Over the weekend before the Fourth of July last year, David and Libbie Mugrabi, an art-world power couple known for their enormous collection of Warhols, hosted a dinner party for about 15 business associates, some of whom were also staying over at their lavish nine-bedroom estate in the Hamptons.
Ms. Mugrabi said she retired around 11:30 p.m. that Friday, after a long night of $800 bottles of wine served by the family’s staff. When she woke around 6 a.m. and came downstairs, she said she found her husband lying on top of an attractive brunette in the television room, beneath a painting from Richard Prince’s “After Dark” series.
They were asleep and nude, using a towel as a blanket. Discarded clothes by the pool suggested they had been skinny-dipping. “She was naked on my couch with a towel on top of her, and he was sitting on the floor with his head lying on her breasts,” Ms. Mugrabi said.
“Upset and mortified,” she said she left the room quietly. “I didn’t to want to make a scene.” But when the woman was still staying at the house four days later, Ms. Mugrabi confronted her.
In a conversation that was surreptitiously recorded by the nanny, the guest blamed her behavior on taking psychedelic mushrooms and ketamine that night, a revelation that did not exactly have the effect of marriage counseling.
“Nothing happened, for sure,” the woman said. “I have no interest in your husband.”
“You were naked on my couch,” Ms. Mugrabi said. “How is that appropriate?”
Within two weeks, the incident had metastasized into one of the most salacious New York society divorces in recent memory.
“Art billionaire’s ex caught him naked with another woman,” read the headline in The New York Post, which has been following the divorce closely. That article also reported that there was a scuffle involving a Keith Haring sculpture, and wrangling over the ownership of the couple’s Manhattan townhouse.
But more than a tabloid story, the divorce also threatens to expose the private dealings of one of the wealthiest and most influential families in the art world. Mr. Mugrabi, 47, is the scion of a powerful art-dealing family that is reportedly worth $5 billion and owns some 1,000 works by Warhol, making it the world’s largest private holding.
“We were a team,” Ms. Mugrabi said of her marriage to Mr. Mugrabi.CreditFrazer Harrison/Getty Images
And now Ms. Mugrabi, 39, who has two children, 9 and 11, with her estranged husband, wants her share. There is no prenuptial agreement.
But before she can ask for a number in the divorce settlement, her lawyers say they need to evaluate her husband’s net worth, which involves exposing the Mugrabi family’s sophisticated structure of asset ownership by offshore corporations. Such revelations would offer a rare window into how art-world titans like the Mugrabis shield their finances from public scrutiny.
“We were a team,” Ms. Mugrabi said of her marriage. “We were partners at home and in business, with kids, everything. So whatever is the right thing, if that’s a little amount or a big amount, that’s what I want.”
Scraping by on $200,000
Five months after that fateful morning in the Hamptons, Ms. Mugrabi came to lunch at the Mark Hotel on the Upper East Side, dressed like a sliver of night sky.
Her long dark hair, which she has styled every day, tumbled over a Saint Laurent jacket, Azzedine Alaïa shirt and Wolford leggings, all jet black. Her left wrist sparkled with diamond and silver bracelets, while her Dolce & Gabbana kitten heels and eyeglasses were bedazzled with crystals.
Ms. Mugrabi’s expensive tastes have emerged as a central issue in the divorce. She scoffed at tabloid reports that she is scraping by on $25,000 a month in support payments. The actual amount, she said, is $200,000 a month, though that is less than the $3 million a year that she was accustomed to spending, on things like flowers ($400 a week) and household staff ($450,000 a year).
And looking good isn’t cheap, either. “I spend more than six figures a year on fashion,” she said. “Whatever designer I’m into at the moment, I would say I’m one of their larger customers.” Current favorites include Dior, Tom Ford, the Row and Saint Laurent.
She became accustomed to luxury at an early age, having grown up the daughter of a prosperous plastic surgeon named Charles Scher. “We grew up very wealthy,” said Ms. Mugrabi, noting that they lived “between” Oakhurst, N.J., and Palm Beach, Fla.
Fate brought the Mugrabi and Scher families together in 2001, when both were staying at the St. Regis hotel in Aspen, Colo. Ms. Mugrabi says she noticed her husband’s more flamboyant brother, Alberto, first, but it was David who got her number. She had just turned 22 and had recently graduated from the New York Restaurant School; he was 30 and working in finance.
Ms. Mugrabi described her courtship as a relatively modest period, when her future husband lived in a one-bedroom apartment in Trump Tower. “He wasn’t the type of man that wanted to spoil me until after we got married,” she said.
In her telling, Mr. Mugrabi casually proposed to her at the apartment in 2004, after his mother was nudging him on the phone about wanting to throw an engagement party. “He didn’t have a ring, but I said, ‘You don’t need a ring to propose,’” Ms. Mugrabi said. So he popped the question (she said yes) and called his mother right back. “His mother said, ‘I’m throwing you a party tomorrow.’”
The five-carat diamond ring would come later.
The couple wed in 2005 at an extravagant ceremony at the Pierre hotel that featured orchids dripping from the ceilings and a performance by Ishtar, the Arab-Israeli chanteuse. Ms. Mugrabi wore a custom white-lace gown by Victorio y Lucchino, which required her to visit its atelier in Seville, Spain, for fittings.
“It was way over even what I wanted,” she said. “I knew about 30 people at my wedding. It had about 500 or 600.”
Guests included a who’s who of art-world machers, including Peter Brant, the paper magnate, and his wife, Stephanie Seymour; Aby Rosen, the real estate developer; Larry Gagosian, the high-powered gallery owner; and Steven A. Cohen, the financier who last year bought a prized Roy Lichtenstein painting from Agnes Gund for $165 million.
The newly wed Ms. Mugrabi quickly learned her role in the family empire.
“I just copied his mother, and she told me what to do,” she said. “She’s like, ‘Well, you just do the home part with the entertaining. The way we run our business is mostly through the home, because we don’t have a gallery.’”
For more than a decade, the couple enjoyed the perks of a billionaire lifestyle.
“Every summer we went to Sardinia, to Italy, to Portofino,” Ms. Mugrabi said. “We went on lots of different yachts. Aspen. Miami. We went to St. Barts three times minimum, a year.”
The couple sometimes flew commercial, other times on her father-in-law’s private jet, a Gulfstream V acquired from the casino magnate Steve Wynn. On the global art-fair circuit — a blur of FIACs, Friezes and Art Basels — they favored suites at Claridges in London and the Plaza Athénée in Paris.
Ms. Mugrabi recalled one gathering at the Venice Biennale, early in the relationship.
“We went on Paul Allen’s yacht, and everybody was wearing big ball gowns,” she said, referring to Mr. Allen’s 414-foot-long yacht, Octopus. “I was a young girl and I remember thinking, ‘This is intense.’”
Cornering the Warhols
Mr. Mugrabi and his lawyers declined several requests for an interview for this article, but the unfolding divorce opens a window into an elite tier of the art market, where multi-million-dollar transactions are done not out of blue-chip galleries or art fairs, but at extravagant dinner parties and stately country houses.
Clients include billionaire industrialists and members of Middle Eastern royal families, who prefer to keep details of their acquisitions private.
“The Mugrabis are important to the upper register of the market, and the auction houses,” said Linda Yablonsky, an art reviewer and writer. “They have these high-flying private clients, but most of it takes place behind closed doors. This corner of the art market is the most opaque thing in the world.”
The Mugrabis’ art-world ascent began with David’s father, Jose, who emigrated to Colombia from Jerusalem in 1955 and made a fortune in textiles. After moving to the United States in the 1980s, Jose shifted his attention to the art market.
His first purchase was a Renoir landscape, bought in 1982 for $121,000 on the advice of Jeffrey Deitch, who was then an art consultant for Citibank, before becoming an influential contemporary art dealer.
Jose quickly made a name for himself as a deep-pocketed art buyer. In 1988, he paid almost $4 million for Warhol’s “Marilyn Monroe (Twenty Times)” — a record for Warhol at the time — one of the artist’s original silk-screen treatments of the movie icon. He later justified the expenditure by saying, “I felt like I was buying a piece of America.”
(Six works on loan by the Mugrabis are currently hanging in the Whitney Museum of American Art, for “Andy Warhol — From A to B and Back Again.”)
The Mugrabis also started acquiring works by Damien Hirst, Mr. Prince, Jean-Michel Basquiat and Jeff Koons. In 2013, Jose set a record for the most expensive work by a living artist, when he paid $58.4 million for Mr. Koons’s “Balloon Dog (Orange)” at Christie’s.
The family has become so influential in setting global prices that The Times of London once described them as controlling “the art world equivalent of the Dow.”
“We’re market makers,” Alberto, the elder son, told The New York Times Magazine in 2009. “You can’t have an impact buying one or two pictures per artist. We’re not buying art like Ron Lauder — just to put it on a wall. We want inventory.”
Until now, the machinery behind those dealings has been largely kept out of view. But if Ms. Mugrabi’s divorce lawyers have their way, it will soon be exposed in court.
A $10 Million Skinny-Dip
For much of their 13-year marriage, Ms. Mugrabi said, they were “the perfect couple” and enjoyed their prestige on the social circuit.
“I go every year to the hat luncheon,” she said referring to an annual fund-raiser for the Central Park Conservancy, “as well as a bunch of things at Lincoln Center and the Guggenheim.”
The couple also had been meticulously renovating the East 82nd Street townhouse they lived in, pouring millions to turn the seven-story home into a private museum to display the Mugrabi collection.
Ms. Mugrabi said she began suspecting there might be another woman last summer, when her husband was unreachable for several days in June while she shuttled between vacations in Sardinia and London. “He definitely was not acting like a married man,” she said.
Events came to a head at the fateful dinner party, held at the Mugrabis’ 7,000-square-foot mansion, nestled in the woods between Sag Harbor and Water Mill.
After the skinny-dipping incident, Ms. Mugrabi said, she offered to walk away from her husband in exchange for $10 million. “But that was a one-week offer,” she said. “It wasn’t forever.”
Later that week, when Ms. Mugrabi left the Hamptons house to consult a divorce lawyer, she said that moving trucks arranged by her husband arrived to remove the most valuable art.
“He took a bunch of Basquiats, he took multiple Warhols, he took about a dozen KAWS paintings out of the house. Two huge George Condos,” she said. “I would say he took at least $200 million in art.”
Ms. Mugrabi believes that her husband was trying to hide the assets from a potentially expensive divorce. Needing money to finance a legal battle, she looked no further than the diamond on her finger.
“The same thing that got me into this marriage is going to get me out,” she said. “So I sold my ring” — for $100,000, she said — “and retained a divorce lawyer.”
Mugrabi vs. Mugrabi
On a drizzly afternoon in November, David and Libbie Mugrabi, each with a platoon of lawyers, faced off inside the New York City Civil Court building in Lower Manhattan.
Before the hearing started inside the dingy sixth floor courtroom, Mr. Mugrabi crossed his arms and glared at his wife. Her lawyer Kevin McDonough asked a court officer to make him “stop giving my client the death stare.”
Mr. Mugrabi replied: “I was just admiring your tie.”
The hearing was intended to determine how much money Mr. Mugrabi must give his wife each month as the divorce progresses.
Mr. McDonough emphasized the Mugrabi family’s wealth, calling them “the 1 percent of the 1 percent” and saying that Mr. Mugrabi’s “after-tax cash flow” was $5 million a year. Another $10 million, he said, was deposited each month into a corporate bank account under Mr. Mugrabi’s control.
In response, Mr. Mugrabi’s lawyer Lois Liberman burst out laughing. She countered that his income was only $150,000 a month, after paying $200,000 a month in spousal and child support.
“One of the major issues of why the marriage disintegrated was Mrs. Mugrabi’s profligate spending,” Ms. Liberman said, adding that Ms. Mugrabi would drop “$10,000 in the blink of an eye” on daily trips to Valentino, Chanel and other boutiques.
“Nobody can talk about this woman starving,” Ms. Liberman added.
Ken Jewell, a matrimonial lawyer in Manhattan who is not involved with this case, said that under New York State law, a person in Ms. Mugrabi’s position can expect to claim half the income the couple earned during their marriage.
And while Ms. Mugrabi does not likely have a right to the wealth Mr. Mugrabi brought into the relationship, she could have a significant claim on the family’s art business, and potentially the art.
“The goal here is to prove the extent of Ms. Mugrabi’s contributions to the couple’s business and how the money is held,” Mr. Jewell said. “If you can prove the money exists, then there is a claim. Then the question becomes: Where’s the money?”
Citing a lack of progress after an hour, Justice Douglas Hoffman adjourned the hearing until after lunch. Ms. Mugrabi, accompanied by her mother, Jane Scher; her sister, Mia Rowe; and about six lawyers, shuffled into the rain and went to a nearby Italian restaurant.
The afternoon session would prove equally fruitless, and Ms. Mugrabi expects the case could take up to four years.
She seemed resigned to a long fight. “I feel great every time I’m in court,” she said recently. “I love court.”