Current residents include TV newswoman Jane Pauley and her husband, cartoonist Garry Trudeau; designer Arnold Scaasi and his beau, publisher Parker Ladd; and Barbara de Kwiatkowski, who was sitting in the blood-red library of her duplex on a recent afternoon.

“It’s probably the most terrible winter I’ve had in my entire life,” she said. A few days before Christmas, she explained, she was making her way down the stairs when her Scottie dogs got in the way. She broke her ankle.

“It really screwed up my Christmas,” she said. “It screwed up everything.”

Aside from the exhibit of her late friend Nan Kempner’s couture collection at the Met, she hadn’t left her apartment for two months. “I don’t do crutches. I don’t give good crutch, ha-ha! Mind you, the weather was awful.”

She was wearing black jeans, a Saint Laurent sweater over a black T-shirt, and Todd shoes. With her smoky eyes and thick auburn hair, she looks like the Ava Gardner of Night of the Iguana. It’s not hard to see why Mick Jagger climbed through a bedroom window to get to her. Or why the current governor of California once said: “I think she’s a very, very, very sexy girl …. I imagine everything possible that one can do with her, and that’s what I want to do with her.”

The palatial apartment we were sitting in was bought by her late husband, Henryk de Kwiatkowski, in the 1960’s. Since his death in 2003, she’s had it to herself and a handful of servants, except when her son Nicholas comes home from college. I glanced out the window at the East River swirling. A servant appeared with a tray of green tea and tiny sandwiches with the crusts cut off.

“It’s a really classy building, but reeeeally classy,” she said. “My husband had a way of doing something that, whatever he did, it was the best. We had the best house in Greenwich, and we have the best house in the Bahamas, and we have the best farm in Kentucky, and we have the best apartment in New York, as far as I’m concerned. It’s certainly livable.”

Society decorator Sister Parish did the apartment.

“I really loved Sister, and she liked me,” Mrs. de Kwiatkowski said. “We used to go shopping, and she would test me. She would say, ‘What do you like in this shop?’ And I would say, ‘This, this and that.’ And you’d turn the plate over and it would say, ‘Reserved for Sister Parish.’ So I picked the right things.”

Parish also did her 100-acre estate in Greenwich—Conyers Farms—which sold for $50 million two years ago. Mrs. de Kwiatkowski has been thinking about getting another country house.

“It’s a great time to buy,” she said. “I’m thinking Locust Valley, but then I’m starting to think East Hampton—but I don’t like the fact that it’s really far away. And if I want to go to the Hamptons, I can rent a house there. I could do that. There are times when I just want to go out to the country and not spend hours driving out there.”

Facing us was a painting of Chairman Mao by Andy Warhol. “They just sold one for $2 million, which is unbelievable,” she said, getting up. “This one is special, because it’s a really nice one—and look how many times he signed it for me.” She looked at the painting. “It’s nicer than the one that went for $2 million.”

In the 1970’s, Mrs. de Kwiatkowski was part of the inner circle of Andy Warhol’s Factory, the art studio/cult of personality/all-around hangout—located on East 47th Street, then Union Square, then the Flatiron area—for demimonde types such as Anita Pallenberg, Truman Capote, Bianca Jagger, the Velvet Underground, Edie Sedgwick, Paul Morrissey and Baby Jane Holzer.

She took a book of photos down from a shelf—Andy Warhol’s Exposures—and paged through it: her with Roman Polanski (“He was pretty randy”); on the back of a horse with Dick Cavett (“Oh, that was so much fun, he lived next-door”); herself and four society swells decked out in leather.

“I didn’t usually dress like this,” she said. “We all decided that we were going to go to the leather bars. They wouldn’t let Andy and me into the worst ones, because I was a girl and he was Andy. Certainly we didn’t get into the back rooms. There was one called the Toilet. They were disgusting. We had this incredible time I will never forget.

“But this is not my life,” she added. “My life is polo! My life is Prince Charles! That was one day. It was one day!”

She said she remembered the infamous blackout of 1977. She was at a friend’s apartment and Studio 54 impresario Steve Rubell came over with “supplies” and they jumped into his Cadillac convertible.

“We had champagne and we just drove around,” Mrs. de Kwiatkowski said. “We drove up to Elaine’s and a ton of people were there, and there was candlelight. It was a very carefree time—everybody was happy, things were not serious. New York became serious after that. It was just really fun, probably because of Studio 54—all I liked to do was dance. I just liked dancing! Believe me. And I used to run out of that place and people were chasing me—I’d be in a limousine or I’d run home. I mean it, and this is kind of important, there were guys—it was unbelievable—running on the sidewalk. And I’m not going to name names, but they’re big-time names.”

What did she make of New York nightlife now?

“People don’t have fun anymore,” she said. “It’s over. I wouldn’t be caught dead in a nightclub.”

These days she’s into dinner parties, but you won’t catch her at a charity event. “I did that,” she said. “I was just looking at all the ball gowns I have. It’s fun to look, but I’m never going to wear them again.”

I noticed a feathered admiral’s hat on a shelf. “My Fritzie!” she cried out. She explained that she had bought the hat at an auction of the estate of Fred Hughes, Warhol’s business partner. “I loved him! I collect a lot of Fred’s stuff. I even bought his clothes, because he used to wear these military uniforms. He was quite eccentric.”

Mrs. de Kwiatkowski said she lived with Mr. Hughes for a spell when too many playboys were on her tail—Ryan O’Neal, Bryan Ferry, Bill Paley, Gianni Agnelli. “There were a lot of them,” she said. “When you’d brush them off, you would just get more attention than you bargained for.” She said she dated Warren Beatty for “a nanosecond” and Jack Nicholson for “a little more than a nanosecond. But it was for their benefit.

“It was difficult being a popular girl,” she continued. “Everyone was after you, and I didn’t like that. In retrospect, I think: Gee, how great. But no, I did not make it with all those people. It seemed like I did, but I didn’t. ’Cause I’m a real regular kinda girl.”

She said she gets up very early. “I wake up and I look out into the sky, and on the river I see the boats going by,” she said “I can be slow after that, if I want. Do I go to the gym? No, I don’t. I’m really lucky. I got the muscles.”

I asked how much she was worth.

“A ton.”

Over a hundred million?

“Uh, yep. Over that. Way over.”

BARBARA TANNER WAS BORN IN ROSWELL, N.M., but six months later the family moved to Suffolk, England. Her father—who would die when she was just 20—worked for the Air Force. “It was all top-secret what he did,” she said. “I just saw red folders on his desk that said ‘Top Secret.’”

She and her three siblings had an English upbringing. She had a thing about dolls. “I didn’t like dolls, and I used to bury them in my backyard—just the heads,” she said. The family moved to Paris, where she attended a school for diplomats’ kids. “I wasn’t keen on boys, because I found—and I don’t know if this sounds really pretentious—I found that a lot of them liked me, all at the same time, and it was overload,” she said.

When did she lose her virginity?

“You rascal! Seventeen and a half. And I didn’t do it for a year after that. No, that’s not true.”

Next stop: New York, where she attended Finch College for women on the Upper East Side. Tricia Nixon was an alumna, and one day the girls went down to Washington to protest the Vietnam War. “We had tea with Tricia at the White House,” she said. “She was trying to be nice Miss Perfect.”

While at Finch, she met Joseph Allen, a 29-year-old newsprint entrepreneur. She was 19. They got married.

“I knew Paris better than he did, but he explained the stock market to me,” she said. “He made you feel secure. There’s no way you could not like Joe, but we should not have been married, because I was too young.”

They honeymooned in Morocco, where they got drunk on brandy with actor Richard Harris. The newlyweds lived on East 72nd Street.

In the early 1970’s, Mr. Allen and budding media tycoon Peter Brant bought half of Warhol’s Interview magazine. “We were financing it for a while,” said Mr. Allen. “And I think they gave us an equity position. It was not really a formal arrangement with Andy.”

“Joe put part of it in my name,” Mrs. de Kwiatkowski said. “I owned a fourth of it. He put it in my name, to give me something to do, which is ridiculous. I always find it ridiculous—these men thinking that they have to give women something to do.”

She helped organize parties at the Factory. “Proper parties!” she said. “I had proper food. We had Leni Riefenstahl, all the important people who were in town.”

She started a shopping column and wrote about Helen Arpels shoes. “I wore them and made them popular,” she said. “My husband even copied them from me. I got every color.”

She’d have lunch at the East 63rd Street restaurant Quo Vadis with Truman Capote, who became a pal after he’d alienated his “swans,” Babe Paley and Slim Keith. “He liked to gossip; he could tell you things about everybody,” she said. “And I’d just listen.”

“Barbara holds the keys to the other side of the amazingly enormous Warhol story,” said photographer Peter Beard. “She was there for all the great statements of Andy’s for years before she cared. She was completely innocent, and she literally saw and heard everything and didn’t give a damn. She had the most naïve and unspoiled eye of any human to enter Manhattan.”

“Barbara represented the difference between the 60’s Factory and the 70’s Factory,” said writer Bob Colacello. “The 60’s had the speed freaks and the whacked-out heiresses—and street people, really—and the 70’s Factory was kind of like, Andy had been shot, and so it was more about upper-middle-class clean, good kids who, at least on the surface, did not seem quite as self-destructive as the 60’s bunch.

“She was the prettiest young lady you have ever seen—better than Elizabeth Taylor,” said fashion designer Mary McFadden.

“She was a great beauty,” said Picasso biographer John Richardson. “And she didn’t look like other beauties.”

“She was not prepared to deal with the lifestyle that she was introduced to,” said her then husband, Mr. Allen. “And if it wasn’t by me, it would have been somebody else. I mean, she was that good. Everybody was after her.”

“I have to tell you New York was packed with beautiful girls in 1971,” said writer Fran Lebowitz, who was hired at Interview (to review movies and drive a truck to deliver plates of the magazine to the printer to New Jersey). “Barbara had this look particularly prized at the Factory, this very WASP-y look and very fresh. Andy took Barbara up because she was his idea of the great all-American beauty. I don’t think it had anything to do with what Barbara was like as a person. I doubt that Andy would have noticed, you know, or cared.”

SOON HER MARRIAGE ENDED. “I loved Joe,” Mrs. de Kwiatkowski said. “But I had to sow my oats.”

“Once she was discovered by Andy, her marriage was essentially over,” Ms. Lebowitz said. “I mean, how can you keep ’em down on the farm? She started traveling around with Andy. She was his ‘girlfriend.’”

In 1974, she got an assignment to interview Peter Beard. They went on safari. “That was a proper safari,” Mrs. de Kwiatkowski said. “I killed cobras. Women are good shots.” They became an item.

Mr. Beard’s cottage in Montauk was next-door to Warhol’s compound, which the Rolling Stones rented in 1975 before an American tour. Mr. Colacello was staying at the Beard cottage and, in the night, a rattling woke him up. “It was Mick Jagger climbing through my window, thinking that was Barbara’s room!” he said. “It was about 3 in the morning. We all had a good laugh.”

“We died laughing on the floor,” said Mrs. de Kwiatkowski. “‘Mick, you got the wrong room!’ Nothing happened. I was in love with Peter Beard. Wasn’t I a lucky girl? He chose me. All the men in my life chose me. They all chose me.”

“Usually, people who say that things ‘just happen’ to them, it’s not true,” said Ms. Lebowitz. “They make them happen. But I think that in the case of Barbara, it was true.”

She went through a “brief Hollywood period” and auditioned for Jack Nicholson’s Goin’ South and appeared in Andy Warhol’s Bad.

“It was one of his sordid movies,” she said. “I played the worst character in the world. He asked me to play a woman who threw a baby out the window, and I said, ‘No, I will not do that, Andy.’”

She had more success modeling. She was the first woman to wear jeans on the cover of Harper’s Bazaar.

Who else did she model for?

“That’s a stupid question. You model for whoever asks you to model—Calvin, Halston, Ralph. You model for them!”

She made the cover of Interview in 1977. “I hated it! I looked like a chipmunk,” she said. The magazine named her Girl of the Year, and there were quotes from Mr. Jagger (“She leaves me speechless”) and fashion designer Halston (“Men adore her because she doesn’t pull any of that feminine crap … ”).

Halston was her neighbor for a while on East 63rd Street. “Halston was very grand,” Mrs. de Kwiatkowski said. “He gave parties all the time and everybody would dance. Go over at 9 and stay until 6. It was fairly decadent, but it was civilized. I mean, Martha Graham would be there.”

At a drag party there one night, Mrs. de Kwiatkowski wore a jock strap over a silk robe. “Steve Rubell came dressed as Scarlett O’Hara,” she said, “and a lot of people wore Liza Minnelli’s clothes—one guest caught fire because Halston had a staircase with candles on it. Halston wore high heels—no, I got it wrong. Steve dressed in a big fat red dress and H dressed—what the hell did he dress as? All I remember are the high heels, and he walked in them perfectly.”

Her relationship with Mr. Beard lasted around three years. “I moved on, kiddo,” she said. “I moved on to Philip Niarchos [son of Greek shipping magnate Stavros Niarchos]. Quite quickly.” Then she told me about the “little flirt” she’d had with temperamental tennis star Ilie Nastase.

“He was the most fun,” she said. “Once he arrived at my door and he had all his tennis rackets and he said, ‘Barbarella, I’m so tired. Can I stay with you?’ And I said, ‘Surrre, but I’ve got kind of a date.’

“So I go out with a group of people, Taki amongst them, and I said, ‘Oh my God, I’ve got to go home, Nasty’s there.’ And he said, ‘Oh, come on. I don’t believe you.’ I said, ‘Well, come see.’ So we get to my apartment and we creeped along, and then Taki sees all the tennis rackets and he just couldn’t get over it.”

By the early 80’s, she was ready to settle down.

One weekend, she was at her friend Minnie Cushing’s place in Newport. “All of a sudden, we hear a helicopter,” Mrs. de Kwiatkowski recalled. “Who’s landing on her property? And out comes Henryk. And he came up to me—he was going to a ball we had no intention of going to. And he came up for a drink before the ball, and he said, ‘I’m going to marry you.’ He claimed to have seen me before, but he hadn’t.”

Born in Poland, Henryk de Kwiatkowski had fled the Nazis in 1939, was imprisoned in a Russian camp in Siberia for two years, escaped, enlisted with the British Royal Air Force, and flew missions against the Germans. After the war, he immigrated to Canada, became an aeronautical engineer and went on to make a fortune as a broker of used airplanes. Legend has it that over a game of backgammon with the Shah of Iran, he made a $20 million commission from the sale of nine 747’s.

“He was kind of old-world Polish, a proper gentleman,” said Mrs. de Kwiatkowski. “He never walked out of his bedroom without wearing his suit and tie, maybe his polo outfits.”

She met him at an auspicious time.

“She really wasn’t financially independent,” said her ex-husband, Mr. Allen. “She was in little bit of a trap as she was getting older, in her mid-30’s, because she really had no security. It’s great to be the toast of the town, but you’ve got to be able to fund it. Henryk had the dollars. He was not the type of guy that she went out with before. She’d gone through this stage of the young, attractive, wonderful woman, being well liked by some of the most attractive people in New York. But she was not independently wealthy. When she married me and divorced me, we were not wealthy at that time.”

Barbara and Henryk married in 1986. De Kwiatkowski was major player in thoroughbred breeding. He later bought Calumet Farms in Kentucky, which had produced nine Kentucky Derby winners.

“We were always in Europe all summer,” she said. “We followed the polo circuit, so we’d go in June to England and then July in Deauville, and then Saratoga in August and Greenwich.”

When the Warhol Diaries came out in 1989, she said, “It was terrible. I was with Henryk, and his children were saying, ‘Have you read this? Look what Barbara did!’ And I thought, ‘Oh, he’s just going to die.’ And he said, ‘Barbara, I don’t care. I married you because I love you.’”

She is mentioned 73 times in the Diaries. “Andy really exaggerated, and he didn’t tell the truth all the time,” she said. “Andy could be really bitchy.”

“I was the only person I know who wasn’t surprised by those diaries,” said Ms. Lebowitz. “A million people were upset, and they kept saying, ‘I thought Andy was my friend.’ Whatever gives them the idea that Andy was anyone’s friend?”

Mrs. Barbara was in Palm Beach when she heard Warhol had died. “It was awful,” she said. “It was Henryk’s birthday, and I was giving him a party. So I had to be this gay, fabulous person, and that morning it flashed across the news: Andy’s dead. They showed a video of Andy and me walking into the White House, and they showed it over and over.”

After a battle with cancer, Henryk de Kwiatkowski died at age 85 in 2003. “I miss him enormously,” she said. She buried him in the Bahamas. “I found the most beautiful monastery, which could be the highest mountain in Nassau,” she said. “Only monks are buried there, but it was the only decent place that was suitable for my husband.”

She has not remained close to each of her six stepchildren. “They’re still my family,” she said. “They were my family for more than 20 years—but I was a stepmother and, you know, stepmothers aren’t popular. But stepchildren aren’t, either.”

It was after 5 p.m. A servant mixed her a vodka cranberry. In the dining room, she pointed out the hand-painted Chinese wallpaper (“from a very important house in England”). In the living room, she gestured toward a drawing of her by Warhol. “And he never did drawings,” she said. “Never. So it makes it special.”

Two weeks later, we were in her chauffeured Lexus suburban, heading downtown to the Waverly Inn. She was wearing a fur coat over a chinchilla vest, black Saint Laurent pants and Prada boots—the first time she’d worn heels since she’d broken her ankle. She had a Victorian garnet cross around her neck and a huge sapphire ring.

She said that the next day she was flying to Nassau on a friend’s plane. She had some houseguests and thought she might invite Sean Connery over. “He always comes over for dinner, and he’s a lot of fun,” she said. “I always get seated next to him at dinners.”

We pulled up at the Waverly and got a good table up front. She ate almost an entire steak. “I can’t believe I ordered this,” she said. “Do not put that I ordered this. Say I ordered the Dover sole.”

After dinner, back at One Beekman Place, we looked at old photographs: of her and Henryk and their son with Queen Elizabeth; of Henryk with Prince Charles; of her with Margaret Thatcher.

She confessed she thought she’d had a “really fun, fabulous and exceptional” life.

“I just did,” she said. “In a way, things happened to me. It’s not like I went after them; they just happened.”

She mentioned that, two weeks before, there’d been a party celebrating the 20th anniversary of Andy Warhol’s death. She didn’t go.

“It was ridiculous,” she said. “I thought, ‘Why are they celebrating his death? Why?’”

No one seemed to understand-Bear Stearns had lost more than $300 million of his money in the currency markets in just a matter of days-hard-earned money that he had compounded over the years and hoped to leave to his seven children and his grandchildren. And now, at the end of a long day, this impertinent man was suggesting that, yes, he had lost a lot of money, but that his net gain as a Bear Stearns client over the years was $22 million. It was just too much.

"It's not the money, sir," he said in his thick Polish accent, his voice trembling. "It's the principle. [Bear Stearns] praised me like I'm God walking on the water, and … in the meantime these losses mounted day after day until they decided to sell my children's stock now. You got me in all these high multiples ... [you say] you will protect me forever just to get twice the commissions …. And you did it all for peanuts, for a pound of flesh."

Silence in the courtroom. "Would you allow the attorney to ask the question?" directed Federal District Court Judge Victor Marrero of the witness. But Mr. de Kwiatkowski was in no state to continue. His lawyer asked for a recess and the court adjourned.

The Bear Stearns legal team, led by James Linn of Linn & Neville, was confident. Under Mr. Linn's relentless questioning, Mr. de Kwiatkowski had appeared to the federal jury just as the defense lawyers desired: A worldly, sophisticated and indeed successful investor who made one huge and ultimately disastrous bet that the U.S. dollar would rise in late 1994 and early 1995. Bear Stearns had warned him of the risks involved; risk-disclosure forms had been signed; he had been cautioned over the extraordinarily large size of his investment. But no matter: Mr. de Kwiatkowski had an immigrant's belief in the almighty dollar and bet the ranch on it.

And he lost. Now he was suing Bear Stearns for not having sufficiently informed him of the risks he had incurred. "He's a gambler," Mr. Linn summed up in his closing argument. "He is a gambler like no one has ever seen. But he is a successful gambler and he can't stand to lose. Ever."

So on May 18, when a jury found in Mr. de Kwiatkowski's favor and ordered Bear Stearns to pay him $112 million (later increased to $164.5 million to account for interest not earned), Mr. Linn's face was not the only one to go pale in Judge Marrero's courtroom. Also surely in shock were Bear Stearns president and chief executive James Cayne and chairman Alan (Ace) Greenberg-both of whom had taken the trouble to leave their busy desks to attend closing arguments the previous day.

And while the chief executives of Morgan Stanley Dean Witter, Merrill Lynch and Goldman Sachs were not present that day, it is certain that they, too, took sharp notice. Bear Stearns had been found liable for failure to exercise due care on the part of its client, specifically by failing to inform him of a new analysis of the currency market that suggested the dollar was not going his way.

It was a decision virtually without precedent, according to lawyers familiar with the case, and indeed may be struck down on Bear Stearns' appeal to the judge. But this much is true: Brokerages, starting with-but by no means limited to-Bear Stearns, are watching to make sure it doesn't establish one.

Judge Marrero's ruling on the Bear Stearns motion is expected any day now, according to lawyers on both sides. And those same lawyers are in super-charged spin mode, bringing their own perspective to the thousands of pages of court documents and transcripts that have led to this point.

In some ways, it's a simple tale: Heads, I win; tails, I call my lawyer. In Mr. de Kwiatkowski's case, it was: You didn't tell me what analyst X was saying, so I want my money back. But a broader truth holds: If clients are able to sue and win when they lose money in a market downturn-well, it's enough to make the securities industry go weak-kneed with fear.

For Bear Stearns, the implications have already been severe: The company took a $96 million charge to its second-quarter earnings in June.

"The industry was very surprised that a suit like this could be resolved in favor of the investor. There certainly will be implications," said Guy Moskowski, a securities-industry analyst for Salomon Smith Barney.

Said a Bear Stearns spokesman: "We believe this decision should be set aside by the judge. The case is completely unprecedented and, if allowed to stand, represents a major threat of liability to the brokerage industry."

Entree Point

Mr. de Kwiatkowski seems an unlikely figure to strike fear into the hearts of Wall Street bankers. His story is well known and extraordinary. Born in Poland in 1924, he escaped the invading Nazis in 1939, was imprisoned in Siberia by the Russians, broke free and made his way on foot across Central Asia to Tehran, where he talked his way into the British Embassy. He then became a pilot in the British Royal Air Force, flew combat missions against the Germans, ended up as an aeronautical engineer in Canada (where he still remains a citizen) and went on to make millions as an independent broker of used airliners in the 1970's and 1980's.

Most famously, he is said to have earned a $20 million commission from the Shah of Iran for having sold him nine 747's over a game of backgammon at the royal palace in Tehran.

As Bob Colacello pointed out in a 1992 article in Vanity Fair , some of the de Kwiatkowski saga has been embroidered-he did not fly Spitfire planes in World War II, nor does it seem that the Shah actually cut him a check-but the crux remains true. He lives now within the Lyford Cay compound in the Bahamas and maintains three other homes around the world-among them a pied-à-terre at the exclusive 1 Beekman Place and a palatial spread in Greenwich, Conn. All were decorated by the famed East Coast decorator Sister Parish (he named a horse after her, as he has for each of his children; she a dog after him).

Mr. de Kwiatkowski declined to be interviewed for this article, although his attorneys spoke on his behalf.

His children are established members of the trustafarian Upper East Side set-indeed, his super-socialite daughter Lulu (owner of Lulu DK Fabrics) was recently named an "It" girl by Vanity Fair . His son Conrad Kwiatkowski (who eschews the "de" in business practices-an appellation that Mr. de Kwiatkowski only added later in life) runs his own very-high-end art gallery on Greene Street in the West Village. It's called the Monastery, and it abounds in all manner of expensive high-concept gadgetry and overpriced African art. Another son, Stephan, puts on his own mixed-media art shows around town and, according to Mr. Colacello's Vanity Fair article, qualifies for a $15,000-a-month allowance. Mr. de Kwiatkowski and his second wife, Barbara (a former model and Andy Warhol favorite), are very much ensconced-they have the right friends, go to the right parties and belong to the right clubs.

But it wasn't always that way. In the late 1970's, Mr. de Kwiatkowski-despite all his millions, his young wife, his grand residences-was looking for something more … like a little entree. Which is what he started to get when he began doing business with Henry Mortimer at E.F. Hutton.

An account of that relationship, and of Mr. de Kwiatkowski's subsequent investment relationships leading up to the suit, has been culled from the court documents, from interviews with lawyers and acquaintances and from previously published accounts.

At the time, Henry Mortimer, who died in 1992, was coming to the end of his career as a broker. He had previously worked at Clark Dodge, one of the last old-line white-shoe brokerage firms. A Porcellian Club member at Harvard, a member of the Brook and Racquet clubs in New York, his blueblood credentials were superb. They became friends-Mr. de Kwiatkowski would spend time with the Mortimers at their house in South Hampton, and Mortimer's career thrived as Mr. de Kwiatkowski's fortune (and hence, Mortimer's commissions) grew.

In 1987, as E.F. Hutton struggled to survive after the crash, Mortimer-then 70 years old-moved himself and his accounts to Bear Stearns. Working with Mortimer at the time was Albert Sabini, an industrious young broker born in Flushing, N.Y., and educated at Fordham University. While Mortimer traveled the world cultivating his clients, Mr. Sabini was the one picking up the phone and writing the tickets. In so doing, he became acquainted with Mr. de Kwiatkowski at E.F. Hutton and came to know him all the better at Bear Stearns. When Mortimer moved to London, Mr. Sabini-ever striving-stepped in and took over the de Kwiatkowski account.

By 1991, the portfolio was all Mr. Sabini's. According to the court record, Mr. de Kwiatkowski's net worth was $100 million at the time (though likely it was a lot more; as a resident of the Bahamas, he pays no U.S. income taxes, and thus the specific extent of his wealth has always been something of a mystery). And his account at Bear Stearns was blue chip all the way-I.B.M., Texaco and U.S. Treasuries. Mr. Sabini knew, too, that his client had a strong appetite for risk, whether it was speculating in foreign currencies or taking a turn at the gaming tables.

But it was mostly with the dollar that his client preferred to make his bets. Dating back to his airplane-trading days in the 70's, Mr. de Kwiatkowski had a long-standing, somewhat mystical belief in the greenback. "Ever since I was a boy, the dollar has been supreme to me. I saved my life on $2 a day,'" he would say on the stand. Accordingly, he would frequently take speculative positions, going long on the dollar and shorting other currencies such as the yen and the mark.

At the time, Lawrence Kudlow, the chief economist for Bear Stearns, was a dollar enthusiast. Mr. Sabini organized a conference call between his client and Mr. Kudlow in September 1992, and Mr. de Kwiatkowski was impressed. He bought a chunk of futures and sold out three months later, booking a gain of $82 million in the process.

By late 1994, the account had become more active and was a true gold mine for Mr. Sabini-indeed, it made up one-half his total commission run. Every morning he would get to his desk by 6:30 a.m., at which point he would scour the wires for news about the dollar. By now Mr. Sabini was a managing director, thanks in no small part to Mr. de Kwiatkowski.

Since the $82 million trade, his client had stayed away from the futures markets but was following them closely. The account necessitated constant upkeep-Mr. Sabini would make as many as 20 calls a day to Mr. de Kwiatkowski's Lyford Cay home, giving him updates on how the dollar was trading. Like all of Mr. de Kwiatkowski's hired help, he called him "Mr. de K." (For his part, Mr. de Kwiatkowski called him "Sabini" as a matter of course, and "Al" only when he was upset). And Sabini was in awe of Mr. de K-the 10 languages he spoke (from Urdu to Uzbek), his Old World charm. Mr. Sabini was even invited to the wedding of one of Mr. de Kwiatkowski's daughters in 1991.

In October 1994, Bear Stearns' chief economist, Wayne Angell-a former governor at the Federal Reserve-started talking up the dollar's prospects. Mr. Sabini made sure to let Mr. de Kwiatkowski know. His client was intrigued. He still loved the dollar, and now it seemed cheaper than ever; and this was no ordinary dollar bull, but Wayne Angell, a former colleague of Alan Greenspan. "To read through [his report] … the superlatives, I, European, having great faith in the Federal Reserve … I decided this is great," Mr. de Kwiatkowski would say in court.

So he started nibbling away. But nibbling for Mr. de Kwiatkowski soon grew into a $6.5 billion position comprising a complicated basket of 65,000 futures contracts, all long on the dollar and shorting the yen, the pound, the Swiss franc and the mark. It was an extremely large position for an individual investor, to say nothing of a 76-year-old eccentric with a soft spot for the dollar; indeed, it was a bet more in line with what a bank would make.

By late November 1994, Mr. de Kwiatkowski's position was complete. Bear Stearns president and chief executive James Cayne was apprised of the contracts first by Mr. Sabini, then by senior executives in the foreign-exchange department. He himself put in a call to Mr. de Kwiatkowski, asking him to up his margin requirement to $250 million. "No problem," Mr. de Kwiatkowski later testified he told him. "I can send in $500 million if you want."

In January 1995, however, the markets were roiled by the surprise devaluation of the Mexican peso, and the dollar began to plummet. On one day, Jan. 9, Mr. de Kwiatkowski lost a cool $99 million as investors everywhere sold the dollar down. A month earlier he had been down $100 million, only to recover when the markets bounced back.

But there was no bounce back this time. Mr. Sabini could hear the frustration and fear in his client's voice, so he set up a conference call between Mr. de Kwiatkowski and Mr. Angell on Jan. 10.

"How can you do that?" complained Mr. de Kwiatkowski to Mr. Angell. "To produce in November such a glowing [report on the dollar], how can you justify that I have lost $200 million since that glorious report?"

In his testimony, Mr. de Kwiatkowski said that Mr. Angell told him he believed the dollar was undervalued and that, if he held on, he would get his investment back.

So Mr. de Kwiatkowski held on, even as the dollar continued to decline. Soon after, in February, a negative note on the dollar's prospects was put out by Bear Stearns' commodities-research department. Mr. de Kwiatkowski was not apprised of the downgrade (although he admitted on the stand that much of his mail remained unopened). It was this lack of disclosure on Mr. Sabini's part that became the thrust of Mr. de Kwiatkowski's suit against Bear Stearns. If only they had told him, he would have sold, his lawyers contend; conversely, Bear Stearns asserts that it should not be held liable for any random change in opinion by its research staff.

In any event, Mr. de Kwiatkowski was not told. By late February, with the dollar in free fall, Mr. de Kwiatkowski stopped sending in the required funds to meet his margin calls. And while his various assets were being liquidated, his still-large exposure was a risk not only to him but to Bear Stearns, as well.

Liquidation Sale

On Friday, March 3, David Schoenthal, head of the foreign-exchange desk at Bear Stearns, was called in by Mr. Cayne to oversee the final liquidation of the now-hemorrhaging account. Instead of pushing the sale through that day, he opted to wait; conditions might improve over the weekend.

They did not. By Sunday, the Bank of Japan was in the market selling dollars. Demand was negligible. It was a nightmare-traders all over the world seemed to know that there was a big investor selling dollar futures, and they were selling accordingly. Now was the time to close the position, but Mr. Schoenthal needed Mr. de Kwiatkowski's permission. So he put in put the call in Lyford Cay.

According to a transcript of the telephone call (now part of the court record), Mr. Schoenthal said: "Mr. de K, you maybe have about $10 million in equity left, and I think we just have to liquidate the balance, sir. You don't have enough money."

Confused, addled, his net worth eroding before his eyes, Mr. de Kwiatkowski could only respond: "To do what?"

"We have to liquidate the balance of your position, sir. Otherwise you're going to force a deficit."

Later on in the call, Mr. de Kwiatkowski asked what the mark was selling for. It was at 1.39, Mr. Schoenthal responded.

For Mr. de Kwiatkowski, it was too much to bear.

" Ai! ai! ai! " His plaintive cry filled Bear Stearns' cavernous and empty trading floor.

"I know," said Mr. Schoenthal.

More cries. " Ai! ai! ai! "

"All right. Let me just finish the trades," broke in a harried Mr. Schoenthal.

"Okay, okay, okay," came the shaken response over the speaker phone.

"Thank you," Mr. Schoenthal shot back. Then he yelled to his traders: "I got an order to liquidate. I'm doing the best I can. It's a fucking abortion. I gotta go. It's an abortion."

When Mr. de Kwiatkowski awoke the next day, his account at Bear Stearns was fully liquidated-it had taken Mr. Schoenthal until 5 a.m. on Monday to complete all the trades. Gone were Mr. de Kwiatkowski's FX contracts, gone was all his I.B.M., gone were all his U.S. Treasuries. There was a bill for him, too: he owed Bear Stearns another $2.7 million to cover the balance.

Bear Stearns chairman Ace Greenberg did give him a call, though, Mr. de Kwiatkowski testified. He wanted to commiserate; it was awfully bad luck, and Mr. de Kwiatkowski was such a valued customer of the firm. If he had been involved, they could have avoided this mess. It was a civil exchange; Mr. de Kwiatkowski was, after all, a gentleman. Bear Stearns officials deny that Mr. Greenberg made such statements over the phone.

Little more than a year later, though, Mr. de Kwiatkowski would sue. He had lost more than $300 million, and he would have his satisfaction. But broke he certainly was not. In December 1996, he attempted to open up an account at Morgan Stanley and listed his net worth then at $190 million.

So Wall Street and Mr. de Kwiatkowski await Judge Marrero's ruling. Feelings remain strong.

"The verdict was a total aberration," said James Linn, Bear Stearns' lawyer. "There is no rhyme or reason to it. Even Mr. de Kwiatkowski seemed shocked by the jury's decision. You could tell by looking at him. If the judge doesn't turn this aside, the Second Circuit [Court of Appeals] certainly will."

"Mr. Linn has no basis for that statement," responds Mr. de Kwiatkowski's lawyer, Myron Kirschbaum of Kaye, Scholer, Fierman, Hays & Handler. "Mr. de Kwiatkowski was confident going into the trial that he would be vindicated. He was not at all surprised by the jury's verdict."