Katie Holmes and Mayor Michael Bloomberg at The New York Observer's 25th anniversary party.

Last Thursday evening at New York’s perch of power dining, the Four Seasons Restaurant, billionaires could be found clinking glasses with politicians, actors could be seen rubbing shoulders with news correspondents, and throngs of notable wordsmiths quaffed copious amounts of liquor at The New York Observer’s 25th anniversary soiree.

“I think this is the best collection of New Yorkers I’ve seen in 20 years!” effused Ronald Perelman, who leered lustily at our highball glass.

“Can I ask you one question?” he continued. “Where’s the bar?”

It’s thataway, just behind Katie Couric, we assured the business tycoon. Or if he preferred, he could hit the bar on the other side of the restaurant’s famous pool room, where Harvey Weinstein had posted up and Spike Lee, who declined to take off his puffy coat, had helped himself to the generous spread of gourmet goodies before chatting up Katie Holmes and Donald Trump.

(Sadly, Shindigger caught only the tail end of that conversation. Mr. Lee saying to Mr. Trump: “Well, that’s one thing we can agree on.”)

Observer editors past and present—Peter Kaplan, Elizabeth Spiers and Ken Kurson—circled the room, while publisher Jared Kushner greeted guests with wife Ivanka Trump at the door. And from the worlds of business, politics, entertainment, fashion and beyond, the stars just kept pouring in. Even Mayor Michael Bloomberg was impressed with the turnout. “The Observer does throw a hell of a party,” he said in his opening remarks, before dubbing attendee Cory Booker “the handsomest mayor in America—west of the Hudson River.”

Here came Terry McDonell and Danny Strong and Jay McInerney and Audrey Gelman and Larry Gagosian and Ray Kelly and Joel Klein and George Pataki and Eric Schmidt and Kevin Ryan and—oh my!—Rupert Murdoch.

We just had to talk to Rupert Murdoch

“Mr. Murdoch? Mr. Murdoch?” Shindigger beckoned.

“What?” said the cantankerous billionaire, walking right on by with wife Wendi Murdoch.

“Can we ask you a few questions, sir?”

“No!” barked Mr. Murdoch, before making a dramatic swat in our direction. Shindigger agilely ducked for safety, silently chuckling at the news baron’s aversion to the press.

In no time at all, we found friendlier prey. “Someone from The Observer already observed me,” said Broadway favorite Christine Baranski, who was chatting with fashion consultant Fern Mallis under the floral protection of one of the poolside trees.

“New York is just the coolest city, and I love the fact that this paper really makes New York seem cool,” Ms. Baranski said. “The Observer touches on the sophistication and fun of the city. I just like the tone of it.”

Just then, we re-encountered Mr. Perelman, who had been paired with a cocktail, and who had his own take on The Observer. “The only bad moment I ever had was when they wrote a story about a little synagogue,” Mr. Perelman said, referring to Chloé Malle’s prickly 2010 article about the billionaire’s lavish private synagogue.

“I wish they didn’t, but they did, so that’s the end of it,” he said. “I still love The Observer, even besides that.”

Very gracious, we thought, bumping then into Observer alum George Gurley, with whom we had pre-gamed earlier in the evening at Jean and Martin Shafiroff’s glitzy Saint Patrick’s Day cocktail party. The suavely fuddled Mr. Gurley made the perfect VIP-fixer for Shindigger when PR maven Peggy Siegal was hand-holding elsewhere.

“He does Shindigger, he’s trustworthy,” Mr. Gurley assured José “Pepe” Fanjul, the president of Fanjul Corp. and Florida Crystals Corporation.

“I think this is the best event!” exclaimed Mr. Fanjul’s Carolina Herrera-clad wife, Emilia Fanjul.

We danced past the couple then to catch up with model Hilary Rhoda, who was getting a kick out of the bash.

“Oh, it’s a great party!” she said, holding a plate of Christian Albin’s Italian gourmet cibo. “I love the room, it’s gorgeous. I love the band. Obviously getting into the food situation.”

Ms. Rhoda, also dressed in a Carolina Herrera creation, had just returned from the runways of Paris, where she had walked for Céline. “Now I’m back and on photo shoots,” she said.

Photorealistic artist Chuck Close was also taking advantage of the buffet.

“I love The Observer almost in spite of myself,” he said. “At first it was a guilty pleasure, and then one day they endorsed Mitt Romney. I almost canceled my subscription. What were they thinking?”

What brought you back onboard, we wondered?

“When I go to Europe and can’t read you, I get really upset,” he confessed. “It went from being a guilty pleasure to a real pleasure.”

A cocktail later, we found ourselves yelling: “Ms. Herrera, we saw you at the School of American Ballet’s Winter Ball, and you were dancing!”

Shindigger had never witnessed her quite so zippy.

“Yes, I know. I’m South American,” Carolina Herrera retorted sassily.

Cuchi-Cuchi!

Back to the bar we traipsed.

“Do you have a white wine or champagne?” Padma Lakshmi pressed a barman.

“Rosé or brut?” he asked.

“Brut,” the foodie stated assuredly.

Ms. Lakshmi wanted to know our thoughts about her Blossom Ball. “Did you have fun?” she asked.

“We did, “Shindigger said.

“I’m glad!” she said. And then the Maison Martin Margiela-wearing TV host told us about the previous day, which she had spent in Albany: “I was recognized by the State Senate. Every State senator was there, because it’s budget time,” she dished, lowering her voice to a serious, husky tone. Though she lost us at “budget.”

When the band was replaced by DJ Chelsea Leyland’s turntables, things had officially strayed, and Shindigger was impressed (and a tad disappointed) that not a single sloshed attendee plummeted into the white marble pool. Cases in point: when perpetually grabby Four Seasons proprietor Julian Niccolini began frisking two attractive slabs of meat, offering to shower them with pricey pours of Bordeaux. Or when Gawker founder Nick Denton resorted to flirting with a pride of hungry tech lionesses, having already refused to be photographed with Mr. Murdoch because “it’s too obvious.”

Shindigger sidled up to the bar for last call with Ashleigh Banfield of CNN and Fox News’s Kimberly Guilfoyle.

“We’re together,” Ms. Banfield joked about their warring media outlets. “I’ve known her for eight years. We use to work at Court TV together.”

“Did you see Rupert Murdoch? He didn’t want to talk to us,” we bemoaned.

“Because I work at CNN, he didn’t want to talk to me, either,” said Ms. Banfield.

“No, he’s great! God bless him!” Ms. Guilfoyle cut in, right on cue.

As Rihanna’s “Diamonds” thundered over the speakers, Ms. Banfield revealed that she had gotten a smooch from the Newark mayor.

“We had a Cory Booker sandwich,” swooned Ms. Guilfoyle.

As things were wrapping up, at least one guest took on a reflective air. Mr. Close told us that he was overwhelmed by the turnout and notable faces. “I’ll make sure to be at the 50th anniversary,” he promised. “I’ll be 98.”

Shindigger likes a man who can forecast that far ahead—or, for that matter, with any type of math skills.

Here’s to the next 25 years!

The Four Seasons Restaurant, 99 East 52nd Street, (212) 754-9494, 6:30-9:30pm, by invitation only.

Illustration by Amy Melson

Tom Wolfe’s new novel, the Miami-set Back to Blood, has not been particularly well-received by book critics, but at the balmy, prosecco-soaked doorbuster sale and glad-handing jubilee known as Art Basel Miami Beach in early December, attendees armed with e-readers passed around one brief passage with gleeful approval. The scene, which comes midway through the book and is set at the same fair, introduces a character in whom many see an eerie resemblance to dealer Larry Gagosian—the art world’s widely admired, widely feared and widely resented top dog. The character, a gallery dealer named Harry Goshen (the name is perhaps a tip-off) is described as “a tall man with gray hair, although he doesn’t look all that old, and eerie pale-gray eyes like the slanted eyes of a husky.”

A bit mesmerized, Mr. Wolfe’s narrator circles back to Goshen’s eyes a few lines later: “So pale, those eyes ... they look ghostly and sinister ...”

Several fairgoers who encountered Mr. Gagosian in his booth in the Miami Beach Convention Center took note of his eyes as well. Not sinister, they said, just tired.

“Maybe it’s getting to him,” one art adviser surmised. “The travel, the expansion. At some point, it hits you the wrong way. It’s hard to satisfy everyone and keep all the balls in the air, and when you go to the top like that you become a target. People love to get the giant.”

It’s been an unusually challenging period for Mr. Gagosian, the art world’s silver-maned dealer-emperor, whose sharp eye for talent, business prowess and aggressive style of deal-making propelled an ascendancy from modest beginnings as a Los Angeles street peddler—hawking cheap posters in Westwood—to a position of unrivaled dominance in the international art trade, a sovereignty that some are predicting, a tad eagerly, may soon come to a close.

Even as he grapples with a pair of ongoing lawsuits—one brought by billionaire investor Ronald Perelman and another by art collector Jan Cowles—accusing Mr. Gagosian of enriching himself at clients’ expense, his empire has been rocked by a string of high-profile defections.

As Basel got underway, smartphones began vibrating with a curious piece of news: dealer David Zwirner, the serious-minded German known for shepherding cerebral artists like Neo Rauch to world acclaim, would be mounting a New York exhibition of Jeff Koons, long a prized show pony in Mr. Gagosian’s crowded stable and, perhaps coincidentally, the subject of that lawsuit by Mr. Perelman. Though a Gagosian spokesperson made it clear that the gallery would continue to represent Mr. Koons, who also shows at Sonnabend, the move seemed a noteworthy poke in the eye, and the timing a further thumb-twist.

Then, less than a week later, Damien Hirst—a shrewd market operator in his own right—announced that he was leaving Gagosian after 17 years. Never mind that the dealer had helped turn Mr. Hirst into the world’s richest artist (reportedly worth upward of $300 million) and had recently given over his entire network of galleries around the world to a blockbuster exhibition of Mr. Hirst’s Spot paintings (complete with a zany Amazing Race–type contest prodding jet-setting aficionados to hit all 11 shows).

Hirst was history.

And those Spots of his weren’t the last dominoes to fall. A day later, the dotty Japanese artist Yayoi Kusama—who was recently the subject of a major retrospective at the Whitney Museum—announced her own defection from Gagosian.

Three artists out of more than 75 that Mr. Gagosian works with—a number that includes estates like those of Picasso and Warhol—may seem like small potatoes for a world-straddling powerhouse. But there is a common thread that may make their loss a bit more impactful for the gallery, and portentous for the market as a whole. “Look at what they all provided: unlimited supply,” noted an art consultant who has had numerous dealings with Mr. Gagosian. “How many Hirsts do you think they sold? Thousands. How many Kusamas?” Despite her voluntary residence in a Japanese mental hospital, Ms. Kusama remains highly productive. “‘Forty-eight by forty-eight? Can do! You want red? White? No problem!’” the consultant continued, imagining the gallery’s sales pitch. “There are very few artists like that, and he managed to get them. The question is, who can he push to fill that void? Who will be the next million-dollar artist who can churn out a thousand pieces?”

Such artwork, the consultant said, is “like candy”—a quick hit of acquisitional glucose for collectors, necessitating regular replenishment. “‘You have a Hirst? I want a Hirst.’ ‘You have a butterfly? I want a butterfly and a cow.’ Collectors were buying two, three, four at a clip. Because a million dollars didn’t mean anything to these people.”

If the art market has been experiencing a bubble—and many observers believe that it has—this may signal the beginning of a much-needed correction. “I think the whole business has been slowing down,” said one prominent collector, who cited the disappointing auction results for Mr. Koons and several other of Gagosian’s artists at last November’s contemporary sales, despite record-breaking prices for a number of other artists.

Perhaps the gallery overplayed its hand. “City by city, they saturated the market with [Richard] Prince and Koons,” the collector said. “Instead of working with an artist to have longevity—with a slow output, distributed internationally over years—they blitzkrieged and carpet-bombed each city with the work. Everybody got a Hirst.” Perhaps, the collector speculated, these artists were leaving simply because they’d already sold everything they could to Mr. Gagosian’s clientele and it was time to tap a new user base.

“Larry is quite phenomenal,” the collector added. “He got these collectors to buy anything he put out there. ‘Larry’s going to show it!’ became an instant recipe for money. It was absurd.”

These high-level defections follow the deaths last year of several of Mr. Gagosian’s blue-chip artists, the losses of whom likely will be felt not only personally but financially. Cy Twombly, long a jewel in Mr. Gagosian’s crown (newly launched Gagosian galleries in Rome, Paris and Athens all opened with Twombly shows), died in July of 2011, followed by Richard Hamilton, John Chamberlain, Mike Kelly and Franz West.

And then there are those pending lawsuits. The allegations themselves are not terribly dramatic—let’s see you try selling a billion dollars worth of art in a year, as Gagosian reportedly does, without breaking some crockery—but of far larger consequence might be the unflattering light they have shed on the inner workings of the Gagosian empire. Dozens of emails and hundreds of pages of deposition testimony have been made public, opening the kimono on the dealer’s typically discreet business affairs.

This unusual drumbeat of bad news has the art world muttering about a once-unthinkable possibility: could the invincible Larry Gagosian actually be in real trouble? Could a “post-Gagosian era,” as one longtime art writer put it, be at hand?

Is Go-Go a goner?

“People are saying, ‘The whole Gagosian empire is falling apart!’” the prominent collector said.“‘Oh, the whole thing is going to collapse!’ There’s a lot of jealousy.” Art world sources contacted by The Observer were universal in their praise of Mr. Gagosian’s business instincts and his curatorial acumen, noting with particular approval the many influential museum-quality exhibitions his galleries have mounted over the years. They also called him tough, Machiavellian and hard on his employees, a thick-skinned bunch for whom a ready box of Puffs is nonetheless said to be standard equipment. Many sounded mirthful about his string of difficulties. And they all flatly refused to be quoted by name.

“Look, Larry is not a liar, he’s not a cheat,” said the collector. “But he is a frigging bully. He’s very good at intimidating people and running his social pressure on them, and he’s good at image-making, putting out the idea that everything he touches turns to gold. Which of course is bullshit. It worked for a certain amount of time, but no longer.”

Larry Gagosian (Getty)

A spokesperson for Gagosian did not respond to a request for comment, but in a 2010 interview with the Financial Times, the dealer defended his approach: “As long as you behave well, there’s nothing wrong with being aggressive,” he said.

“Everyone wants to see Larry fail,” the adviser noted. “I’m not in that camp. I think he’s extraordinary. Maybe it’s just his time, though. One thing after another put a chink in the armor.”

Mr. Perelman, the billionaire investor and chairman of Revlon, has been a client of Mr. Gagosian’s for more than two decades. The two of them are also, as Mr. Perelman noted pointedly in his lawsuit, longtime friends and business partners (both are investors in the Blue Parrot restaurant in East Hampton). “Accordingly,” the original complaint put it, “Gagosian owed Plaintiffs the highest degree of loyalty and fair dealing.”

In other words: this time, it’s personal.

The rather complicated suit concerns a series of deals—both purchases and trades—between Mr. Perelman and Gagosian Gallery, including a $4 million sculpture by Mr. Koons, Popeye,and works by Richard Serra and Cy Twombly. Mr. Perelman alleges that in multiple instances, Mr. Gagosian misrepresented the market value of these works in order to maximize his own cut on various transactions. Mr. Gagosian’s legal team declined to comment on the Perelman case or any other pending legal matter.

None of the art-world insiders The Observer spoke to believed Mr. Perelman would prevail, and some noted that the complaint served mostly to advertise the plaintiff’s apparent, if implausible, naïveté. There is, for instance, the contention that “Plaintiffs depended on defendants, whose knowledge of the market and judgment in these matters were without peer, for their decisions with respect to art transactions,” which is a little like relying on the salesgirl at H&M to tell you whether your butt looks big in that sequined A-line cocktail dress. It’s her job to move merchandise.

“That’s the game,” said one well-regarded art adviser who has worked with both men. “They’re all in the game together—Perelman’s like that, too.” Likening the relationship to a marriage gone bad, the adviser added, “People get along for years, and then they get a divorce and want to kill each other.”

“I think Ron would sue his dog-walker, and he probably already has,” the collector noted.

Despite Mr. Perelman’s well-established litigious streak, the move raised eyebrows because it seemed to violate the omertà that has long prevailed in the art world. “It’s shocking,” said the art consultant. “It’s a very respected collector standing up to Gagosian for the first time, and doing so in a very public way, saying, basically, ‘I’m not going to take this shit anymore. I’m not going to dummy up.’ I think that’s what’s happening here—when somebody’s the king of the world, nobody wants to alienate them, but the minute people start to defect, they all start piling on.”

If so, Mr. Gagosian might want to seek the advice of his onetime boss Michael Ovitz, for whom he worked as secretary for a brief period in the 1970s. Years later, after co-founding CAA, Mr. Ovitz came to rule Hollywood in much the way Mr. Gagosian dominates the art world; when the spell was broken, with Mr. Ovitz’s firing from Disney in 1997, the many enemies he’d made along the way lined up to get their licks in.

Whatever its chances of success, the Perelman suit raises a thorny issue for the art world: what information, if any, must a dealer disclose to those with whom he does business, be they artist, buyer or seller? As Mr. Perelman’s complaint claimed, “Unbeknownst to his customers, Gagosian and the Gallery are often on all sides of the transaction—representing the buyer, the seller and the artist—and they use these multiple roles to their advantage by undervaluing works when purchasing them, overvaluing them when selling them, and pocketing the substantial differential.”

Which sounds like a pretty good definition of the gallery trade, except maybe the part about it being unbeknownst to anyone.

Another recent lawsuit also raised the matter of Mr. Gagosian’s supposed fiduciary duty to a client, and some onlookers believe the case may redefine the way business is done in the art world.

An edition of Roy Lichtenstein's 'Girl in Mirror' at Sotheby's in London.

In 1964, Pop artist Roy Lichtenstein’s Girl in Mirror—an “enamel” on steel, made in an edition of eight—was a newly minted, fresh-faced ingenue with a bright future and the world at her feet. Today, a little worse for wear, she has emerged as the unwitting subject of a $15 million lawsuit filed by lawyers for art collector Jan Cowles. Ms. Cowles, 93, suffers from dementia, and the suit filed on her behalf alleges that her son, Charles Cowles, who put the Lichtenstein on consignment with Mr. Gagosian and then sold it to him, did not have the authority to do so—and therefore the dealer had no right to sell it to a third party. The suit further alleges that Mr. Gagosian took advantage of Mr. Cowles, who was in tough financial straits, to obtain an unusually rich commission on the sale.

Mr. Cowles, it should be noted, is no novice in the art trade: a longtime dealer himself, he ran a New York gallery for 30 years until closing it in 2009. What’s more, he has a history of unloading works from his mother’s collection—as it turns out, sometimes without her say-so. Indeed, in a settlement agreement between Jan and Charles filed earlier this year after Jan’s attorneys threatened legal action against him, Charles admitted to selling his mother’s art without permission and agreed to pay her back. How he will do so is hard to fathom, though, since the amount owed is said to be approximately $12 million, and Mr. Cowles has no apparent source of income.

In a November court proceeding, the defense stated its intention to add Charles Cowles to the case, a move that the court seemed to approve of. “Well, I’ve been surprised that the son wasn’t brought into the action initially,” Judge Charles Ramos admitted. The defense also indicated that it was considering adding Lester Marks, Ms. Cowles’s accountant and attorney-in-fact, to the case, on the theory that he may have some liability in failing to prevent Charles from selling the artworks.

In late November, both sides agreed to move forward with voluntary mediation, putting litigation on pause.

The Girl in Mirror controversy began in March 2011 with a suit filed over another unauthorized sale. Art collector Robert Wylde sued Gagosian Gallery for fraud after Mr. Gagosian sold Mr. Wylde a Mark Tansey painting, The Innocent Eye Test, that had been consigned by Charles Cowles. It turned out the painting did not belong to Mr. Cowles, but instead was jointly owned by his mother and the Metropolitan Museum of Art.

Mr. Cowles was quick to take responsibility for the debacle. “I didn’t even think about whether the Met owned part of it or not,” he told The New York Times after Mr. Wylde filed suit. “And one day I saw it on the wall and thought, ‘Hey, I could use money’ and so I decided to sell it ... And now it’s a big mess.”

Mr. Cowles, whom Mr. Gagosian referred to in a deposition as “a train wreck,” has claimed in an affidavit that he has been treated for memory problems in recent years. He did not respond to requests for comment.

But Charles Cowles wasn’t the one being sued. Mr. Wylde sought $6 million in damages from Mr. Gagosian for selling him a work without proper title, and Mr. Wylde was sued in turn by Ms. Cowles, who demanded the painting back. The case was settled last October. Mr. Gagosian paid Mr. Wylde $4.4 million, Mr. Wylde returned the painting to Jan Cowles, and Ms. Cowles promptly gifted the painting to the Met, where it is now on display.

For Mr. Gagosian, though, l’affaire Cowles was far from over. The Tansey deal, it transpired, had been part of a larger transaction between Mr. Cowles and Gagosian Gallery in August 2009 that also included Girl in Mirror.

Though the dealer the originally told Charles he expected to sell the enamel for at least $3 million, of which Cowles would receive $2.5 million, he had been unable to do so, eventually paying Charles a total of $3 million for both paintings.

In January, Ms. Cowles filed suit over the Lichtenstein. In addition to taking issue with the unauthorized sale, the suit alleged that Mr. Gagosian falsely claimed the piece was damaged in order to induce Charles to accept a lowball price of just $1 million. Evidence revealed that the work had been restored and showed discoloration and wear, but it remains unclear how much its condition should have affected the price.

In papers filed in March, Ms. Cowles’s lawyer, David Baum—an aggressive litigator whose Facebook posts taunting Mr. Gagosian briefly made their way into the proceedings—brought to light an explosive email. The message was sent to Thompson Dean, the enamel’s eventual buyer, by Gagosian Gallery director Deborah McLeod in July 2009, a month after Charles Cowles announced he was shuttering his own art gallery: “Seller now in terrible straits and needs cash,” she wrote. “Are you interested in making a cruel and offensive offer? Come on, want to try?”

Ms. McLeod had initially approached Mr. Dean about the piece in January, at a price of $3.5 million, but he’d cited liquidity issues, suggesting they get “creative/attractive” on the price. By summer 2009, the recession was in full effect, and Mr. Dean got his Lichtenstein for $2 million. “Approx. half off, so I like it,” Ms. McLeod wrote him. Without disclosing to Charles Cowles that a buyer had made any offer for the piece—and certainly not $2 million—the gallery offered to take both the Lichtenstein and the Tansey off his hands for a total of $3 million. Of that, $1 million was earmarked for the Lichtenstein, which meant a hefty 50 percent commission for Gagosian. Mr. Cowles bit.

Mark Tansey's 'The Innocent Eye Test,' 1981.

The complaint alleges that the gallery breached its fiduciary duty to Charles Cowles by working both sides of the deal without full disclosure—in effect using knowledge of Charles’s desperate financial condition to solicit a lowball offer, then lowballing him further and pocketing the difference. Ms. Cowles is asking for some $15 million, which includes the value of the painting plus interest and $10 million in punitive damages.

The art adviser we spoke to recalled seeing the enamel in Basel, where Mr. Gagosian had placed it on view. “It was a tough year,” the adviser said, noting the recession underway at the time. “But you know Larry got somebody to buy it and led Charlie to the bone and took the most monstrous commission anyone’s ever heard of in the art world.”

That said, everyone knows a smart dealer will maximize his profits, and of course Charles Cowles—whatever his personal circumstances—was under no obligation to accept the $1 million offer.

How one views the case is a matter of perspective. Whereas writer Felix Salmon wrote that the deal smacked of “skulduggery,” Art Market Monitor thought the emails merely “show[ed] a high pressure sales organization working hard to make a deal. Though Gagosian made $1 million on the sale himself, I doubt he rubbed his hands with glee. No one in 2009 was confident they would be able to cover their overhead.” Besides, while Mr. Cowles’s financial situation was in fact dire, that’s hardly an uncommon circumstance for collectors looking to part with works of art.

“Look, Larry’s fine to take a million if he can get away with it,” the art adviser admitted. “But seeing the inner workings of the conversation and the McLeod email casts a very poor light on how business is done. I’ve heard a lot of rumblings from collectors wondering about whether they’ve gotten a fair shake in their deals.”

In the art market there are, broadly speaking, two ways to structure a resale. The first is a consignment. The seller consigns an artwork to a selling agent, who markets it on his behalf, taking a percentage of the sale as commission. The second is a buy/sell, in which the agent buys the work from a seller and sells it on to a buyer. At the time Mr. Gagosian got his offer from Thompson Dean, Girl in Mirror was still on consignment. It subsequently appears to have morphed into a buy/sell.

When the judge denied Mr. Gagosian’s motion to dismiss the Lichtenstein case in September, he noted that “Gagosian, as an agent acting on behalf of its consignor, had a fiduciary duty to act in the utmost good faith and in the interest of Charles, its principal, throughout their relationship.” The standard desk reference on art law—which, as it happens, is co-authored by longtime Gagosian attorney Ralph Lerner—takes the same view: “On accepting works from an artist on consignment,” it reads, “the dealer becomes the artist’s agent, and the law of agency applies.”

Should the case go to trial, it may turn in part on whether Mr. Cowles’s role in the transaction is seen as comparable to that of an artist or consignor, or if he was acting as a fellow dealer instead, and was therefore not owed the same fiduciary duty—as the defense will likely contend.

Nonetheless, in his deposition, Mr. Gagosian indicated that throughout his career he has represented both sides of transactions without disclosure of that fact to either party. “To be honest with you, the question hardly ever gets asked,” he said. “I never get asked the question, ‘Are you representing both sides?’” He said he thought the information was “implicit,” adding that “My objective is to pay the seller and to make a profit for the gallery.”

“Lawyers and past clients of Gagosian’s who are not of good will would definitely find ammunition in that type of testimony,” said longtime art lawyer Thomas Danziger. But Mr. Gagosian, Mr. Danziger added, “is the most important and most successful art dealer out there. If he believes this is correct, it should be no surprise that other dealers feel the same way.”

Fiduciary duty is “not well [enough] understood” in the art trade, Mr. Danziger said. “Larry Gagosian’s view as expressed in the deposition might even be the majority view among art dealers, which is that they are representing ‘the deal.’ In point of fact and under New York agency law, you cannot represent both parties on the same transaction unless there is full and informed consent, and that is clearly what has been missing in a lot of transactions we’ve been reading about.”

Whatever the outcome of the Cowles and Perelman suits, many think change is long overdue. “People are going to have to be regulated,” the art adviser said. “More transparency may just be what everybody needs. Then again, maybe if you regulate the art world, it will fall apart.”

“A lot of people think this is the end of the art world as we know it,” the consultant agreed.

As for Mr. Gagosian, the recent patch of rough ice has exposed him—and the freewheeling industry he has helped to create—to unaccustomed scrutiny.” He puts winning first, and he doesn’t care who he steps on or screws,” the advisor said, “but that’s what it takes. It’s all a snake pit. These people deserve each other. And when you think about it, it’s all quite entertaining and amusing.

“The art world is constant entertainment.”

agell@observer.com

Let's make a deal. (Getty)

For five years, the Harkness Mansion lay vacant, a shell of its former record-setting self. Built in 1896 by shipping magnate Nathaniel McCready, it would change hands over the years among the city’s industrial elite. IBM president Thomas Watson bought the home in 1939 and sold it years later to the Harknesses, Standard Oil investors who also owned a mansion across the street. It was turned into a studio and school for the Harkness ballet company in the 1960s. In 1987, Jacqui Safra, the Swiss banking heir and Woody Allen investor, bought the rare, 50-foot-wide limestone mansion for $6.9 million. Two decades later, just as the real estate bubble was on the verge of bursting, private equity impresario J. Christopher Flowers dropped a staggering $53 million on the 20,000-square-foot home, the highest price ever for a residential property in the city.

Shortly after taking over the home, he began demolishing the interiors, preparing for a top-to-bottom gut renovation that would cost millions of dollars more. Instead, it was Mr. Flowers who got hit in the gut, when his wife asked for a divorce. For two years, the manse went wanting because buyers tend to prefer a move-in-ready home. “It was a black hole,” Mr. Flower’s broker, Brown Harris Stevens’s Sami Hassoumi, told The Observer last Thursday. “What I was showing wasn’t a house, it was a construction site. I had a temporary construction staircase that was scary. We had to wear hard hats.”

For most buyers, this would have been a nightmare. Not for Larry Gagosian, proprietor of the eponymous gallery empire, which is headquartered two short blocks away at 980 Madison. Not only does he pick up one of the most coveted properties in the city, but like the art he swaps on a regular basis, it was achieved through a deal that almost no one else could have expected or achieved. “They said they weren’t taking a penny less than $40 million,” broker A. Laurence Kaiser said. “And look what he got it for.” He got it for $36.5 million.

Mr. Gagosian’s purchase of the home is in some ways no different from his approach at auction. He knows how to spot value, an opportunity. Witness his purchase, last November, of a 1980 painting by Roy Lichtenstein for $2 million at Christie’s. Mr. Gagosian stayed until the bitter end of the auction to pick up the picture—it did not have many other bidders. In his booth at the Art Basel fair in June, the painting was on offer for $5 million.

It would not be surprising for Mr. Gagosian to fix up the Harkness, give it his signature shine, and sell it for well more than Mr. Flowers paid in a decade or two. For that matter, consider Mr. Gagosian’s savvy purchase, in 1999, of the West 24th Street building that now houses his gallery there. He bought it from the Gambino family for $5.75 million. In 2007, it was estimated to be valued at around $40 million, with air rights.

In the meantime, the Harkness is so much more and so much less than a home to Mr. Gagosian. It is a would-be gallery, a statement of intentions, a way of life, just another deal on the way to countless more. A showcase, a showpiece, a show stopper. “He thinks of himself as a billionaire and wants the lifestyle of a billionaire,” said one collector who does business with Mr. Gagosian. He shuttles between his 11 worldwide galleries on his private jet; two years ago he had Christian Liaigre design a home for him in the ultimate billionaire vacation spot: Flamand’s Beach, on St. Barth’s. Now he has the Fifth Avenue mansion to go with all that.

For someone who grew up in a modest home in Los Angeles, Mr. Gagosian’s art has always been entwined with the buildings in which he shows it, perhaps more so than any other gallerist to come before him. Fifteen years ago, Mark Stevens, then the art critic for New York magazine, wrote an article describing the look of what he called “power galleries.” Mr. Gagosian told him, “I’m out there, I don’t hide. People say ‘high profile.’ I’m not doing it because I want to be high profile. That’s the tail wagging the dog. Somebody said, ‘Why don’t you live in a little house with an old car? Nobody will write about you.’ But I grew up in a little house with an old car.”

From Venice, Calif., to the Upper East Side, Soho to Chelsea, and around the globe, the lengths to which Larry Gagosian goes to present his art are unparalleled, and now he owns the ultimate stage. In buying the Harkness Mansion, Mr. Gagosian not only purchased a century-old limestone shell, he also purchased a regal facade, into which he can pour his architectural and artistic dreams.

The gallery. (Property Shark)

Real estate is woven inextricably into Mr. Gagosian’s art world ascent. “If I weren’t doing this, I’d probably be in real estate,” he told then-Village Voice art critic Peter Schjeldahl in 1981. The New Yorker had come to L.A. to assess the local art scene, and in Mr. Gagosian’s gallery he found “the cold excitements of money.” An early profile observed that Mr. Gagosian “works in a manner more typical of real estate developers and movie executives.”

By this point, what is perhaps lost in the sands of time is the simple fact that Mr. Gagosian’s empire is built on a single, canny real estate move. In the early 1970s, when he was in his 20s, he spotted a vacant patio space in an old Spanish building in the center of Los Angeles’s Westwood Village. “It just struck me that that would be just prime real estate—why is it sitting there?” he said in an early interview. “So I found out who owned the building and I asked him whether I could rent this vacant courtyard for an arts-and-crafts kind of show there.” Mr. Gagosian, who was then selling posters, paid the first month’s rent of $75 with a loan from his mother. According to a 1972 article in the Los Angeles Times, he charged the 25 craftsmen manning the card tables that made up his Open Gallery—they sold things like purses and candles—$6 a day plus 10 percent of their gross.

Once an art dealer, he was no stranger to living with his work. Seven years before he rented the ground-floor space in artist Sandro Chia’s studio building on West 23rd Street in 1985, Mr. Gagosian briefly operated a private gallery in a loft at 421 West Broadway, in collaboration with the dealer Annina Nosei. Mr. Gagosian was spending most of his time at his gallery in Los Angeles then, but when in New York he continued to live in the loft even after he opened in Chelsea. (Mr. Gagosian has said he bought that loft in 1978 for $10,000 and a Brice Marden painting. Peter Marino did the renovations.)

In his native Los Angeles, Mr. Gagosian briefly ran a similar operation in the early 1980s. In addition to his gallery in West Hollywood, Mr. Gagosian held at least one exhibition in a building he built on Market Street in Venice, which also served as his Los Angeles home. In the late ’70s, before Venice gentrified, Mr. Gagosian pounced on a vacant lot there and hired the architectural firm Studio Works to create an innovative structure for him. In the late 1980s, it sold to Andy Summers, guitarist from rock band the Police, and on the occasion of L.A.’s bicentennial, it was designated one of the 200 most significant buildings of the past 200 years.

Craig Hodgetts, who ran Studio Works with Robert Mangurian, recalled the day Mr. Gagosian walked into the architects’ office on the Venice boardwalk. “We were on the beach and had a garage door we left open. This guy comes through the door, looks around the office, and says, ‘Are you guys architects? I just bought a property around the corner and I wonder if you would be interested in designing something.’” It was seemingly casual, but in hindsight, Mr. Hodgetts said, “I think he knew exactly what he was doing.” He must have known a bit about architecture, since he had been living in the Richard Neutra-designed Strathmore building in Westwood, in the same apartment Charles Eames once called home.

And then there is Toad Hall. The spectacular beach house in Amagansett was built for Francois de Menil by architect Charles Gwathmey in 1979, one of the postmodernists’ most celebrated homes. Mr. de Menil sold the home 12 years later, after “a lifestyle change.” It went on the market for $12 million, and while the price is not known, it was bought after a bidding war between Edgar Bronfman, Jr., who prevailed, and Mr. Gagosian. In the early 1990s, the newly divorced Mr. Bronfman bought a townhouse on East 73rd Street, and his broker, Roger Erickson, leafleted the neighborhood to promote his business. “I get so much junk mail from you,” Mr. Gagosian told him, according to a New York magazine profile of the broker. “But since you’ve bothered me again, I’ll ask you if Bronfman wants to sell his house in Amagansett.” Just like the Harkness deal with Mr. Flowers, it was a broken man in a broken economy. Mr. Gagosian got his beach house, and he only paid $8.15 million for it.

Mr. Gagosian mixes work and hearth to this day. On Oscars weekend this year, he installed an exhibition of artworks by Richard Prince at his new Holmby Hills home in L.A.—he had just purchased it for a cool $15.5 million the year before—and hosted a tony get-together there. According to The Wall Street Journal, members of his staff “mingled with guests, discreetly passing a rolled-up sheet of paper between them like a baton. The sheet listed prices for nearly every artwork in sight.”

Indeed, a similar air of showiness suffuses Mr. Gagosian’s current home—which he bought in 1988 from Schlumberger heiress Christophe de Menil—inside a converted stable at 147 East 69th Street. (The street has long been a haven for artistic types—Mark Rothko had and Jacob Collins has a studio down the block.) Pieces from his prodigious private collection hang on the walls, including Richard Prince, Andy Warhol, Cy Twombly, Damien Hirst, Roy Lichtenstein and countless contemporaries. Photos of a 2009 party there reveal guests swilling wine feet from multimillion-dollar paintings. Mr. Gagosian is said to have what may be Picasso’s last painting hanging over his bed.

The carriage house. (Property Shark)

While The Observer would never attempt to divine what goes on in Larry Gagosian’s head, based on discussions with real estate and art world experts, it is quite possible the Harkness Mansion could serve, in some capacity, as gallery, showroom, salon.

“The answer is, yes, it’s been done,” an attorney who specializes in zoning told The Observer. “It’s a residential district, which precludes any commercial use, but there is nothing stopping him from putting a gallery in the first few floors.”

The mansion’s cavernous 20,000 square feet could not be entirely given over to art, because the Department of Buildings still requires certain amenities for a residential building to get its certificate of occupancy. In this case, that includes a kitchen and at least one bedroom. The residences could occupy a few floors, or be nothing much more than a garret in the sixth-floor attic.

There are still further restrictions on a gallery conversion. There can be no separate entrances for the home and the gallery and no signage on the doors. Business hours are strictly forbidden—this is not a venue for public viewings. “But that doesn’t mean you couldn’t throw a party there every night if you wanted,” said the attorney.

The stately house would be a nice addition to the 11-gallery Gagosian empire, his most upscale space so far. Yet Mr. Gagosian would not want to go abandoning the mothership at 980 Madison, either. The biggest restriction of all is that no commercial activity could take place in the home. Even for the notoriously behind-closed-doors Mr. Gagosian, the convenience of going around the corner to sign over art would be essential.

Galleries in townhouses on quiet Upper East Side streets are nothing new. L&M Arts operates one, as does Marianne Boesky. Unlike Mr. Gagosian’s new manse, both are partly zoned for commercial use. In Ms. Boesky’s case, it was a doctor’s office on the ground floor that was converted to a gallery in 1971, according to city records. Still, this did not keep her from staging the “dwelling” show in the spring, occupying every floor of the brownstone. Just because it’s a bedroom does not mean it cannot also become a gallery space.

Allan Stone lived over the shop on East 90th Street for 16 years until his death in 2006. The converted firehouse was sold this summer for $9.875 million and is reportedly being turned back into a single-family home. Richard Feigen’s gallery is located on the first few floors of his home, but any sales must be done off-site due to the aforementioned residential restrictions.

Perhaps the best known—if most notorious—example of a gallery inside an Upper East Side mansion was the $150,000-a-month 71st Street palace that another Larry once occupied. The disgraced Salander O’Reilly, at 22 East 71st Street, actually lay within a commercial district, making sales there legit. Well, legit from a zoning perspective.

The mansion. (Property Shark)

Still, odds are this will be nothing more than a home for Mr. Gagosian, which is to say, of course, that it will be a gallery, as well, or more than a gallery, even. The thrill of buying off the gallerist’s walls is paramount, and at three times the size of Mr. Gagosian’s current home, oh, will there ever be a lot of wallspace. His current house is by all accounts stunning but has relatively small entertaining areas. A good portion of one floor is occupied by a lap pool.

While few of the mansion’s original details remain, the soaring, five-story atrium, which used to be an entrance for horse-drawn carriages, remains—big enough for a Serra or two. And it gives his stable of beloved architects plenty of space to play with. Like the 1,200-square-foot terrace looking across the avenue to the park, all of it perfect for entertaining.

And that is precisely the point.

The collector familiar with Mr. Gagosian insisted that the art on the dealer’s walls is his own collection and is not for sale. Yet it serves a purpose even more important than sales, as an example to the guests he entertains. This is how a megawealthy person can live, should live, must live—with great art. A visitor might think, I could live like this. If that visitor decided to do so, he or she would know where to go to buy such things.

“Is it anything a standard gallery person could do and get away with? Probably not,” said one source. “It’s not something Gavin Brown could or even would do. But Larry’s a word-of-mouth, private-client, private-banking kind of guy. It won’t be his gallery. It will be his salon.”

Or, it could just be his home. He is, after all, perhaps the only art dealer who has managed to attain the lifestyle of his billionaire clients. It is about time he started really living like one.

With additional reporting by Elise Knutsen.

mchaban [at] observer.com | @MC_NYC

The Mansion. (Property Shark)

While The Observer would never attempt to divine what goes on in Larry Gagosian's head, based on discussions with real estate and art world experts, we feel safe to say that the Harkness Mansion is more than a home. It could also serve, in some capacity, as gallery, showroom, salon.

"The answer is, yes, it's been done," an attorney who specializes in zoning told The Observer. "It's a residential district, which precludes any commercial use, but there is nothing stopping him from putting a gallery in the first few floors."

The massive 20,000-square-foot mansion could not be entirely given over to art, because the Department of Buildings still requires certain amenities for a residential building to get its certificate of occupancy. In this case, that includes a kitchen and at least one bedroom. The residences could occupy a few floors, or be nothing much more than a garret in the fifth-floor attic.

There are still further restrictions on the gallery plan. There can be no separate entrances for the home and the gallery and no signage on the doors. Business hours are strictly forbidden—this is not a venue for public viewings. "But that doesn't mean you couldn't throw a party there every night if you wanted," said the attorney.

The stately house would be a nice addition to the 11-gallery Gagosian empire, his most upscale space so far. Yet Mr. Gagosian would not want to go abandoning the mothership at 980 Madison, either. The biggest restriction of all is that no commercial activity could take place in the home. Even for the notoriously behind-closed-doors Mr. Gagosian, the convenience of going around the corner to sign over art would be essential.

A Gagosian spokesperson declined to comment on the gallerist's plans for his new home.

Still, Mr. Gagosian is just about the perfect buyer for the Harkness Mansion. As The Observer reported Thursday, one of the reasons J. Christopher Flowers was having such a hard time selling it, after paying a record $53 million in fall 2006, is because the Harkness had been gutted, in preparation for a renovation that was derailed by an acrimonious divorce.

Most buyers want something that is move-in ready, but assuming Mr. Gagosian plans to turn at least some portion of the mansion into a gallery, buying a shell actually makes that job easier. Not only does he save on demolition costs, but the shrewd dealer could also negotiate down the price of the home, which had been asking more than $40 million but sold for $36.5 million.

Galleries in townhouses on quiet Upper East Side streets are nothing new. L&M Arts operates one, as does Marianne Boesky. Unlike Mr. Gagosian's new manse, both are partly zoned for commercial use. In Ms. Boesky's case, it was a doctor's office on the ground floor that was converted to a gallery in 1971, according to city records. Still, this did not keep her from staging the “dwelling” show in the spring, occupying every floor of the brownstone. Just because it's a bedroom does not mean it cannot also become a gallery space.

Perhaps the best known—if most notorious—example of a gallery inside an Upper East Side mansion was the $150,000-a-month 71st Street palace that another Larry once occupied. The disgraced Salander O'Reilly, at 22 East 71st Street, actually lay within a commercial district, making sales there legit. Well, legit from a zoning perspective.

Allan Stone lived over the shop on East 90th Street for 16 years until his death in 2006. The converted firehouse was sold this summer for $9.875 million and is reportedly being turned back into a single family home. Richard Feigen's situation is very much like that of Mr. Gagosian, in that his gallery is located on the first few floors of his home, but any sales must be done off-site due to the aforementioned residential restrictions.

The carriage house. (Property Shark)

Something of a live/work space would not be unusual for Mr. Gagosian. In the late 1970s and early 1980s, before he got a space in Sandro Chia’s studio building on West 23rd Street in 1985, he operated a private gallery in a loft on West Broadway, where he continued to live after he opened in Chelsea. (In an early interview, Mr. Gagosian recalled buying that loft in 1978 for $10,000 and a Brice Marden painting.) The West Broadway space, which was at one time operated by Mr. Gagosian in cooperation with dealer Annina Nosei, was, in fact, where David Salle had his first New York exhibition.

In his native Los Angeles, Mr. Gagosian ran a similar operation in the 1980s. Exhibitions were held in a space on Market Street in Venice in a gallery that was attached to his home there. That building was designed for Mr. Gagosian by architect Robert Mangurian in the early 1980s.

He mixes work and hearth to this day. On Oscar weekend this year, Mr. Gagosian hosted a get together at his new Holmby Hills home in L.A.—he had just purchased it for a cool $15.5 million the year before. According to The Wall Street Journal, members of the staff “mingled with guests, discreetly passing a rolled-up sheet of paper between them like a baton. The sheet listed prices for nearly every artwork in sight.”

Indeed, a similar air of showiness suffuses Mr. Gagosian's current home inside a converted stable at 147 East 69th Street. (The street has long been a haven for artistic types—in addition to Mr. Feigen's gallery, Mark Rothko had and Jacob Collins has a studio on East 69th.) Pieces from his prodigious private collection hang on the walls, including Richard Prince, Andy Warhol, Cy Twombly, Damien Hirst, Roy Lichtenstein and countless contemporaries. He is said to have what may be Picasso's last painting hanging over his bed.

Since the Harkness Mansion is more than three times as large as Mr. Gagosian's current 6,525-square-foot abode, it may well be the manse will be his new home. Which is to say that no Gagosian home is ever just a home. The Harkness gives him considerably more space in which to hang personal art, which everyone knows, despite appearances, is all always for sale. After all, buyers love buying off the gallerist's walls. It's an old trick that gives the art a personal touch and, naturally, drives up the price.

“Is it anything a standard gallery person could do and get away with? Probably not,” said one source. “It's not something Gavin Brown could or even would do. But Larry's a word of mouth, private client, private banking kind of guy. It won't be his gallery. It will be his salon.”

mchaban [at] observer.com | @MC_NYC

Broker Sami Hassoumi told The Observer earlier today that rennovations (we're talking another $10 million), a divorce, and a shaky market were to blame for the mansion being toppled from its pride of place as the most expensive property in the city.

The price may have fallen but Kirk Henkels, Executive Vice President and Director of Stribling Private Brokerage, insists that it is positive and shows that the market is experiencing a rebound. "The money is there and if it's exactly what buyers want, you're seeing bidding wars," he said. No one's going to fight over a house with a temporary staircase though.

At the end of the day, only one thing matters in Manhattan real estate, and that is the price tag. Here are the properties that now rank ahead of the Harkness on the real estate leaderboard.

The Harkness Mansion at 4 East 75th Street. (Photo: PropertyShark)

It seems that Larry Gagosian has been quietly looking for a new place to throw his raucous parties. And found one he has.

The bronzed behemoth of the New York art world, has purchased the storied Harkness Mansion, The New York Post reports.

Mr. Gagosian will not want for space in his new home. The five-story limestone mansion encompasses 21,700 square feet. Built for a shipping magnate in 1896, it has housed some of New York's most notable: the Mortimers, IBM's Thomas Watson, a bunch of Standard Oil families.

The home certainly isn't a stranger to the auction  block. In 2006,  billionaire J. Christopher Flowers bought the Harkness for $53.6 million, making it the largest individual deal in the history of New York real estate.  But the property was back on the market in 2009, already asking it less than what Mr. Flowers paid. He was reportedly going through a bitter divorce.

Mr. Gagosian reportedly paid $36.5 million for the mansion, a remarkable deal considering the selling history. That's not to say, however, that the home is ready and waiting for the art dealer to move in. Mr Flowers reportedly spent upward of $4 million gutting the property, but the renovations were not completed. Mr. Gagosian will have to pick up where he left off, spending what is sure to be a hefty sum on the home's facelift.

The art market must be doing well, as Mr. Gagosian also purchased a home in Holmby Hills, L.A., for $15.5 million, according to Curbed. The dealer also got a deal on that property, saving about $3 million from the basic asking price.

eknutsen@observer.com

Baldwin and Schumer.

The swans in Town Pond paddled on serenely, unfazed by the crowds filing up James Lane toward Guild Hall. The birds, evidently, are accustomed to such revelry. The event, last Saturday, was a celebration of Richard Prince’s exhibition “Covering Pollock,” currently on display at the Hall’s gallery. The work, Mr. Prince’s latest, consists of black-and-white photographs of Jackson Pollock obscured by images of models, ’80s punk stars and various forms of old-school erotica. Inside, groups of curious viewers—some of them peering over their spectacles at the prints—made polite banter about the graphic images.

Simon de Pury, the famous auctioneer enlisted to moderate the live art sale, had flown in from Monaco for the occasion. He effused about Mr. Prince’s latest show. “It’s great to see him constantly reinventing himself” Mr. de Pury said of the artist. “He is an outstanding master. I’ve loved his work for many years. He’s getting better and better.”

Around 7 o’clock, the party caravanned up Main Street, a procession of flowing gowns and white linen pants. A stalwart member of the East Hampton police force halted traffic as guests paraded across Main Street, walking unhurriedly past stopped cars and onto the grounds of the famed Gardiner Estate.

Elizabeth Sobieski, Kim Heirston Evans, Stacey and Matthew Bronfman, former MoMA director Richard Oldenburg and his wife Mary Ellen, and a slew of Macklowes (Harry, William and a racily dressed Julie) all enjoyed the cocktail hour. “Let me introduce you to the young wife,” Patricia Durkan announced to a gaggle of other guests. “It’s just like being on my brother’s boat,” another said to her friend.

Alec Baldwin, the evening’s emcee, staked out a chair on the periphery and generally kept to himself.

Mini seemed to be the order of the evening: mini-margaritas served in diminutive Patron flasks, mini-rum and Cokes in tiny glass Coke bottles and mini-white wines in microscopic chalices. (Naturally, two full bars serving full-size drinks were available to those searching for a more generous pour.)

The night’s honoree, Martha Stewart, gracefully made her way around the party, trailed by a roving receiving line of well-wishers introducing themselves and reminding her of their acquaintance. The homemaking queen told The Observer her favorite pastime in East Hampton was walking her dogs on the beach every morning at 6:30. Frightfully early, yes, but, as we all know, dogs are not allowed on East Hampton’s beaches after nine o’clock.

As Ms. Stewart walked along the tree-lined path leading from the main house to the back lawn, where dinner was to be served, she was exhorted by an admirer. “The oldest tree in America is on this property in the back,” a member of the group exclaimed with obvious excitement. “I’ll show it to you.” “We’re going to see the oldest tree in America,” Ms. Stewart then informed The Observer as we cut through the thicket. Once in the arboreal section of the garden, the fearless leader was suddenly confused. “This is the tree. Or did they take it down?” Having perhaps seen the oldest tree in America, the group of sojourners disbanded as Ms. Stewart walked back to the path to the tented dinner area.

Mr. Baldwin, a longtime supporter of Guild Hall, took to the mic and announced the lineup. “You can feel the pulse, the buzz, the heat of this exciting teenage crowd we have here,” Mr. Baldwin said, generating a collective guffaw from the 60-something audience. “If you really want to show your appreciation for me and anything I may have done for Guild Hall, just get the hell out of my way when the Clifford Ross piece comes around. I want that Clifford Ross piece, and I’m going to get it,” Mr. Baldwin said.

True to his word, Mr. Baldwin paid $70,000 for the photograph titled Hurricane, LI, a black-and-white image of the roiling surf of Long Island. For his part, Goldman Sachs exec Donald Mullen paid $100,000 for a Barbara Kruger piece depicting a blindfolded man with the words “He entered shop after shop, priced nothing, spoke no word, and looked at all the objects with wild and vacant stare” emblazoned on the blindfold (a quote from the harrowing Edgar Allen Poe story “The Man of the Crowd”). We thought we spotted George Hamilton in the audience, but it turned out to be a warmly bronzed Larry Gagosian. Mr. Gagosian put in a few bids, driving up those art prices as he is wont to do, but didn’t end up taking anything home.

After the auction, Keith Richards’s progeny Alexandra Richards, who was D.J.’ing, had the crowd in a youthful way, and as we took our leave Foreigner’s “Hot Blooded” came over the speakers, and a sea of fists pumped into the night.

—eknutsen@observer.com

The event was emceed by Alec Baldwin and deejayed by Alexandra Richards, the daughter of Keith Richards.  Other attendees included the artist Richard Prince, Matthew and Stacy Bronfman  Larry Gagosian, Robert Nederlander, Elizabeth Sobieski and Harry Macklowe.

Like Richard Serra, Bob Dylan will be showing at Gagosian in September.

The Observer has learned from a source who spoke on condition of anonymity that Gagosian Gallery will present an exhibition of Bob Dylan's paintings in New York in September.

Artnet reported this morning that the gallery has added Mr. Dylan's name to its artist roster, and that rumors have been afloat on a Dylan-related Facebook page that the gallery has been selling, and will exhibit, the musician's visual art.

Gagosian operates 11 branches around the world.