, Ruprecht, 58, was a former expert (in rugs). Both men had assumed the stewardship of their respective institutions in 2000, at the start of the price-fixing investigation. Both were seen as having risen to the challenges of corporate management.

But in December 2012, after he had been president and CEO for 12 years, Ruprecht was elected chairman of the Sotheby’s board. Many close to the business talked of being shocked. “Bill has never been a big outside presence,” says someone who has worked with Ruprecht for many years. “It was the ideal moment to get a complement to him, a fantastic, high-profile person. When that happened instead, I thought, They’re in for a management change one of these days.”

One person who took careful note was Daniel S. Loeb, owner of the hedge fund Third Point. Loeb has a record of buying stock in public companies he sees as needing a shake-up, then putting himself on the board, raising the share price, and cashing out. His most famous turnaround has been Yahoo, whose CEO he forced out in favor of current head Marissa Mayer. (A year later he sold his initial stake in Yahoo at a profit of 129 percent.) Loeb, 53, is a New Yorker and a contemporary art collector. He owns works by Warhol, Basquiat, Cindy Sherman, and Richard Prince. He is also friends with Tobias Meyer, then Sotheby’s principal auctioneer.

In the summer of 2013 Third Point bought 5.7 percent of Sotheby’s shares, which many saw as indicating that Loeb intended to supplant Ruprecht and replace him with Meyer. The commanding, German-born Meyer ran Sotheby’s contemporary art department—the division getting walloped by Christie’s booming sales of balloon dogs and squeegee paintings—and the frustration in the department was thought to be all-consuming.

“To the outside world the headlines of’Christie’s blows everybody away’—it was completely ridiculous,” says a well-placed Sotheby’s insider (not Meyer). “Christie’s was giving away most of their earnings for a big flash of market share and huge numbers. They don’t care what the net results are.”

The auction house’s secret strategy may have been exposed last year by megacollector Peter Brant, who admitted to the New York Times that when he sold a balloon dog to Christie’s in 2013, the auction house not only waived its standard commission fee (which for the $58.4 million piece could have been a whopping $5 million) but also gave him a large share of the fee it normally would have collected from the buyer. In other words, Christie’s was prepared to sacrifice much of its profit for the gloss and glory of coming in first.

“They do not disclose the deal structure, so you don’t know how much has been given back,” the Sotheby’s insider says. If Christie’s loses money on deals, no one outside the company knows; there are no shareholders and no publicly issued profit-and-loss statements.

When Loeb began accumulating shares, some assumed he intended to empower his friend Meyer to fight back using similar tactics. In fact, Meyer left Sotheby’s shortly afterward, and when, in October 2013, Loeb did finally call for Ruprecht’s resignation, he castigated Sotheby’s for trying to blame its problems on “predatory behavior by Christie’s.” It was Sotheby’s, Loeb wrote in an open letter, that had “most aggressively competed on margin, often by rebating all of the seller’s commission and, in certain instances, much of the buyer’s premium to consignors of contested works.” By then Third Point had amassed 9.3 percent of Sotheby’s stock, becoming its largest shareholder. Loeb also criticized Ruprecht for receiving a lavish salary of $6 million per year, including such perks as a driver and country club memberships, while his company suffered “chronically weak operating margins and deteriorating competitive position.” Sotheby’s, he famously added, was like “an old masterpiece in desperate need of restoration.”

Ruprecht reacted quickly, initiating a poison pill that stopped Loeb from amassing more shares. And something that arguably should have been done in 2012, when the board chairmanship was open, finally happened: Domenico De Sole, the renowned co-founder of Tom Ford International who transformed Gucci in the late 1990s, joined the Sotheby’s board as lead director. De Sole, 70, a Harvard-educated lawyer, met with Loeb and made it his business to stay friendly with him throughout what would become an all-out war. In February 2014 Loeb asked for board seats for himself and two others: Harry J. Wilson, a former U.S.Treasury official, and Olivier Reza, the head of Alexandre Reza, a Paris-based luxury jeweler. Ruprecht responded by putting up his own three candidates, the so-called “Sotheby’s slate.”

In late April the two sides headed to court in Delaware, and over a weekend in May—just before the house’s spring auction of con-temporary art, which set individual records for sales by Julian Schnabel, Keith Haring, and Matthew Barney—a compromise was hammered out, thanks to back channel diplomacy by De Sole. Loeb, Reza, and Wilson would get their seats (as would the Sotheby’s slate), and Loeb would get $10 million to pay his legal expenses.

Officially, order was restored. Loeb was often seen in the Sotheby’s headquarters on the Upper East Side. So was De Sole, who joked to me that he joined the board because he had thought it would be “interesting—but I hadn’t quite realized how interesting. “Loeb also complained to friends that Sotheby’s was more time-consuming than any of his other investments. He had gotten himself onto the board, but now what? “How do you think you can fix this, Dan?” he was asked by people on the Sotheby’s staff. If he had answers, he wasn’t revealing them. Since Loeb joined the board, Sotheby’s stock price has spiked several times, but overall it has been stable.

Still, on November 20 it was leaked that William Ruprecht was stepping down. The announcement came 10 days after a triumphant auction at Sotheby’s of masterworks belonging to Bunny Mellon that fetched $159 million, exceeding estimates, but only eight days after Christie’s trounced its rival yet again in the latest contemporary sales, $853 million to $344 million.

Sotheby’s board had reached a “mutual decision,” the press release would read. Ruprecht would receive severance totaling $6 million, and he’d stay on until June 30 while a search committee led by De Sole looked for a successor. Prominent headhunting firm Spencer Stuart (which had brought Marissa Mayer to Yahoo) was engaged; there has been talk of a very long short list that inevitably included Tobias Meyer; Amy Cappellazzo, another friend of Loeb’s and the former international chairman of Postwar and Contemporary Art at Christie’s; LACMA head Michael Govan; and MoMA chief Glenn Lowry.

If ever a time had come for Steven Murphy to celebrate, this was it. Sotheby’s was way behind in contemporary sales, its management in disarray. Indeed, at dinner parties with his close friend Lady Fiona Carnarvon (owner, with her husband George Herbert, 8th Earl of Carnarvon, of Highclere Castle, the setting of Downton Abbey), Murphy seemed relaxed, confident. According to friends, he and his wife were trying to figure out where to stable their horse and whether or not to rent a weekend cottage on the Highclere estate. And so he was caught utterly off guard when he was summoned to the now famous meeting on December 2. “He simply had no idea,” his wife told friends.

One person not surprised was Edward Dolman, who had returned from Qatar the previous summer and assumed the stewardship of Phillips, the so-called “third auction house.” “I think,” he mused, “what you are seeing is the rational side of the business taking over from the irrational. Pinault makes decisions quickly. He doesn’t have to answer to a board,” Dolman adds. “When he makes up his mind, he executes.” Others speculated that Ruprecht’s departure, since it left Sotheby’s in a bad spot, offered the Frenchman an opportunity to let go of Murphy. “He’s concerned a downturn is coming in the luxury goods sector,” says someone close to him. (Ten days later Pinault’s son François-Henri fired both the CEO and the creative director at Gucci.)

While the relative timing is striking, the changes atop the auction houses are not comparable in that Christie’s, unlike Sotheby’s, is perceived as extremely stable. Patricia Barbizet is widely considered capable, as are Pylkkänen and Brooks. “It may be the business has gotten too tricky for just one person to run it,” one senior executive at Christie’s says. Barbizet is said to have scheduled four meetings with Pylkkänen in the first 10 days of January. Sotheby’s, meanwhile, has witnessed little easing off in dealmaking on the part of its competitors. “If [Murphy’s firing] was supposed to be some sort of smoke signal—we’re going to make more sensible, profitable deals—well, we’re not seeing that,” says a Sotheby’s insider.

Whoever comes in at Sotheby’s, a complete remodeling of the business is in order, according to Dolman. “Sotheby’s and Christie’s are so big they’ve become institutions,” he says, adding that in the current era, when contemporary art “takes up two-thirds of the business,” it may not make sense to have huge overhead elsewhere. Phillips, of course, has the advantage of being lighter and nimbler than its counterparts. “I like the idea of a small, high-end, high-quality business, focusing on particular areas of the market without trying to be all things to all men,” Dolman says. A flow of applicants from both houses came to his door during the current uncertainty.

As for Steven Murphy, he appeared to recover quietly. He sent e-mails to old friends wishing them a Merry Christmas. He still visited Fiona Carnarvon on weekends. He held a farewell party for Christie’s staff at his Chelsea townhouse, but there was no sign he was leaving London for New York.

“It was unfortunate he was let go the way he was,” says a former Christie’s colleague. “I don’t know why it was necessary. I liked Steven.”

A Four-Star Scandal

The Gasparilla Pirate Fest is Tampa’s version of Mardi Gras. It’s perhaps the most eccentric — and politically incorrect — civic festival in the country. Every year, on the last Saturday in January, the men of Tampa, including those from the oldest, richest families, dress up as pirates and invade the harbor in “krewes,” while the poorer civilians let themselves be invaded, at least symbolically. The festival was founded in 1904 by the oldest krewe, Ye Mystic Krewe of Gasparilla, which took its name from the legend of the courtly buccaneer Jose Gaspar, who, the story goes, eluded the United States Navy by wrapping himself in an anchor chain and plunging to the bottom of Tampa Bay. Ye Mystic Krewe’s membership is currently closed, at 760, and there’s a waiting list. “The old guard, the established hereditary class, they have not integrated their membership,” Amy Scherzer, the social chronicler at theTampa Bay Times, told me. Still, there are dozens of newer krewes that have embraced diversity, and Gasparilla, despite its aristocratic origins and social pretensions, isn’t exactly a redoubt of Tampa society — or a model of decorum. Women bare their breasts, drunkenness is rampant, and the police look the other way. “I kept an off-duty sheriff on my lawn,” said Norma Gene Lykes, whose family, which had holdings in steamships, cattle, citrus, and land, practically founded Tampa, in the mid-1800s.

In the midst of this intoxicating melee is the military. The current director of Ye Mystic Krewe of Gasparilla is a retired military man, as were three former directors, including the late James Tarbet, a 25-year Royal Navy veteran and former aide-de-camp to Prince Charles. Tampa’s chief link to the military is MacDill Air Force Base, which sits on a spit of land that juts south into Tampa Bay and is home to Central Command (Centcom), Special Operations (Socom), and the Coalition Forces. The base was put there in 1939 because the site is surrounded by water and was considered a safe place for test flights. Tampa and the military have always looked out for each other. “The military is a crucial part of the fabric of this community,” former mayor Sandy Freedman told me. Tampa has one of the leading veterans hospitals in the country. Generals Tommy Franks and the late Norman Schwarzkopf liked the town so much they retired there. Military dollars help keep the economy running, and military protocol and pageantry add heft, sparkle, and intrigue to Tampa society. It’s also well known that many military men are enthusiastic patrons of Mons Venus, a local strip joint whose founder is renowned as the inventor of the nude lap dance.

PHOTOGRAPH BY WIN MCNAMEE/GETTY IMAGES

PHOTOGRAPH BY WIN MCNAMEE/GETTY IMAGES

Every year the Gasparilla fest includes a Parade of Pirates, led by Ye Mystic Krewe, that winds through Tampa on a 3.8-mile route and, at one point, passes by the Bayshore Boulevard residence of Jill and Scott Kelley. More recently another kind of parade has made its way to the Kelleys’ mansion: Reporters and photographers have been streaming there since last November, in the wake of the scandal that resulted in the resignation of General David Petraeus as head of the Central Intelligence Agency. It was revealed that the general had been having an extramarital affair that came to light only because Paula Broadwell — the biographer with whom he’d had the affair — had written disturbing e-mails under the handle “Kelley Patrol” to Jill Kelley, warning her to back off from her relationship with Petraeus, the four-star general whom Broadwell liked to call “Peaches.” Similarly ominous messages were sent to Petraeus’s former second-in-command at MacDill, General John R. Allen, reportedly warning him to beware of the Tampa “seductress.” In the days that followed, Petraeus, Allen, Broadwell, Kelley, and a local FBI agent named Frederick W. Humphries II, who had been asked by Kelley to investigate the matter, were exposed to intense media scrutiny, as the baroque details of the affair trickled out, with devastating consequences for some national heroes.

As the tabloids camped out in front of the Kelley house, the 37-year-old woman at the center of it all quickly became notorious. She said nothing, but she seemed to revel in the effect created by the bright pink and yellow figure-hugging dresses she wore to parade in front of the paparazzi. At one point Jill Kelley called Tampa’s mayor, Bob Buckhorn, and requested “diplomatic protection” because she held the title of “honorary consul” for South Korea. (Since the title was honorary, the request was denied.) Onlookers couldn’t help wondering: Who is the woman at the heart of this tawdry tale, and how did she insinuate herself into the most exclusive levels of Tampa society, not to mention national power?

Jill Kelley’s twin sister, Natalie Khawam, was a Washington, DC, lawyer who often visited the Kelleys and became a fixture at their Bayshore Boulevard parties before she eventually relocated to Tampa. A photograph of the two sisters in matching designer suits was featured prominently in Kelley’s house, and guests quickly named the duo “the Chanel twins.” “They targeted the rich and powerful here very clinically,” said one society heiress, who explained that she “dropped them, like we all did, because they behaved so badly. If they thought someone was no one they just ignored them.” There were stories about Jill and her surgeon husband hosting lavish parties and receptions, even though their finances were a mess. Many a Tampa matriarch was left shaking her head, and the Chanel twins gained a new nickname: the Kartampians. The members of Tampa society would be damned if they were going to let the twins reduce them, and their town, to the level of tabloid and reality show sleaze. The Kartampians were something of a Gasparilla in reverse: arrivistes intent on swashbuckling their way through Tampa society, taking no prisoners. “I called probably 50 people,” Amy Scherzer, of the Tampa Bay Times, said. “They all had a Jill Kelley story, and none of them was flattering.” Sandy Freedman, the former mayor, told me, “This town has become too porous. That a bimbo like Jill Kelley should be given any kind of recognition or access to the military — it’s outrageous. Tampa needs to be more careful about vetting people. It cannot go on like before.”

Jill and Natalie could not have picked more fertile ground for “arriving” socially than Tampa, which Scherzer described as “a well-kept secret for almost one hundred years.” It offers easy access to the Northeast — the flight to New York takes only three hours — and the town’s relaxed Southern charm, slow pace, and balmy temperatures make it a target for those wishing for a wonderful lifestyle without the social and financial pressures — or restrictions — of Palm Beach. And parts of it are just as beautiful, if not more so. Bayshore Boulevard fronts the water and has the longest unbroken sidewalk in the world (four and a half miles). The houses on it are genteel Southern mansions that can be had for only about a million dollars. The area is welcoming in other ways, too. “There are fewer older families here than elsewhere in the South,” Norma Gene Lykes said. “Anyone with money can make it here, but you have to behave nicely. I hate to say that, but it’s the only rule.”

Tampa’s other founding families include the Fermans, Franklands, Lowrys, McKays, Culbraeths, and Howells. All are members of the Palma Ceia Golf & Country Club and the Tampa Yacht & Country Club, not far from Bayshore Boulevard. But those lines are dwindling, along with the old Latino families that made Tampa a North American capital of cigarmaking: the Corrals, Cuestas, Garcias, and Vegas. The town has many more professionals than blue bloods these days. “More doctors and lawyers than we need,” as Lykes puts it. Another breed that Tampa is known for: sports owners. In 1976, New York Yankees owner George Steinbrenner moved down from Cleveland; his two daughters, Jennifer and Jessica, grew up here and married locals. His two sons, Hal and Hank, also live here. Other Tampa sports owners have included the Glazers (Manchester United and Tampa Bay Buccaneers). Star players come too: Derek Jeter built a 30,875-square-foot house in the Davis Islands enclave that the locals have taken to calling “St. Jetersburg.”

All of this makes the town an eclectic, unpretentious mix, something its people are proud of. They like characters and intrigues — as long as they are “in bounds.” Another former mayor, Dick Greco (who served four terms), is married to Dr. Linda McClintock, a physician who has been married so many times people have lost count. They are popular, beloved figures. “Dick Greco is always the last to leave a party, and while he was mayor he was often to be found at 2 a.m. socializing in Ybor City with whoever happened to be there,” said Scherzer, referring to the town’s arty nightlife district. The road construction magnate Douglas “Diesel” Cone, a member in good standing at Palma Ceia, kept a mistress and a second family in an exclusive North Tampa neighborhood for 25 years. This fact was revealed only days after his wife Jean Ann died in 2003 and he quickly married the mistress, Hillary Carlson. For years Cone had apparently lived another life as “Donald Carlson,” devoted husband to Hillary and State Department employee. Tampans love this kind of story, and they are not prudes.

Jill Kelley arrived in Tampa in 2001. She had recently married Scott Kelley, a surgeon who had been offered the position of his dreams: a fellowship at Tampa’s H. Lee Moffitt Cancer Center, widely considered one of the top 10 cancer facilities in the country. They soon bought a three-bedroom spec house in the well-heeled neighborhood of Hyde Park, right behind Bayshore Boulevard.

Jill was born Gilberte Khawam in Lebanon of Syrian parents, on New Year’s Day 1975, and grew up around Philadelphia (where she was known as Gigi), along with her identical twin, Natalie; an older sister, Caroline; and a younger brother, David. Her parents moved to the United States in 1976 with nothing. In 1988 they opened a Middle Eastern restaurant called Sahara, in Voorhees, New Jersey. Jill and Natalie both attended Lower Moreland High School, in the suburb of Huntingdon Valley, Pennsylvania, where classmates recall that they were introverted and kept mainly to themselves. One of them remembers Jill announcing that everyone would think of them differently after they’d had nose jobs, which they eventually had — together — in New York, according to Tony Khawam, a distant cousin once married to their sister Caroline. A family friend recalls the Khawam household as being “traditional Lebanese” and very welcoming. But according to Tony Khawam, the mother, Marcelle, had a habit of overspending, and Sahara closed after only a year in operation because the family could no longer afford to keep it staffed. The family lost its home, and the father, John Khawam, returned to his previous occupation, selling insurance.

After graduating from Lower Moreland in 1993, Jill took a job as a researcher for a physician at the University of Pennsylvania, where she soon began dating Scott, a burly, affable surgical intern out of Columbia Medical School who had been an undergrad at Dartmouth. Scott had worked his way up from Boston’s middle class, and for Jill he represented, to use a phrase she would later often repeat, an “upgrade.” Tony Khawam remembers her laughing with Natalie about her success. “He’s going to be a surgeon!” she would brag, perhaps seeing a way out of the family’s financial straits. Jill and Scott married in a Catholic ceremony in Philadelphia in 1998. (The Khawams are Syrian Catholic.)

Meanwhile, according to Tony Khawam, the inseparable twins (who declined to be interviewed for this story) had come up with “a plan” that was focused on one thing: money. “They made up their minds they were going to use men to get money, and they discussed this quite openly in front of the family,” he said. He added that Natalie got engaged several times, and in each case would use the beau’s credit card for trips and clothes for Jill, Scott, and the twins’ parents, before dumping him. One of Natalie’s boyfriends was Lew Blum, 20 years her senior, who owns a well-known tow truck business in Philadelphia. “They’re mean. They’re just mean,” Blum said. “I couldn’t realize that they were nothing but cons.”

Blum claims that he lent Natalie the down payment for a Jersey Shore condo — $50,000 that vanished. “I probably invested in those people maybe about a hundred grand, like going on trips and paying for rooms. That was how they used me. I thought these people liked me. They didn’t like me. They took my money; they promised to pay me back. They didn’t pay me back.”

Of course, Tampa knew nothing of this. By 2004, all anyone knew was that the Kelleys and their two young daughters, with a third on the way, were living the high life in the $1.4 million Bayshore Boulevard brick mansion with columns and dormer windows they’d bought that year. “They started having large birthday parties for their children, with huge bouncy houses,” Norma Gene Lykes recalled. “They had these funny things at Christmas that blow up. That’s not something you usually see on Bayshore. Bayshore’s a little more subdued than that.”

The ostentatious young family appeared to want for nothing. The household staff the Kelleys hired at their new home included a live-in nanny and a housekeeper who wore a French maid’s uniform at Jill’s parties. The Kelley children were often dressed in matching outfits.

Many locals found the Kelleys’ behavior over the top. But the couple had started appearing in the pages of the Tampa Bay Times in 2002, and by 2006 they had established themselves as a social duo who loved to throw parties. They could always be counted on to have free-flowing champagne and a glittering guest list. “It started with the Grecos, who are just very welcoming,” Scherzer told me, referring to the former mayor and his wife. But soon there were the Steinbrenner siblings, whom Jill befriended when their children attended the same preschool, and, increasingly, the military. “Jill liked dramatic, floor-length halter-neck hostess gowns, even for a casual supper,” one former guest recalled. “She would sometimes wait until everyone was assembled and then make her grand entrance.” Jill knew how to charm and have fun. “People thought they were a riot,” Scherzer said. “People assumed they were from Lebanese money.”

Then, in November 2008, General David Petraeus, the popular commander of the multinational forces in Iraq, was transferred from Fort Leavenworth, Kansas, to MacDill, upon being promoted to the leadership of Centcom, where he oversaw the troops in Afghanistan. The Kelleys arranged a dinner party for the general and his wife Holly, the daughter of the late general William A. Knowlton, when they arrived in town, to welcome them to the community and introduce them to Tampa society. The guest list for the event indicates how far the fun-loving Kelleys had ascended in only a few years. It included Tampa mayor Pam Iorio and Florida governor Charlie Crist.

The Petraeuses and the Kelleys became fast friends, frequently dining at each other’s homes. Some of the Petraeuses’ more formal friends didn’t know what to make of the fast-rising Kelleys. When the general and his wife hosted a dinner, cooked by a private chef at MacDill, the whole thing was immaculate — except, some guests say, for Jill Kelley and Natalie Khawam. “First of all, they were dressed inappropriately,” one guest told me. “Miniskirts, boobs out — and everyone else looked elegant.” The girls’ full figures, along with their favored conversational subjects, only furthered the Kardashian-like impression they made on Tampa society. “Jill would yammer on about shopping and travel, while Natalie would discuss whistleblowers and class action suits and, especially, her divorce — she talked like she was going to collect billions of dollars,” the guest said. “Scott barely said a word except ‘Hi, how are you?’ ”

In 2009 the Kelleys hosted the Petraeuses for a Christmas dinner. The general sat between the twins at one end of the table, while the matronly Holly, a former debutante who graduated summa cum laude from Dickinson College (and whose father was the superintendent of West Point), was seated at the other end. Another guest recalled that during dinner one of the twins screamed, ” ‘Look at my new Manolo Blahnik shoes!’ and kicked up her legs for everyone to see. David Petraeus absolutely loved it.” Natalie joked to one of her friends, “I am Petraeus’s version of People magazine!”

It was all fun, for the most part. But some in Tampa society began to note a darker, conniving side. One matriarch I spoke to said, “Basically, my ex-husband and I weren’t getting along so well, and we’d be having dinner with Jill and Scott in a restaurant, and suddenly Natalie, who hadn’t been invited, would appear wearing a skimpy outfit. The next thing you know Jill would be in my then-husband’s lap.” Several society wives called one another and expressed their fears that Jill was setting Natalie on their husbands. Tony Khawam said that from his perspective the wives were entirely right to suspect this. The twins, after all, were quite clear about their plans behind closed doors. “They had their eyes on Hal Steinbrenner and his brother Hank,” Khawam told me. “They’d take trips on the Steinbrenners’ plane and brag about how they would split Hal up from his then-wife, Christina — and then the plane would be theirs.” Khawam went so far as to call someone who worked in security for the Steinbrenner family to warn them about what was going on. Hal Steinbrenner and his wife did ultimately split up, but not, according to a source close to them, because of Jill and Natalie.

As such exploits began to make the rounds of Tampa conversation, Jill and Scott Kelley’s marriage also became a subject of speculation. “Jill controlled Scott,” said one observer. Many people heard Scott complain about how, no matter how hard he worked, he could not make enough money for his wife’s spending habits. “Have you tried cutting up her credit cards?” one person is said to have asked. “She just orders more,” he replied.

In early 2008, Natalie had married a DC-based businessman, Grayson Wolfe; in the fall of that year she gave birth to Grayson Paul Wolfe II. Almost immediately afterward, she filed for divorce and moved from DC to Tampa, into a small house at the back of the Kelleys’ Bayshore Boulevard mansion, with her son. She claimed that Wolfe had been physically abusive. The claims were eventually ruled in a court opinion to be false, but over the next 17 months Wolfe was not allowed to visit his child. In the interim Natalie and the rest of her family began calling the infant by a new name — a fact his father realized only when he caught a glimpse of a photograph of his son’s one-year birthday cake, decorated with the words “Happy Birthday John.”

Scott Kelley’s expenses increased when Natalie moved in. He was now supporting not only his wife, three children, and a household staff, but also his sister-in-law and her young son. Troy Jimenez, who occasionally did Jill’s and Natalie’s hair, noticed that the sisters often didn’t pay for their Saturday afternoon appointments. “They just forgot to have their credit cards with them,” he told me.

Around this time Scott left Moffitt for a new job at the Watson Clinic in Lakeland, a 90-minute drive from Tampa. Fortunately, it came with a hefty pay upgrade, or so he told people. Dr. Kelley needed the raise. In addition to the pressure of having to support his wife’s sister and nephew, more financial trouble was brewing. Jill had bought an investment property in downtown Tampa for $1.8 million, but its value plummeted because of the economic meltdown. Natalie, a 2005 Georgetown Law School graduate, found work at the Tampa firm of Cohen, Foster, and Romine, run by the colorful Tampa lawyer Barry Cohen, but left within six months after making a sexual harassment accusation against a co-worker.

If the twins were in turmoil, they hid it well. Jill and Natalie became close to the Petraeuses’ 30-year-old daughter, Anne, eventually attending her wedding, in 2012. They also became close to an expanding network of senior military personnel, including General John R. Allen and his wife Kathy, and a good-looking Navy SEAL, Vice Admiral Robert S. Harward, who arrived that year to become the deputy commander of Centcom. All of them, at various points, would show up at the Kelleys’ for parties, often in staff cars. Accepting local hospitality was a military custom. Everyone had everyone else’s e-mail addresses. The barriers were down.

When the Kelleys invited the Petraeuses to their Gasparilla bash in January 2010, of course the Petraeuses accepted. They’d never been before. The military couple arrived with a 28-motorcycle police escort, and they hobnobbed with state attorney general candidate Pam Bondi and David Laxer, the owner of Bern’s Steak House, a Tampa landmark. The four-star general described the proceedings as “awesome.” His financially challenged hosts apparently found creative ways to hold down champagne and canapé costs at their functions. “I have heard from several people that Jill used patriotism as her carrot and asked vendors to donate food and wine when she entertained the military,” Scherzer told me. The Kelleys also typically hired multiple security guards for Gasparilla, and there was a report of one guard using a Taser to shoo away the rabble that day.

The Kelleys’ money problems continued to worsen in the months that followed. Their home was foreclosed on in 2010 (they ultimately managed to hold on to the house), and they have been involved in numerous credit card disputes since then. These included a Chase Bank allegation over a revolving credit account debt of $25,088.56, which has since been dismissed, and a Regions Bank suit for $253,437.31 for unpaid credit card bills. (The couple has since agreed to a repayment schedule.) The couple have nine court actions on record involving debts, mortgages, and multimillion-dollar foreclosures. In 2007 the Kelleys set up a now-defunct cancer charity called the Doctor Kelley Cancer Foundation. Records give no indication of any funds from this foundation going to cancer patients, although the Kelleys claimed $135,423 in expenses and tax write-offs. “I think having Petraeus’s personal e-mail made Jill feel pretty special, like maybe she didn’t have to pay her mortgage and could fudge the numbers on a nonprofit,” Scherzer told me.

Natalie, meanwhile, made a bankruptcy filing showing that she owed $3.6 million to an array of creditors, including $800,000 to Scott and Jill Kelley. She and Scott had embarked on a strategem in 2009, drawing up a potentially big money lawsuit against the medical company Genzyme, manufacturer of an adhesive that covers and protects incisions after surgery. Scott believed that Genzyme had misrepresented its approved use by suggesting it could also be crunched up and inserted as a slurry into wounds. He and Natalie found two Genzyme sales reps who would be whistleblowers. But then Natalie’s departure from Cohen, Foster, and Romine complicated the initiative.

In March 2011 the Petraeuses hosted a ceremony at the U.S. Capitol, in Washington, awarding medals from the Joint Chiefs of Staff to four civilians for distinguished service to the military. All the recipients were members of the Petraeuses’ Tampa social circle; two of them were Jill and Scott Kelley. Jill’s “selfless contributions” and “willingness to host engagements” were cited as reasons for her receiving the military’s second-highest civilian honor.

Inevitably, Natalie was invited to the dinner following the ceremony, at Washington’s Prime Rib restaurant. Unlike the other guests, the twins made a point of changing outfits for dinner. Photographs show Jill in a floor-length pink evening gown, while Natalie is in black, leaning into Petraeus. They are both smiling.

But by November of that year Natalie had less to smile about. Despite letters of support from generals Petraeus and Allen, her ex-husband Grayson Wolfe was granted full custody of their son. Judge Neal E. Kravitz wrote a searing opinion, finding Natalie to be “a psychologically unstable person” with “an unsteady moral and ethical compass.” The judge reported that a court-appointed psychiatrist had found that her allegations against her ex-husband — which included his putting a gun to her head — were “part of an ever-expanding set of sensational accusations…so numerous, so extraordinary and so distorted that they defy any commonsense view of reality.” (Natalie is appealing the verdict.)

In 2012, Jill received her “honorary ambassador” title for her service at MacDill from Centcom and an “honorary consulship” from the South Korean government. (Neither title comes with any official rights or responsibilities.) The Tampa locals were startled to see “Honorary Consul 1JK” vanity plates on her Mercedes S500. She also bragged of visits to the White House and other high-level connections. She sent breezy e-mails to Tampa’s mayor, Bob Buckhorn, saying, “I’m up in DC having dinner tonight with Gen Petraeus & Gen John Allen,” and, “I was at the WH with my friends in the Administration this weekend — the stress was surreal!”

But there were signs that the military leaders were growing tired of the Kartampians. In the spring of 2012 General Allen’s wife Kathy called Mark Rosenthal, a sporty member of Tampa society known for the “train room” in his converted garage, to complain about the e-mails Jill and Natalie were sending her husband. Rosenthal, in turn, called Jill and left a voicemail suggesting to his friend that it was inappropriate to pester members of the United States military’s high command and their wives. Jill apparently did not respond. Vice Admiral Harward’s office, meanwhile, started to make calls to civilian friends to see if they could somehow get the twins to leave the admiral alone. Last fall, before the Petraeus scandal broke, MacDill’s chief officer of protocol canceled a dinner that Jill Kelley had organized in DC that Centcom’s new commander, General James Mattis, was to host.

No one knows precisely how Paula Broadwell, Petraeus’s biographer, first heard about Jill Kelley and her sister. But since she was having an affair with Petraeus, one can speculate about the source. Some of the general’s friends wonder if he began to express irritation and Broadwell went too far in trying to protect him, or if it was, as others have suggested, a “catfight.” (No one I spoke to would venture to say whether the friendships the twins enjoyed with Petraeus, Allen, and Harward had crossed the line to become romantic affairs.)

Either way, Broadwell’s “Kelley Patrol” e-mails started a train wreck. The FBI agent to whom Kelley went to air her concerns about cyberstalking, Frederick Humphries, was a friend of all concerned. He was also a national hero, having helped foil the planned Al Qaeda attack on Los Angeles International Airport in 1999. Humphries immediately reported the threats to his superiors, who in turn asked to see all his e-mail correspondence with the Kelleys. Two years previously he had e-mailed the couple and other friends a spoof photograph of himself topless and flanked by two target dummies. He became a laughingstock when the story got twisted by the media into his “posing shirtless” for Jill Kelley, and the innuendo went viral. He e-mailed a friend saying he was miserable and could not believe what had happened to him.

Petraeus, of course, resigned from his post as Director of Central Intelligence on November 9. General Allen then became the target of an investigation into the appropriateness of his extensive e-mail correspondence with Jill Kelley. President Obama has put Allen’s nomination to become supreme commander of NATO on hold as that investigation continues.

And Tampa’s famous twins? Jill initially hired Monica Lewinsky’s publicist, Judy Smith, the inspiration for ABC’s Scandal, and John Edwards’s lawyer, Abbe Lowell, who has filed a series of complaints in every direction: against the FBI for leaking information about his client; against Natalie’s former employer, Barry Cohen, seeking damages for revealing privileged information; and against a New York businessman, Adam Victor, for defamation. (Victor alleged that Jill had asked for $80 million in commissions to put together a business deal with the South Korean government and that she had used Petraeus’s name to get in the door.) Natalie hired the celebrity attorney Gloria Allred and gave an attention-grabbing press conference that left the press corps scratching its head. She is still pursuing her sexual harassment case against her old employers.

The question remains: How did General Petraeus ever get mixed up in all this? Amy Scherzer shared a theory with me: “I know people wondered why David Petraeus was so taken with them, and I couldn’t help thinking that maybe he wanted an escape from the world” — and, as Centcom commander, the world and its security were essentially his purview. “These girls were the perfect escape. They are fun, effusive, hospitable.”

Norma Gene Lykes had some insight into the fast rise and even faster fall — if that’s what it is — of the Kartampians. “They tried social climbing in a place where there’s a very short ladder,” she told me. “And the fact that they couldn’t do that, I think, says a lot about them.” She believes Tampa’s reputation may have suffered irreparable damage. “Frankly, it is an embarrassment. Tampa is now known for the seedy underbelly of MacDill.” Mayor Buckhorn declared the whole affair “a circus” in the Tampa Bay Times. “Hopefully, this thing will go away soon,” he said, “and we can all get back to business.”

Indeed, the Kelleys’ inflatable Christmas decorations went up as usual on Bayshore Boulevard, and they spent New Year’s Eve partying in New York. There was no sign of any bruising, even though Jill was stripped of her honorary consul title and is no longer allowed through the checkpoints leading into MacDill. As Gasparilla 2013 approached, Tampa society wondered if the Kelleys would go ahead with their annual front lawn blowout. In any case, the city is longing for the day when it can open a newspaper and no longer read the words Jill and Natalie.

I Tried to Warn You About Sleazy Billionaire Jeffrey Epstein in 2003

“Jeffrey wanted me to tell you that you looked so pretty,” the female voice said into my disbelieving ear.

It was the fall of 2002. I was pregnant, uncomfortably so, for the first time and with twins, due the following March. I was besieged by a relentless morning sickness. I was sick in street gutters, onto my desk, at dinners with friends. I suffered severe bloating and water retention.

But here was this faux-compliment coming, bizarrely and a bit grotesquely, from a woman I hadn’t met—a female assistant who worked for one Jeffrey Epstein, a mysterious Gatsby-esque financier whom I’d been assigned to write about by my then-boss Graydon Carter, the editor of Vanity Fair. (Epstein had caught the attention of the press when he had flown Bill Clinton on his jet to Africa. No one knew who he was or understood how he’d made his money.)

 

Photo Illustration by The Daily Beast

Photo Illustration by The Daily Beast

Upon hearing of my assignment, Epstein had invited me to an off-the-record tea at his Upper East Side house (during which I distinctly remember he rudely ate all the finger food himself) and then had his assistant call to tell me he’d thought I was pretty.

At first—it was the early stages of reporting—I was amused at having been so crassly underestimated. For a man who clearly considered himself a sophisticated ladies’ man (the only book he’d left out for me to see was a paperback by the Marquis de Sade), I thought his journalist-seduction technique was a bit like his table manners—in dire need of improvement.

If only it had all ended there. This was what it had been meant to be. A gossipy piece about a shadowy, slightly sinister but essentially harmless man who preferred track-pants to suits but somehow lived very large, had wealthy, important friends, hung out with models, and shied away from the press.

But it didn’t.

I haven’t ever wanted to go back and dwell on that dark time. But then the latest Epstein scandal broke, when Prince Andrew was accused in a Florida court filing of having sex with a 17-year-old girl while she was a “sex slave” of Epstein’s.

In the last 48 hours I’ve had a journalist from the U.K. Sun newspaper put herself inside my foyer. I’ve been inundated with requests for TV interviews. And Epstein’s old mentor, the convicted fraudster Steven Hoffenberg, recently released from jail after a 20-year sentence, has been pestering me and my agent to write a movie.

Separately, Hoffenberg’s daughter has gotten in touch—and it’s gotten me thinking. There are some injustices that maybe only time can right. And perhaps now is the time. Things happened then that simply shouldn’t have, and if I don’t talk about them, then probably no one will.

It became obvious as I was reporting his story that you could essentially divide Jeffrey Epstein’s biography into two themes. One was the hidden source of his wealth—he claimed he’d fueled a lifestyle of vast homes, a private jet, and endless travel by managing the money of billionaires and taking a commission, a story that no one I spoke to believed—while the second mystery was his unorthodox lifestyle.

“The advice I was given was he is so wealthy, he can fight you, he can make your daughters look ridiculous, plus he can hurt them.”

Then in his 50s, he’d never been married but had had a string of intelligent, good-looking girlfriends, including Ghislaine Maxwell, the raven-haired daughter of the late, disgraced British newspaperman Robert Maxwell whom he promoted from girlfriend to “friend” when it was over. She remained frequently by his side.

But the New York gossip was focused on the many parties he gave at his house, where he regularly hosted a mix of plutocrats, academics from Ivy League schools, and nubile, very young women. Oh, and also Britain’s Prince Andrew, whom he introduced to everyone as just “Andy.”

 

I got to work on all of it—and Epstein kept close tabs on me. He didn’t want to be seen to cooperate, but he’d do his best to control me. He phoned regularly. I wasn’t altogether surprised to be quickly summoned to the offices of the rich and powerful, sometimes before I’d even asked to meet with them.

James “Jimmy” Cayne, then the cigar-chomping CEO of Bear Stearns, not only phoned me up, he found the time in his busy day to give me a tour of the office. He was on his best behavior, talking up Epstein’s alleged supposed great brain, his value to the bank—never mind the fact that Epstein had had to leave it quickly in 1981; this Cayne put down to Epstein’s ambition “outgrowing” the place.

I also met with respected real estate developer Marshall Rose; the former Bear Stearns chairman Alan “Ace” Greenberg called me; so too did Leslie Wexner, the founder and CEO of The Limited, who trusted Epstein so much he had given Epstein carte blanche to insert himself into both Wexner’s family and business affairs, according to people who saw Epstein’s contract; they all chattered on about Epstein’s brilliantly creative mind, his intellectual prowess—a mental agility that, to put it bluntly, was simply not evident in the many phone conversations he had with me.

These were conversations that took a fairly grim twist pretty quickly. “What is the nature of the piece?” he kept asking. “Does it have this aspect in it?” “This aspect” would refer variously to his philanthropy, his interest in biological mathematics, his well-known friends, some tycoons, some academic wonks—and yes, the women. “I don’t expect there’d be a piece on me without that,” he’d said, preening.

The women he directed me to were all respectable. There was a doctor, there was a socialite, there was Ghislaine Maxwell; they were all grown-ups, with the appearance of financial independence.

While Epstein’s friends speculated that retailer Les Wexner was the real source of Epstein’s wealth, Wexner (who called him “my friend Jeffrey”) never commented on this, though he did send me an email praising Epstein’s “ability to see patterns in politics and financial markets.”

My investigation began to take on unexpected twists. After a bit of digging I found myself not in some plush office setting but going through the metal detectors inside the Federal Medical Center at Devens prison in Massachusetts, where I met with one Steve Hoffenberg, a fraudster who’d been convicted of bilking investors of more than $450 million in one of the largest pre-Madoff Ponzi schemes in history. He was sentenced to 20 years in prison.

Hoffenberg told me that he’d met Epstein shortly after Epstein had been kicked out of Bear Stearns in 1981 for “getting into trouble” and that Hoffenberg had seen charm and talent in him —“he has a way of getting under your skin”—and had hired him as a “consultant” to work with.

Hoffenberg, officially, ran Towers Financial, a collection agency that was supposed to buy debts that people owed to hospitals, banks, and phone companies, but instead the funds paid off earlier investors and subsidized his own lavish lifestyle. Hoffenberg told me had he had been Epstein’s mentor and that Epstein had made a terrible mistake in doing something so high-profile as flying Bill Clinton, since that would only draw a spotlight to his business dealings. “I always told him to stay below the radar,” he said.

Aware that I was listening to a convicted felon who had lied under oath—he was, after all, sitting before me in an orange jumpsuit—I left the jail determined to get more concrete proof about the source of Epstein’s finances. Slowly, I got there.

It took many meetings of the type you see in the movies. There I was, with my growing belly, in the backs of people’s chauffeured-driven cars, in out-of-the way hotel bars—and finally, in my sixth month, when my doctor had begun to look dismayed and told me to take it easy, a train ride to a law firm in Philadelphia, where I and a research assistant were shown a room full of boxes with legal files, and the man who brought us there whispered, “Good luck!”

Luck did shine upon me that day. I opened the first box, and there was Epstein’s deposition in a civil case explaining in his own testimony that he had indeed been guilty of a “reg d violation” while at Bear Stearns and that he’d been asked to leave the investment firm; it was the nail in the coffin I needed.

I had discovered many other concrete, irrefutable examples of strange business practices by Epstein, and while I still couldn’t tell you exactly what he did do to subsidize his lifestyle, my piece would certainly show that he was definitely not what he claimed to be.

I had to put all my findings to Epstein and, bizarrely, he seemed almost unconcerned about the financial irregularities I’d exposed. He admitted to working with and for Hoffenberg but quibbled with some of the specifics of Hoffenberg’s allegations, reminding me that Hoffenberg was a convicted felon. Third parties in turn quibbled with his accounts, and he was irritated, but not overly so.

I was a little mystified at how benignly he responded to my questions about his business activities. Now, when I look at my meticulous notes, I notice that his tempo quickened—and he was much more focused—when he himself asked: “What do you have on the girls?” He would ask the question over and over again.

What I had “on the girls” were some remarkably brave first-person accounts. Three on-the-record stories from a family: a mother and her daughters who came from Phoenix. The oldest daughter, an artist whose character was vouchsafed to me by several sources, including the artist Eric Fischl, had told me, weeping as she sat in my living room, of how Epstein had attempted to seduce both her and, separately, her younger sister, then only 16.

He’d gotten to them because of his money. He’d promised the older sister patronage of her art work; he’d promised the younger funding for a trip abroad that would give her the work experience she needed on her résumé for a place at an Ivy League university, which she desperately wanted—and would win.

The girls’ mother told me by phone that she had thought her daughters would be safe under Epstein’s roof, not least because he phoned her to reassure her, and she also knew he had Ghislaine Maxwell with him at all times.

When the girls’ mother learned that Epstein had, regardless, allegedly molested her 16-year-old daughter, she’d wanted to fight back. “At the time I wanted to go after him. I mean, physically, mentally, you know, in every way, shape, and form. And the advice I was given was, you know, he is so wealthy, he can fight you, he can make you look ridiculous, he can make your daughters look ridiculous, plus he can hurt them. And that was the thing that frightened me was that he would know where they lived and could possibly just send somebody when they walk the dog at night or something around the corner, and we’d never hear from them again,” she told me.

When I put their allegations to Epstein, he denied them and went into overdrive. He called Graydon. He also repeatedly phoned me. He said, “Just the mention of a 16-year-old girl… carries the wrong impression. I don’t see what it adds to the piece. And that makes me unhappy.”

Next, Epstein attacked both me and my sources. Letters purporting to be from the women were sent to Graydon, which the women claimed (and gave evidence to show me) were fabricated fakes. I had my own notes to disprove Epstein’s claims against me.

And then there was Epstein himself, who, I’d be told after I’d given birth, got past security at Condé Nast and went into the Vanity Fair offices. By now everyone at the magazine was completely spooked.

But my sources, my young women and their mother, heroically held firm. They were going to tell their story, consequences be damned. And as for me? My doctor insisted that once I filed this piece I lie down on my bed and not get out. One of my babies had started to grow alarmingly slowly.

I worked through December 2002 like a dog. I worked with three fact-checkers, the magazine’s lawyer; I sifted through everything Epstein threw at me and defused it. We were getting ready to go to press. And then the bullet came. “Graydon’s taking out the women from the piece,” Doug Stumpf, my editor, told me.

I began to cry. It was so wrong. The family had been so brave. I thought about the mother, her fear of the dark, of the harm she feared might come to her daughters. And then I thought of all the rich, powerful men in suits ready to talk about Epstein’s “great mind.”

“Why?” I asked Graydon. “He’s sensitive about the young women” was his answer. “And we still get to run most of the piece.”

Many years later I know that Graydon made the call that seemed right to him then—and though the episode still deeply rankles me I don’t blame him. He sits in different shoes from me; editors are faced with these sorts of decisions all the time, and disaster can strike if they don’t err on the side of caution.

It came down to my sources’ word against Epstein’s… and at the time Graydon believed Epstein. In my notebook I have him saying, “I believe him… I’m Canadian.”

Today, my editor at The Daily Beast emailed Graydon to ask why he had excised the women’s stories from my article. A Vanity Fair spokeswoman responded: “Epstein denied the charges at the time and since the claims were unsubstantiated and no criminal investigation had been initiated, we decided not to include them in what was a financial story.”

But this wasn’t a financial story, it was a classic Vanity Fair profile of a society figure. I don’t know—because I never asked him—if Graydon still believed Epstein when in 2007 Epstein was sentenced to jail time for soliciting underage prostitutes. But it has often struck me that if my piece had named the women, the FBI might have come after Epstein sooner and perhaps some of his victims, now, in the latest spate of allegations, allegedly either paid off or too fearful of retribution to speak up, would have been saved.

He has a way of spooking you, does Epstein. Or he did. My babies were born prematurely, dangerously so; he’d asked which hospital I was giving birth at—and I was so afraid that somehow, with all his connections to the academic and medical community, that he was coming for my little ones that I put security on them in the NICU.

When they’d been released home some months later, I went out to my first party. There was Jeffrey Epstein, sucking a lollipop. “Vicky,” he said, “you look so pretty.”

Vicky Ward was a contributing editor to Vanity Fair for 11 years. She is the best-selling author of The Devil’s Casino and most recently, The Liar’s Ball (Wiley).

The Very Rich Should Divorce Very Quietly

Since the so-called “Wolf of Wall Street” divorce scandal broke, I’ve been studying photographs of Christina Kelly, the angry blonde housewife whose specific allegations might yet very well bring down not just her errant husband but a whole investment bank.

I keep scanning Mrs Kelly’s thought-out wardrobe, searching for a sign of her motive. She’s got the classic boots-and-blazer look down pat; she looks put-together in a friendly, controlled way that is mystifyingly at-odds with the angriest—and most seemingly self-destructive—lawsuit to have hit the courts in years.

For those who haven’t been keeping track: Mrs Kelly, 38, and her husband, the in-advisedly-named Sage, 42, head of health-care banking at Jefferies & Co, are divorcing. She alleges that he and twenty-or-so named colleagues collectively abused “alcohol, cocaine, mushrooms, Special-K, heroin.”

She also alleges that Sage, who is the father of their two daughters, aged ten and six, urinated on himself at the office annual party and elsewhere; that he defecated on himself while intoxicated and that he encouraged her to have sex with a named client while he had sex with the client’s named girlfriend. Oh, and one of their girls almost ingested cocaine left out on a pool table in their basement.

Sage and the identified colleagues have denied all of it. He has taken a leave of absence from Jefferies, which has reportedly already lost five clients. On Monday it was also reported that, in a desperate-sounding attempt at damage control, Jefferies CEO Richard Handler had taken a random drug test with the health-care bankers (all were clean)— which only added to the surreal nature of the fiasco.

Whatever the truth of the specifics here, it’s no surprise that rich guys on Wall Street do bad things. I know this. I write books about this. I’ve heard many, many ugly stories about strippers, orgies, private islands, private clubs, hush money, missing wedding rings on strip-club floors. The anecdotes all reveal something uncomfortably schizophrenic about our world…but even so: what has gotten into this woman? Mrs. Kelly, for some reason, doesn’t seem to have understood the truism that most people in her bubble-wrapped environs intuit more clearly than the Constitution: rich people get divorced quietly. It’s a simple equation. Scandal equals reputational, emotional and financial ruin—for all concerned.

Some examples of the cost of public brawls: In 1999 Patricia Duff, the dazzlingly beautiful political hostess tried to battle publicly with her husband Ronald Perelman. All that happened was the custody of their small daughter Caleigh was decided in his favor, while she was (predictably and stereotypically) painted as over-emotional.

Even when handsome Peter Cook callously cheated on stunning Christie Brinkley in 2008, their public battle was not damage-free for the former model. It led to column inches devoted to his claim that her coldness had alienated him, a speculation that she could probably have done without.

More recently Richard Gere and Carey Lowell ducked for cover—and a privacy seal—when it looked like their differences were being put under a harsh microscope not likely to flatter either.

But more important for Christina Kelly, whose husband earns $7 million per annum, is the loss of his earning power that her scandalous allegations may very likely cause. Injuring the family breadwinner is the same as injuring yourself.

“It’s not unusual for either partner to have access to sensational or powerful information, but it is highly unusual for them to use it in such a way as to shoot yourself in the foot and let out the economic foundations of the divorce,” says divorce attorney Deb Lans of the Manhattan firm Cohen Clair Lans. “You have to be very angry to be at the point where you no longer have any self-interest.”

I can’t help thinking (yes, completely self-servingly): if only Christina Kelly had read my new book, The Liar’s Ball, perhaps she would have read about a story that shows the prudence of taking a different path.

In the early 1990s Louann Hilbert was the middle-aged wife of one of America’s highest-paid CEOS, Steve Hilbert, the founder of insurance behemoth Conseco.

Hilbert was a flashy man who helicoptered five miles daily over corn fields to and from the office. One day Louann’s phone rang. It was the local BMW dealer. “How are you enjoying your new convertible?” he asked her.

“What new convertible?” she replied. It emerged that her husband, had secretly bought the car for his new girlfriend, Tomisue Tomlinson, a 23-year-old woman whom he met a few weeks previously when she jumped nearly naked out of a cake at a bachelor party.

Divorce ensued, along with a deluge of humiliating media coverage. Louann kept dead quiet, taking a settlement in Conseco stock which she quickly sold; the new Mr and Mrs Hilbert lived, by contrast, a public, glamorous life on a 33-acre estate with a 23,000 square foot house named Le Renaissance. The Indiana Pacers came to practice there….

And then, six years later, Conseco went bankrupt. Hilbert and other Conseco directors were sued for $700 million it emerged they’d borrowed from the company. The Hilberts would lose the estate and much else. But by then Louann Hilbert had not only remarried, she had actually pocketed around $100 million from her Conseco shares…

There are many people interviewed in the book who enjoyed telling me Louann’s story (except, obviously, Steve Hilbert). And there isn’t a woman alive who wouldn’t smile, hearing it.

The former Mrs Hilbert’s story is a parable about a woman of class who needed no help from a wardrobe of carefully-co-ordinated riding-style clothes and Birkin bags, to exercise elegance and self-control. Ultimately she won out. Like I said: the rule is simple: rich people should divorce quietly…

‘Housewife Tycoon’ Took On ‘Mad Men’ NYC Real Estate Market and Won

Real estate, so an industry proverb goes, is a circle of men holding a revolver to one another’s heads. One moment’s hesitation—and bang—they’re all dead. But while alive they act and react with the adrenaline-rush of men who’ve got it all-on-the-line and who are hopelessly, haplessly connected to one another.

For three years I’ve been immersed in this masculine mesh of mistrust, reporting my latest book: The Liar’s Ball: The Saga of how One Building Broke the World’s Toughest Tycoons. From my interviewees I’ve heard multiple versions of the same story: of how an entrepreneur’s financial success made multi-millionaires of his golfing foursome: he required a banker, a lawyer, a broker on the way up… they could talk bidding strategies, term-sheets and loans while driving and putting. It saved everyone time.

“You need people who are loyal to you if you are an entrepreneur” explains Eric Schwartz one former member of Deutsche Bank’s real estate group. What he didn’t say, but I ended up deducing from my research is that loyalty in this group is an exclusively male concern.

Simon Benattar

Simon Benattar

“We make the Wolf of Wall Street look tame,” one of my sources for the book told me. He outlined a relationship-based world in which the fee-earning professionals do whatever it takes to stay on the right side of the principle. Requirements include trips with mistresses to Las Vegas. “You bring a girl, I’ll bring a girl and if you don’t have a girl I’ll find you one…” one of my characters, a (married) “tycoon” generously offered to his (married) broker. Closing parties take place in hotel suites where the ratio of prostitutes to men is five to one.

The decadent lifestyle is as much a part of the adrenaline-fuelled risk-taking as is the daily battling over buildings, suing competitors, raising leverage; work-is-life and vice versa to these “rough riders” and it’s all one big intoxicating gamble. The impetus to win is valued far more highly than anything else, including, ironically, money—which explains why, in the development world, there are just as many spectacular falls as rises.

It’s not really a surprise then, that of all industries, real estate, despite being by far the largest market in the United States, remains the least attractive arena for women. Yes, there is a sprinkling of very successful women on the circumference—namely in the broking, banking and legal professions—but the central role of the developer remains dominated by men. The exceptions tend to be either daughters (for example, Ivanka Trump) or wives (Zhang Xin) but even their remarkable headway is blighted by a steady stream of chauvinist chatter about what they wear to meetings as well as speculation that they are only in the room because of either their father or husband respectively.

So, it was a treat as I was researching all this testosterone to stumble over a woman who played in this arena, and who played faster, harder, and wilder than the men. And the most interesting fact? She was better than them all!

Five feet two inches tall, Cecilia Benattar came from a working-class background in Manchester, England. She arrived in New York in her early thirties and didn’t even know where Times Square was. This didn’t stop her from pulling off the business shock of the decade in 1964. Functioning as the North American representative of the dashing British developer Max Rayne (later Lord Rayne] who was happy to delegate from London, she negotiated to partner with General Motors, then the biggest company in the world. To secure their interest she bluffed. She introduced a bunch of strangers to the GM board as “my staff”; she went around a conference room and said “Meet my CFO,” etc., of people she’d met the night before in order to give the false impression she was running a behemoth on a par with theirs. If she’d been discovered as a fraud, as the one-woman shop she truly was, what did she care? She had nothing to lose. “This was my chance at the brass ring. … I had no fear,” she said.

She struck a deal to pull down the Savoy Plaza Hotel, a treasured McKim Mead and White Hotel in New York’s midtown in the face of protests in the streets. She quelled those by changing the topic. She held a private auction of the hotel’s contents; it was the chicest second-hand sale New York society had ever seen: “It took a woman to think of this piecemeal disposal,” wrote Gloria Steinem in Ladies’ Home Journal. Yet being a woman was not something Benattar dwelt on. “I strive to make people forget me as a woman and see me just as someone who knows her job,” she said in an interview.

In the hotel’s place, she erected a gleaming new 50-story trophy building to house General Motors in what was then considered a deserted New York location. Her job was to make it attractive.

She pretended to hold an architectural competition but in reality handpickedEdward Durrell-Stone, because she felt she could control him. With the help of a lawyer named Jesse Wolf, a partner at a then tiny legal partnership named Weil, Gotshal & Manges LLP, she personally wrote every single lease in the building and chose every single non-GM tenant. They were all leading global brands: Estee Lauder, Revlon, the advertising firm Wells Rich and Greene and the broking firm Carter, Berlind, Weill & Levitt. Because of this, the building became the symbol of global excellence.

She broke with the mafia that controlled New York real estate and, instead, staffed the building with ex-convicts, many from minority backgrounds, because she believed in second chances.

“This was my chance at the brass ring. … I had no fear.”

She would put in long days and nights, chain-smoking and drafting and reading every word on every document personally. But she always left the office in time for dinner with her four children—and then she’d reappear back, smokes in hand. Her mother, she said in interviews, helped run her household. Her husband, an architect, worked for her until in the early 1970s she fired him and married another guy, a lawyer, who also worked for her.

She was very busy leasing in 1969 when her youngest daughter was born, so she didn’t name the baby for six months. Inevitably, there were jokes about this. She didn’t care. She was supremely self-assured. She liked crosswords: she once entered a national competition and thought she might win, so she shut down the offices for two weeks so her employees could help her win it.

She was fiercely loyal to those she respected. She worshipped Rayne and they corresponded daily by telex; she repaid Jesse Wolff by insisting Weil Gotshal lease space in the GM building; she promised him they’d remain the only law firm in situ and that this would be the making of them. She was right. The little firm became GM’s lawyers and evolved into one of the most dominant legal firms in the world.

Her downfall came about, because for a second she forgot that to swim in the shark pool, you have to always act like a shark.

She refused to participate in political bribery, which is the unspoken prerequisite backbone of this world. New York Mayor John Lindsay asked her for $100,000 for a potential presidential campaign. She refused on principle.

And it was this that felled her. Lindsay reneged on a deal to rezone a second residential building she was converting to commercial use; this cost Rayne millions and, against her wishes, he decided it was time to get out of New York. It was time to sell the GM building, something his son says he regretted until his death in 2003. Had he held on to it, the building would have been worth more than the rest of his vast portfolio combined.

Benattar moved to Canada and formed her own real estate company, NIOT—an acronym that stood for Now It’s Our Turn (an acronym that made Rayne laugh). Before her death in 2003 the Canadian developer Paul Reichmann flew her to London’s Canary Wharf to get her input; he was one of the few who knew just how valuable her ideas and her brawn were.

“She wasn’t a woman; she was a man,” is one of the things that was said about her. Her popular nickname was “the housewife tycoon”—not a label one imagines today’s female business leaders, with their talk of leaning in and getting their partners to do the laundry, want said of them.

But Benattar’s story serves as a timely reminder that if we women really want to break into the tawdry circle of men holding revolvers and taking each other to Las Vegas strip clubs, it can be done. The better question might be this: Do we want to go there?

Vicky Ward’s The Liar’s Ball: The Extraordinary Saga of How One Building Broke the World’s Toughest Tycoons is published by John F. Wiley & Sons