Friends dis-united: The social scandal that tore Manhattan apart

It was the perfect letter - if the goal was to blow up New York society. A bombshell of preening and aspiration, it set off a war between an ageing princess and the girl who threatened to snatch her crown. There was just one catch: according to a complaint filed last week with the Manhattan district attorney's office, the letter was a fake.

The publisher of the letter was socialiterank.com, a mysterious website that appeared on 24 April, 2006, declaring itself unofficial judge, jury and executioner of 10021 - the postcode of upper Park Avenue and Fifth, and the home of many young women who appear on the charity-ball circuit. Each fortnight, the site released a "Social Elite Power Ranking", scoring the women on their style, public appearances and publicity efforts. The perennial No 1 girl was Tinsley Mortimer, a Virginia rug salesman's daughter who'd married into New York society.

The site took an ominous tone from the start. "Next time you think about skipping that certain gala, wearing that unknown designer, dating some weird band member, beware," it warned. "We're watching. And your ranking is on the line!" In the year since it appeared, Socialite Rank manipulated the city's gossip cycle, elevated unknown women to unlikely prominence, and gained thousands of readers, who filled the comment boards with catty and frequently venomous remarks. Several socialites were mocked and ruined, others smeared with rumours of cocaine abuse. And what made it more eerie was that no one knew who was speaking: the Rankers hid behind their anonymity, as did the commenters who wrote in with their own harsh judgments.

As Socialite Rank gained prominence, it found its ultimate target in Olivia Palermo, a wide-eyed student who'd hit the charity circuit in tight dresses and loose ringlets around the time of the site's launch. At first she was warmly received, but gradually began to offend. During Fashion Week, Olivia, just 20, sat in the front row of so many shows that she became known as a potential threat to Tinsley, the reigning princess. Almost instantly, Socialite Rank turned on Olivia, pelting her with nasty remarks.

On 27 March, the site posted a breathless headline: "EXCLUSIVE! OLIVIA PALERMO LOSES HER MIND AND SHOCKS SOCIALITE WORLD". The accompanying story claimed that Olivia - "our social climbing heroine of the moment" - had written a letter apologising for her sycophantic ways. According to the site, she'd emailed 70 prominent socialites to beg "for acceptance, privacy and forgiveness". The site also claimed that the email was being forwarded all over town, with recipients claiming it was " desperate", "crazy", "idiotic". But what angered socialites - or allegedly did so - only excited Socialite Rank, which instantly delivered its own "final verdict": Olivia Palermo had been officially evicted from the club. "This is better than Ecstasy," the site gushed.

"Dear Ladies," the "Palermo letter" began. "I know I have gotten off on the wrong foot with many of you and there may even be some of you that do not like me. But I feel that those feelings are more a creation of sites like socialiterank, rumours and gossip than they are to your own experiences." The writer went on to reintroduce herself as a student, an athlete, and a "great shoulder to cry on" who hoped for nothing but forgiveness and friendship, perhaps a spot on a charity committee, and eventually a friendly hello if she dropped by the Waverly Inn.

Olivia instantly denied writing the letter, which Socialite Rank claimed she sent from a Yahoo account that Olivia said she never owned. Not only that, Olivia said, the writer of the letter had stolen her identity. She planned to hire a lawyer. The announcement evoked howls. "She's turning into the Anna Nicole Smith of the benefit circle," one social observer quipped. "A tawdry, trashy, white-trash circus freak." But Olivia was serious. "I may be a young girl," she told another socialite, "but behind every young girl is a powerful father." Quietly, her father, Douglas Palermo, a successful New England real-estate developer, hired one of the nation's premier litigation firms.

One month later, on 26 April, Socialite Rank ran its final post. "SR is closing its society heaven," the site announced. After urging readers to take a deep breath and focus on the screen, the founders claimed they hadn't shut down owing to "lawsuits, complaints or threats". In fact, they'd always planned to publish for a year and no more. Now, having gathered "behind-the-scenes triumphs, power struggles, love affairs", and "many more unpublished 'Palermo' letters", they would compile the results in a book, tentatively titled The Year of the Rank. Around noon on 29 April, the site went blank.

The charity circuit, once a bastion of breeding and privilege, has transformed itself, in the days since 9/11, into a kind of reality show. Running from September through May (and ending with the Met's Costume Institute Benefit Gala, which took place last week), the parties raise funds but also provide an extended publicity campaign for young women who seek to become famous. They compete in a gossip free-for-all played out in the popular press and on the internet. In this mediated world, public image cuts dangerously close to private reality, and it is considered an honour to have one's photo rudely dissected on a website.

The business of rising from social girl to professional celebrity was put into overdrive five years ago by Paris Hilton. Rising alongside digital cameras and photo blogs, she constructed a life based on hype and a pretty face. Hilton preferred the word heiress to socialite, but she embodied the original meaning of the latter term, coined in 1928 to describe the rebellious young women of the Jazz Age. A socialite was brisk and blithe, radiant and unconcerned. She embodied youth, freedom, modernity. When Hilton left for LA, finding fulfilment as a reality-show star, she was succeeded by a generation of girls - perhaps 100 at the core - who wished to repeat her success, without taking off their underwear. A peculiar amalgam of some of the oldest names in New York, daughters of captains of industry, and pretty young things with the right dresses but no pedigree at all, these girls proudly called themselves "socialites".

After graduating from Columbia, their leader, Tinsley, had married her high-school sweetheart, "Topper" Mortimer, and then hit the charity-ball circuit with her sister-in-law, Minnie. Tinsley and her sidekicks and associates - the Venezuelan heiress Fabiola Beracasa, the daughters Hearst, assorted ugly ducks and pretty young things - quickly filled the gossip news hole that Paris had left in her wake.

Socialite Rank broke down socialite party performance into four categories: "personal styles and designer relations"; "press coverage in major publications and gossip columns"; "appearances and commitment to events"; and "hot factor - what makes each of the individuals sizzle with personality". Tinsley nearly always scored first and Fabiola second. Like high-school cheerleaders who tire of their boyfriends, sometimes they traded places. Socialites were glued to the site. Some checked it every few minutes. Dozens were brought to tears. "We're all human, my God," says Zani Gugelmann, the No 4 girl. "Who wouldn't cry when somebody says they're fat or they have a horse face or a big nose? You're like, What? And that's just the physical stuff. When they say nobody likes you, it's shattering."

Soon the process gained momentum. Women made reputations and lost them, stimulating greater interest in the social scene and attracting reporters who trolled the site for new profile subjects. One element the scene lacked was a fresh face. Tinsley, after all, was entering her thirties.

Staring into this house of mirrors was Olivia Palermo, a young girl bewitched by her own reflection. Olivia had all the requisite trappings: the private-school education; the party frocks from Bonpoint; the year in France. Now she wanted to join the girls she read about on Socialite Rank.

She began interning at the society magazine Quest, dropping pounds, and seeing more of her childhood playmate, actor-heiress Byrdie Bell. In April 2006, Byrdie's mother took the girls to a Sotheby's auction. They rushed over to Gugelmann, who was chatting with the party photographer Patrick McMullan. "Zani, Zani, how are you?" they asked. McMullan turned around. "Oh!" he said. "Who are these two pretty girls? Let's take a picture."

The next day, Olivia and Byrdie appeared on patrickmcmullan. com. " These are the new girls," Zani emailed a friend. "They're going to be the next pretty young things." A week later, Zani saw the girls at another party. "Realise what you're getting into," she said. " Once you're in the public eye, people can toss you around like a ball. And you don't know whose hands you're going to land in." The girls listened, nodded, and when Zac Posen invited them to his Spring Fling, they arrived in his dresses.

Olivia joined the social circuit in earnest that autumn. Photographers were charmed, as was Socialite Rank, which asked her to submit a profile. (" Favourite Things I Simply Love: Manicures and pedicures.") She didn't land in the top 20, but reached the runners-up category called "Don't kill yourself, you almost made it". Excited, Olivia increased her efforts. She hired a publicist. She met fashion designers. She joined charities.

The women proved less accepting, especially after Olivia made a few missteps. "She would hover," one girl recalled. And when the photographer left, so would Olivia - only to appear in front of the same camera, next to another girl. She moved too fast, at parties and in the scene, becoming known as the Pop-up Socialite.

The tension came to a head in February, when Olivia made her grand splash at Fashion Week. New York Post's "Page Six" ran an item saying Tinsley would pout when asked to pose for pictures beside Olivia. The social world took sides.

On 28 February, Olivia threw a birthday party. She was turning 21. It was an intimate affair - 12 best friends and one member of the press. " Everyone had their little name plates, and everyone gave their prezzies," Olivia's friend Chessy Wilson recalls. "It was cute!" The celebration continued on 2 March with a bash at the nightclub Marquee. The invitation featured Olivia's face against a starry black backdrop.

A few days later, Socialite Rank parodied the invitation with an "SR Creation": Olivia on a can of tuna fish. "If you haven't heard Olivia Palermo's name over the last week in a half [sic] you're probably still in the severe state of trauma over Anna Nicole's death or reside in some Third World Country where the only access to the internet is available through one computer at the central Red Cross," the site remarked in its oddly ungrammatical voice, then went on to accuse her of borrowing dresses, skipping class and copping an attitude of "aimless desperation". SR asked its readers: "Is she a packaged can of tuna, a Chicken of the Sea?"

The article struck a nerve. Hundreds of readers posted replies. "She is so boring, lame, and has nothing to offer," one wrote. "She's quite the climber and clings to the top girls. She is a sad wannabe." A more perceptive commenter wrote, "Welcome to the top, bitches - it's a long way back down."

Three weeks later, the site attacked again - printing the letter. Olivia kept her chin up, hosting a party for her boyfriend Brad Leinhardt's fashion line, dining on truffle fries at Bette, storming the Room 100 magazine party at 60 Thompson. Almost no one in the room spoke to her, but she said such slights didn't matter. "I have 400 friends in my BlackBerry and I get more invites than I can handle," she said to me, taking my call. " All I care about, quite frankly, is that someone is pretending to be me. Can I call you back in a little bit? We're just finishing up lunch. Toodles! Bye! "

Fake or not, the letter had all the elements that drive web traffic and create intrigue: youth, beauty, wealth. The Post ran an item titled " YOUNG BEAUTY: BE NICE TO ME!" Then Page Six got a second day out of the scandal, this time printing Olivia's denial. With each story, Olivia's reputation sank within the social world, but outside of that small circle, she attracted sympathy. "Now she's at the centre of everything," designer Holly Dunlap said. "This incident has created an Olivia fan club. Everyone's cheering her on."

As Olivia's fame spread, the women she was leaving behind began to speculate about who had written the letter. There are four basic theories. Theory one, "The Idiot", has it that Olivia sent the letter in total sincerity, wishing to befriend the girls who had rejected her. Most ignored this theory. The second theory, "The Fat Bitch", is based on the notion that, at the bottom of every scandal, you'll find a single individual nursing a grudge, often an overweight woman.

As newspaper and blog-readers gave credence to the Fat Bitch theory, the socialites put out a third theory, "The Counter-Fake". According to this theory, Olivia and her PR team had written the letter as a media stunt, knowing it would be unmasked as false, to play into a Mean Girls story line. "They faked the fake!" one socialite claimed.

The fourth theory, "The Pawn Gambit," is the most paranoid. According to this notion, Olivia's PR team knew that New York was planning a story about her, and they worried that the magazine found her "boring". So they crafted the false story line of a rivalry with Tinsley, hoping to rocket Olivia to fame.

As Olivia's name hit the gossip headlines, Tinsley, who subscribed to the Counter-Fake theory, grew angry with Olivia. Reporters, however, threw their weight behind the Fat Bitch. They wanted a rivalry - the blonde and the brunette, the favourite and the upstart, the Wasp and the Vowelista. Olivia could play Veronica to Tinsley's Betty. The story line would damage Tinsley's name and bring unwanted attention to her age. But in the end, she would unwittingly bolster that narrative.

On 2 April, the two girls separately arrived at a club to model in a fashion show. It was the night of the annual Scottish party, Dressed to Kilt. Downstairs, men in kilts were getting wasted. The socialites did their turns and lined up backstage for the final walk. One by one, they passed down the catwalk. Olivia walked backstage and headed up the stairs just as Tinsley came down. Staring straight ahead, Tinsley stiffened her left shoulder and appeared to knock into Olivia, who stumbled into the railing. "Oh, my God," a girl behind Olivia said. "I can't believe it!"

The next day, the press reported the alleged event, as well as Tinsley's denial: "I never came within an arm's length of her." Socialite Rank covered the incident by not mentioning it at all.

By mid-April, many of the women had fled the circuit. They stayed at home and had dinner parties away from the cameras. At charity events, paranoia set in. "You never know who you're talking to," one socialite said. "You could be talking to somebody who could write something terrible. They probably already have." Socialites speculated about who could be behind the site. They threw names about at random. Some, once fingered, had to make multiple denials. One girl called it "a witch hunt ".

An inner circle of socialites began to suspect Fashion Week Daily reporter Valentine Rei and his step-sister, Olga Rei. The Russians arrived on the scene three years ago, party-crashers cadging invitations, handing out business cards, and sidling up to the most famous people in the room.

They look like twins and opposites: Valentine is tall, blond, and reedy; Olga is blonde, too, but busty, standing just 5ft 4in. They don't drink or smoke, but they're addicted to fame, having sought it out at a young age. They were child stars in Russia, where they met and grew up together, after Valentine's mother married Olga's father. "It's almost like destiny," Valentine says, "for us to be intertwined."

Suspicions that Olga and Valentine ran Socialite Rank grew. "They were wannabes for a long time," one fixture in the scene says, "and sometime or other they started acting like they were somebodies." On Socialite Rank's final post, "The Year of the Rank", Olga's face appeared in a gallery that included all the top girls except Olivia.

I first met Olga and Valentine early last month. Valentine wore a sling; he'd recently broken his elbow when he fell off the catwalk at a Y-3 Fashion Show - for a Fashion Week Daily reporter, the equivalent of a Purple Heart. Olga, an account manager for Lipman Advertising, shares Valentine's drive. At 23, they've already helped launch a glossy fashion magazine, Quadrafoil.

The cosmically connected kids - born just three days apart - talked about their unconscious harmony, often completing each other's sentences. I asked how they saw themselves in this world. "Powerful people control famous people," Valentine said. "That's what we want to be."

Valentine tried to keep cool but grew excited as he talked. "Socialites today have everyday jobs. But in the evening they go out, they wear fancy dresses," he said. "They're regular people living celebrity lives, and that's what makes them so exciting."

"It's true," Olga said. "Everyone works so hard... They think all we do is put a dress on and go to a party. The reality is, we work all day - then we put a dress on."

I asked them about Olivia. "She's a nice girl with nothing to say," Valentine said. "A quiet little pedestrian college girl. But she obviously wants to be in the spotlight."

"She hasn't paid her dues," Olga said.

Because their opinion so closely mirrored that of Socialite Rank, I asked them directly: Did they run the site? Valentine flinched, stiffened, and looked away. Olga blushed.

One month later - two days after the site went blank - when presented with a paper trail that appeared to link Socialite Rank's electronic address to their billing address, Olga and Valentine agreed to confess. Why not? More fun! It was impossible not to consider, in this house of mirrors, that I might be falling for the ultimate fake, but their confession poured out: detailed and - to all appearances - deeply felt. "We are the masterminds behind Socialite Rank."

The idea arose last year, just before the Met's Costume Institute Benefit Gala. Olga and Valentine had fallen in love with the PYTs. They wanted to give the girls a platform, put them in lights - and have a little laugh at their expense. "We're not evil," Olga assured me. "We just thought it would be fun."

They agreed at the outset to run the site for a year and no more, no matter what. The idea took shape when they saw a New York Post article about hotness. The Post had invented a formula that calculated an individual's total hot factor. "It was completely ridiculous," Valentine recalled. "We thought it was obscene. But then we thought, What if we just rank the girls? And put the numbers next to them!"

Olga and Valentine sifted through the names of 170 women, from debutantes to ladies who lunch. "It was extremely fair. It was extremely mathematical, " Valentine said. "They go to the event, they look pretty, their event score goes up." The response was overwhelming. It took the site's founders five days to read through their emails. Many letters came from socialites. "They started campaigning," Olga said.

Publicists flooded the site with requests to post pictures and press releases. Swamped, the Russians obliged, often highlighting nonstop emailers like Lydia Hearst (who often tells the press she isn't a socialite). " She wrote us more than anyone," Olga said. "Once the girls got the fame," Valentine continued, "their friends revealed their dark demons, their secrets - drug use, sexual pasts." There were nice comments, too, some from readers in Dubai, many from 10021, and dozens of comments from Tinsley's mother.

Tinsley wasn't meant to be the site's star. Olga and Valentine just happened to love the package: the smile, the wit, the handbag line. She was the picture of a socialite. "You need a hero, you need a face," Valentine explains. "That's Tinsley - the face of Socialite Rank."

After a few months, they had to buy more server space. They bought a second allotment, and more again. Finally, they bought a domain name. It didn't cost much: their total expenses for the year were only $750. And sellout offers flew in: $175,000 to write a corporate blog; an hour on camera with Tyra Banks; TV shows, films, cover stories. The New York Times wanted to do an exposé. VH1 offered correspondent jobs. There was just one condition: they had to reveal their identities. They refused.

In the new year, more stars were born. Fabiola Beracasa, who began with a low profile, appeared at events perfectly dressed, exchanged hugs with Olga and Val, chatted, smiled, and hit No 1. "Work it!" Olga exclaimed. Arden Wohl, the headband socialite, also rose in the ranking. "She's been a downtown icon in our eyes for years," Valentine said. "Now the other girls are catching on."

Olivia Palermo never climbed higher than the 16th spot. She broke into the top 20 with her looks, but she failed to impress Olga and Valentine with her skills in manipulating the press - namely, Olga and Valentine. Asked how she felt, she might say, "Like a kid in a candy store!" Asked about her dress, she might opine, "Girls love to play dress-up." The canned statements annoyed Olga and Valentine. Besides, they didn't lack for people to like. "Tinsley was one of our heroes," explained Valentine. "You need villains, too."

"Canned", "packaged", Olga said to her production wizard, whose identity they are still protecting. He tried to translate her words into an "SR Creation." Packaged, canned, he repeated to himself - and then thought, tuna fish. An idea was born. "We did that evil article," Olga recalled, shaking her head. "And that was enough." Readers got the story line, and the comment hordes pilloried their new villain. And then, the letter.

"We're being honest," Olga said. "We did not write the Olivia letter. But whoever did it, they are even smarter than us."

Socialite Rank's story - should we choose to believe it - is this: "It was not a vendetta against Olivia," Valentine said. "It was a vendetta against us. Someone set us up."

"We thought it was real!" Olga said.

"Three people forwarded it to us," Valentine said. "So we posted it. We never thought it was going to blow up."

But it did. The site is dead; the servers have been taken offline. And whoever wrote the letter will not be hard to find if the District Attorney takes Olivia's case and brings to bear the power of subpoena (clearly the hope of Olivia's attorney).

Olga and Valentine, who have yet to hear from any lawyers, feel sorry for much of what happened - if not the idea itself, then the way they quickly lost control of it. Toward the end of our interview, I asked if they regretted founding the site. "What did we do it for?" Olga asked herself out loud. Valentine broke in. "The scary thing is - to us it was pretty effortless," he said. "We're wondering, what if we actually tried? Maybe we could be as big as PerezHilton.com? We could be 10 times bigger! We have the power."

And that's what scares Olivia Palermo. But she wields her own kind of social power. She had learnt, quickly, that the glittering house she had once aspired to enter was actually transparent. Anything that went on inside could become instantly, shamefully public.

Olivia would confide to a friend that she needed a break and had decided to move, for a short time, to LA. The conversation soon appeared on yet another anonymous rumour mill - Socialite Rank was gone, but the day it shut a new site assumed its place. "Welcome me back, girls!" a commenter on Park Avenue Peerage observed, "It's the SR Reunion 2007."

This article was originally published in the 10 May issue of 'New York Magazine' © 2007 Isaiah Wilner

FABIOLA BERACASA

Age: 30

Who's the daddy? Daughter of Venezuelan banking magnate Alfredo Beracasa and Veronica Hearst, stepdaughter of publishing heir William Randolph Hearst.

Where's the money? Cash comes courtesy of her mother's Hearst inheritance.

Interesting fabulousness: Known for her impeccable style - it's claimed she has 14 wardrobes stuffed with designer togs.

Key look: Labels, labels, labels.

TINSLEY MORTIMER

Age: 31

Who's the Daddy? Her father, George Mercer Junior, is a rug salesman from Virginia.

Where's the money? Tinsley's husband Robert Livingston Mortimer - known as Topper - is the great-grandson of Henry Morgan Tilford, a president of Standard Oil of California. Topper is a vice-president at the Guggenheim Group investment bank.

Interesting fabulousness: Billed as the number one socialite of 2006. Has her own handbag line.

Key look: All-American good looks teamed with blonde curls and short skirts.

BYRDIE BELL

Age: 22

Who's the daddy? Byrdie's mother took her daughter and the ill-fated Olivia Palermo to an auction at Sotheby's, where they were spotted by party photographer Patrick McMullan. The rest is history.

Where's the money? Like all the best socialites, Byrdie's wealth is inherited.

Interesting fabulousness: The eccentrically monikered Byrdie is dating one Bingo Gubelmann.

Key look: Gap-toothed yet immaculate socialite/actress.

OLIVIA PALERMO

Age: 21

Who's the daddy? Olivia's mother is an interior decorator and her father is a real-estate developer.

Where's the money? Family money meant that Olivia was a shoo-in to the mercenary world of Manhattan society.

Interesting fabulousness: Short-lived reign as New York's new It-girl, now gets the sympathy vote for having been the subject of so much bitching.

Key look: Italian-American princess.

PARIS HILTON

Age: 26

Who's the Daddy? Hilton's paternal great-grandparents were Hilton Hotels founder Conrad Hilton and his first wife, Mary Barron. She has three siblings, of whom her sister Nicky is also on the socialite circuit.

Where's the money? As well as being heiress to a tranche of the Hilton fortune, Paris will inherit part of her father Richard's real-estate riches. She has also earnt an estimated $1m in her own right.

Interesting fabulousness: Catapulted to fame by her un-fabulous sex tape, Paris has conquered reality television and the music business, appeared in movies and launched her own range of fragrances.

Key look: Huge sunglasses, tiny dogs, even tinier frocks. Could soon be sporting convict's stripes.

OLGA REI AND VALENTINE REI

Age: Both 23

Who's the daddy? Valentine's father married Olga's mother.

Where's the money? Family wealth on both sides means that the Rei step-siblings want for little, although after being exposed as the writers behind Socialite Rank, many society New Yorkers have blacklisted them.

Interesting fabulousness: Both are former child stars. When covering a Y-3 fashion show for Fashion Week Daily, Valentine fell off a catwalk and broke his elbow - that's dedication.

Key look: He's a white-haired, Slavic giant, she's a tiny, almond-eyed Eastern blonde.

LYDIA HEARST-SHAW

Age: 22

Who's the daddy? The great-granddaughter of the media tycoon William Randolph Hearst and daughter of Patty Hearst.

Where's the money? She is one of the heirs to William Randolph Hearst's media empire, a $5bn (£2.5bn) a year business.

Interesting fabulousness: A model, her first cover shoot was for Vogue. Has worked with more fashionistas than you could shake a stick at. Famously "refused" to give Britney one of her limited edition handbags for Puma.

Key look: Cross between Lily Cole and Heather Graham.

ARDEN WOHL

Age: 24

Who's the daddy? Wohl belongs to a well-heeled New York family. Her father, Larry Wohl, is a real-estate mogul, and the art collection of her grandparents, Ronne and Joseph S Wohl - featuring Matisse, Monet, Braque and Modigliani - sold for a hefty sum at Sotheby's.

Where's the money? With grandparents who collect Monet, need you ask?

Interesting fabulousness: The aspiring film-maker is being called the earthy antidote to the beau monde's bevy of blond ambition.

Key look: Hippy-dippy headbands.

ZANI GUGELMANN

How old: 30

Who's the daddy? Unlike her stable mates, Zani has managed to keep her family tree under wraps. Suffice to say, they're not on the breadline.

Where's the money? Apart from family cash, Zani is a successful jewellery designer.

Interesting fabulousness: Accidently revealed a breast this spring during a gathering at the Indian Consulate. After being told she was baring all, replied: "Well, they really are fantastic."

Key look: Willowy brunette wearing her wares.

REBECCA ARMSTRONG