Photo: Jono Rotman

Jared Kushner exited the subway on Canal Street to find his world blown up. It was the morning of July 13, 2004, and Jared, on break from NYU Law School, was hustling to his internship at Manhattan District Attorney Robert Morgenthau’s office. His cell phone buzzed. He saw a text message from his younger brother, Josh, an incoming Harvard freshman who was interning at the Kushner family’s office in Florham Park, New Jersey, that summer. “Dad is not in the meeting today. Is everything okay?” Josh wrote. Jared quickly called his father’s cell phone.

“Dad, are you all right?”

“Well, not really,” Charles Kushner said. “They’re going to arrest me today.”

“For what?” Jared blurted out. “Is it because of the tape? I thought your lawyers knew about that. I thought it’s not illegal.”

“Apparently they’re saying that it is,” Charles said.

“Well, maybe now the whole story will come out,” Jared said. He hung up and tried to work for twenty minutes but couldn’t focus. He jumped in a car for New Jersey. By the time he arrived, his father had surrendered to the FBI.

The whole story—or as much of it as was needed to send Jared’s father to prison—did come out. And the story was a deeply strange one. In an investigation triggered at first by members of his own family, Charles Kushner, one of the most powerful men in New Jersey, the head of a real-estate empire worth as much as $2 billion, pled guilty to eighteen felony counts of tax fraud, election violations, and witness tampering. In the strangest twist, Charles admitted to taking revenge on a hated brother-in-law by secretly setting up him up with a prostitute, then taping the encounter. He spent sixteen months behind bars for his crimes.

Charles Kushner—everyone calls him Charlie—is, by any measure, a remarkable man. The child of Holocaust survivors, he has an engulfing charm and a palpable hunger for attention, and pushed himself to become a gifted businessman and Jersey kingmaker. “He loved being the Don Corleone of the community,” says a family friend. “He loved that when he walks into a synagogue the rabbis run over to him. Charlie saw himself as the Jewish Kennedy.” But beneath the charm there is a coiled aggressiveness. “Charlie’s good points are incredibly good,” a former employee says, “but if you cross him he becomes maniacal. He will crush you.”

In many ways, his conviction and prison sentence put an end to Charlie’s ambitions. But not in all ways. Because Charlie had long been grooming his eldest son—he has two sons and two daughters—to take over where he left off, getting him into the best schools, letting him sit in on business meetings, helping burnish his résumé. The day Jared would take over from his father was meant to be far in the future. But the sentence accelerated the timetable. And so two years later, in July 2006, Jared, having just finished his third year as an NYU law-M.B.A. student, went to meet Arthur Carter, the owner of the New York Observer, at Carter’s co-op on Fifth Avenue at 67th Street. Carter had been looking to sell the salmon-colored weekly. Jared brought with him a check, a presentation printed on peach paper, and a family lawyer.

The Kushners had never been lovers of newspapers, to say the least. Charlie and Jared blamed papers in general and more specifically the Newark Star-Ledger for besmirching the family name. The Kushners respected the Observer’s elite readership, but that was about all they liked about it. “I found the paper unbearable to read, it was like homework,” Jared tells me.

Jared, tall and blond and rosy-cheeked, had been trying to arrange a meeting with Carter for six months. Each time he called, Carter rebuffed him. “You’re a nice boy”—he said—“but you’re 25 years old.” Carter was on the verge of selling the Observer (where I was a reporter from 2003 to 2006) to Tribeca Film Festival founders Craig Hatkoff, Jane Rosenthal, and Robert De Niro. “The money was on the wire,” a person close to the De Niro camp says.

But Carter was having second thoughts. The Tribeca investors had been kicking the tires at the Observer for months, and he was tired of it. Also, they’d agreed to fund the paper’s losses for at most a few years. Carter had never run the Observer as a real business. The weekly lost a couple of million dollars per year. He believed that the Observer would probably shutter if they owned it. Carter called Jared and invited him to meet under one condition: Jared had to be ready to close immediately.

Photo: Courtesy of the Kushner Family

At the meeting with Carter and his daughter Marie Dixie Carter, Jared laid the check on the table and moved quickly into his pitch, which was keyed to Carter’s sentimental attachment to the paper. He told him he would invest money in the Observer, build up the paper’s fledging website, and finally run it as a profit-making business.

Later that afternoon, when Jared was back at his internship at Square Mile Capital, the private-equity firm, Carter called to accept his offer. The next day, Jared called his boss. “I have to resign. I bought a newspaper,” Jared remembers saying.

Six months later, Jared—in near-constant contact with his father, who by then had been released from a Newark halfway house—paid $1.8 billion, a record for any office building in the U.S., for 666 Fifth Avenue, the iconic 41-story office tower on the corner of 53rd Street. While Charlie was in prison, Jared persuaded him to sell their mid-Atlantic holdings. In 2007, the Kushners sold the portfolio mostly to AIG, for $1.9 billion, at the end of the bubble, a profit of almost $1 billion. Overnight, Jared had transformed from a student to a major player on the New York stage. At 26, he was the fresh new face of the Kushner family, his rise providing a counternarrative to his father’s fall. But in many ways, they are the same story.

I met Jared Kushner last month in his fifteenth-floor corner office at 666 Fifth Avenue, just down the hall from his father. He was dressed in standard-issue young-mogul attire—navy suit, matching blue tie, bright white shirt—but he still looked remarkably young, more like a college student than a macher. A flat-screen TV on one wall was silently tuned to CNBC. Tasteful modern paintings hung on the opposing wall. A stack of thank-you cards sat unwritten on his desk. His south-facing window frames the twin spires of St. Patrick’s Cathedral. “The only fight we had,” said Jared, “he wanted me to take this corner [instead of him]. I think it’s the better view, but my father insisted.”

Jared’s words, often delivered with a playful, dimpled smile, can be as tightly controlled and innocuous as an athlete’s. But when he talks about his father, there’s palpable emotion behind the mask. “I speak with my father about everything in my life,” Jared told me.

And, the crimes notwithstanding, he sees his father as a victim. “His siblings stole every piece of paper from his office, and they took it to the government,” Jared maintained. “Siblings that he literally made wealthy for doing nothing. He gave them interests in the business for nothing. All he did was put the tape together and send it. Was it the right thing to do? At the end of the day, it was a function of saying ‘You’re trying to make my life miserable? Well, I’m doing the same.’ ” (Charlie’s brother Murray and sister Esther wouldn’t return calls.)

At the time we spoke, the Observer was in crisis, or in more crisis than usual. The longtime editor, Peter Kaplan, a charismatic proselytizer for old media in general and the Observer in particular, had announced his resignation. In early June, the Observer laid off about a third of its newsroom. But Jared talked with an optimism that seemed a bit unrealistic given the dire conditions. “I think we’re definitely at a bottom for newspapers,” he said a couple of weeks later. “Once this Russian winter is over, once the papers fail that should fail, you’ll see a resurgence. I think the Observer two years from now will be a very viable entity.”

The deal for 666 Fifth is also in trouble. The building doesn’t generate enough revenue to pay the $1.2 billion mortgage, and the debt is likely worth more than the property itself. Jared’s heavy investment in real estate and newspapers could be viewed as misjudgment, or bad timing. Yet the actual outcomes may be beside the point. Three years ago, Jared Kushner would likely have been seen as the callow son of a disgraced businessman. Now he vacations with the Murdochs. At some future date, he plans to marry Ivanka Trump. He knows the mayor. The governor will take his call. Jared has become a macher. The Kushners may not always see the value of newspapers—but access to power is a value they understand.

In the middle of our talk, Charlie knocked on the glass door to Jared’s office and walked in to tell his son he was leaving for the day. Jared jumped out of his chair, hugged him, and kissed him on the left cheek. “Okay, bye, Dad. I love you,” he said.

Photo: Clockwise from top left, Chris Hondros/Getty Images; Patrick McMullan; Keith Bedford/ The New York Times/Redux

Charlie turned to face me. “Be nice to my son. We’ve been killed enough by the press,” he said. “Just because I’ve been killed, don’t kill him.”

Charlie Kushner’s fall is in one sense a kind of Cain and Abel story. There was never a time when Charlie and Murray Kushner were not in competition. At first it was over the affections of their parents, Joseph and Rae, Holocaust survivors from Poland who arrived in New York in 1949 and went on to build a thriving New Jersey construction company—one of the New Jersey enterprises that came to be known as the Holocaust builders. At first, Joseph plied his trade as a carpenter, sleeping in houses under construction to save on bus fare. There was little time for fun. When Charlie brought a guitar home from school one day, Joseph snapped it over his leg and sniffed, “A boy has to learn how to make a living, not play a fiddle.”

Charlie was an average student. He attended NYU as an undergraduate, then law school at Hofstra while also getting his M.B.A. at NYU. His brother Murray, three years his senior, was exceptional academically—he graduated summa cum laude from the University of Pennsylvania, before going on to the university’s law school.

Both brothers followed their father into the real-estate business. In the business world, what Charlie may have lacked in book smarts he more than made up for with drive and charm and ruthless competitiveness. He was a gifted businessman. And his father noticed. In 1985, Charlie asked Joseph to go into business with him, and the pair formed Kushner Companies. Nine months later, Joseph died of a stroke, and Charlie became de facto head of the family, giving his two sisters and Murray stakes in the real-estate businesses as he built his empire.

Charlie had the Spartan virtue of self-discipline. In his closet, ties hung in flawless rows. He sent business associates handwritten notes with impeccable penmanship. Before work, he swam 180 perfectly straight laps in the pool at the Short Hills Hilton. If he wasn’t swimming, he was training for marathons. He trained himself to operate on little sleep.

The Kushners mythologized themselves as scrappy outsiders. Charlie had volunteered as a firefighter, and he liked that his wife Seryl shopped at Costco. “My father’s favorite movie was The Dirty Dozen,” Jared says. “His company was made up of hardworking guys who had a bad break.”

Charlie was also a demanding boss who could be abusive if things went wrong. “It would be cheaper to pay for a monkey than pay you!” Charlie is said to have told a senior executive. Employees especially feared meetings where Jared was present. Charlie berated his executives in front of his son, “to teach him how to handle the help,” as one company observer says. “I expect them to do what I could do,” Charlie tells me, “when they don’t—I get frustrated with them.”

Wealth for its own sake was never Charlie’s goal. He was famously generous, doling out jobs to friends and putting the Kushner name—sometimes in Trump-size letters—on synagogues, schools, and Jewish charities. As time went on, charity became a strategic instrument to advance his interests and a weapon if he didn’t get his way. Starting in the mid-nineties, Charlie pumped hundreds of thousands of dollars into Democratic politics. He was Jim McGreevey’s largest donor in his campaigns, raising $1.5 million. Charlie hired Golan Cipel, McGreevey’s Israeli lover, and sponsored his work permit. After McGreevey won, he rewarded Charlie by appointing him to the board of the Port Authority and later tried to make him chair, which would have given him huge influence over billions of dollars of development contracts. Over the years, Bill Clinton, Al Gore, Joe Lieberman, and Bibi Netanyahu all stopped by to see Charlie during swings through the state.

Charlie saw himself as a special man, a leader. The epic generosity is one aspect of this. Another is a sense of personal martyrdom—no one realizes how hard he’s worked, what’s he’s given, how much he’s sacrificed. And some of his persecutors were in his own family—specifically his brother Murray, who he increasingly came to believe was a hindrance in his business. In 1999, Murray backed out of Charlie’s bid to acquire Berkshire Realty, a firm with 24,000 apartments, which would have vaulted the Kushners into the first rank of privately held real-estate firms. Charles pushed forward with another deal that Murray had dragged his feet on and made a profit of $40 million.

Charlie also questioned Murray’s family life. Charlie’s parents took their Jewishness seriously, but Murray had married an assimilated Jew, an attractive brunette named Lee, a fact that Charlie didn’t let them forget.

Photo: Patrick McMullan (2)

By the late nineties, the families barely spoke, and the conflict worked its way into the business and their charity work. Charlie threatened to fire one of his employees when his wife offered to help Lee, who had been diagnosed with multiple sclerosis, promote an MS benefit gala. Friends and members of the synagogue were forced to take sides.

In the spring of 2000, over Passover at the Fontainebleau in Miami Beach, the Kushners tried to reconcile. But as they chatted in chaises longues, their dispute boiled over. Charlie, still angry over the Berkshire deal, told Murray they shouldn’t do business anymore.

“If we can’t be partners, we can’t be brothers,” Murray said.

Lee defended her husband, drawing Charlie’s rage. Charlie complained that they never appreciated all he had done for the Kushner name.

“You think your son got into Penn?” Charlie said, glowering at Lee. “I got him in.”

Murray had to restrain Lee from leaping out of his lap. “We’re out of here,” Lee snapped.

Murray and Lee refused to show up to Passover the following year when Charlie and his sisters, Esther and Linda, held the annual family Seder again at the Fontainebleau. Amazingly, it was even worse. Charlie was furious that Esther took Murray’s side in the feud (later Charlie learned she had cooperated with the FBI’s investigation). In front of 40 guests in a private dining room, Charlie started berating Esther and her husband, Billy Schulder, one of Charlie’s former business partners. Charlie hated Billy too. He never forgave Billy after he had an office romance with another employee years earlier. Charlie exploded when he thought Billy and his son Jacob were snickering during the Seder.

“You’re so pious,” Charlie fumed. “Go on, Billy, and tell your kids how pious you are.”

Everyone knew Charlie was talking about Billy’s affair. “Don’t say any more,” Esther pleaded. Billy and Jacob shouted back.

“You’re a fucking putz!” Charlie yelled. “How can you be so rude?”

“They’re not worth yelling about,” Jared said. Esther and her daughter Jessie stormed out. The family split was final.

A few months later, Murray sued Charlie, claiming that Charlie owed him money from their real-estate partnerships (the suit was settled in arbitration and sealed). The timing, on the eve of Jim McGreevey’s election, couldn’t have been worse. Then, in November 2002, Bob Yontef, a Kushner Companies bookkeeper, filed a second lawsuit raising allegations about Charlie’s political contributions. The following February, Yontef filed a third lawsuit in federal court, a couple of months before McGreevey was going to make good on his campaign promise and promote Charlie to chair the Port Authority. The suits caught the attention of Christopher J. Christie, the U.S. Attorney for New Jersey and a Republican with political ambitions of his own (Christie is currently running for governor). He launched an investigation into Yontef’s allegations.

Charlie blamed Murray and Esther for bringing on the investigation. He told synagogue members that Murray was a moser, an informant. Amid the mounting political pressure, Charlie withdrew his bid to chair the Port Authority. He was left with a deep sense of victimization and betrayal. And as the investigation progressed, Charlie’s internal wounds festered.

Then commenced the noir portion of the Charlie Kushner story. (This account is based on court documents and interviews with several people with knowledge of the plot.) In the summer of 2003, shortly after Jared’s Harvard graduation, Charlie called Jimmy O’Toole to his office for a series of meetings. Jimmy was an Irish Catholic cop on the edge of retirement. Knowing this, Charlie broached the idea of private security work. Jimmy woke up every morning at 3 a.m. to exercise. He had a 28-inch waist and could do 50 chin-ups in a row. Charlie and Jimmy started meeting on eight-mile runs on Sunday mornings. Jimmy knew the Kushner brothers hated each other. Once, when he and Charlie jogged past Murray, Murray made a point to say hello to Jimmy and ignore Charlie.

One day, Charlie called Jimmy to the balcony of his Florham Park office overlooking Columbia Turnpike. “Do you know Billy Schulder?” Charlie asked. Jimmy nodded.

“He’s been fucking around on my sister forever.”

Charlie had long disliked Schulder. Though Schulder wasn’t directly involved in Murray’s lawsuit, he worked for him. And Esther had taken Murray’s side in the feud. A prostitute and a tape, in Charlie’s increasingly disconnected logic, would bring a measure of revenge, teach them all a lesson.

Jimmy was silent. “I’ll look into it,” he said before leaving. From his cell phone, he called his brother Tommy, a private investigator in Utica.

“What do you think, bro? He’s putting twenty grand on the table.”

Photo: From left, Patrick McMullan; Stephen Chernin/Getty Images

Tommy thought they could pull it off. “Plus,” he told Jimmy, “it is a lot of money.”

A few days later, Jimmy went back to Charlie’s office and Charlie slid an accordion folder across his desk. “Count it when you get home; there’s twenty thousand dollars in there.”

Jimmy believed the gig might lead to regular work for Charlie. But he couldn’t shake the feeling he was doing something wrong. Though he told Charlie he would find a hooker, in truth he never looked that hard. And by the fall, Charlie was impatient. “Maybe I should hire a real professional,” Charlie snapped in another conversation.

“Who the fuck are you talking to?” Jimmy replied, slamming down the phone. Later that week, Jimmy hid in the woods along Charlie’s morning jogging route. Jimmy was going to make Charlie pay for his big mouth. Nothing serious, just a little pushing around to send a message. But as luck had it, Charlie didn’t run that morning.

Jimmy saw Charlie at a restaurant a few days later (Charlie denies this). “If you talk to me like that again, I would have to put my hands around your neck,” Jimmy said. Both men laughed nervously.

Around Thanksgiving, Jimmy was back in Charlie’s office. He put the accordion folder on his desk. “Sorry it didn’t work,” he said. (Charlie denies this occurred.) Charlie slid a piece of paper across with a phone number on it.

“When you call her, tell her that you’re a friend of John’s.”

Jimmy didn’t ask any questions. He went home and dialed the digits. A girl with a thick Eastern European accent answered. She gave her name as Suzanna. “Don’t worry,” Jimmy said. “This is a family member, we’re not doing any blackmail.”

“You’re a friend of John’s, I trust you,” the girl said.

Tommy checked into connecting rooms at the Red Bull Inn, along Route 22. He installed a hidden video camera in the digital alarm clock. The same week, Schulder was ordering lunch at a local diner in Bridgewater, New Jersey, when a leggy blonde with a revealing suit pulled up. She said she was in town interviewing for a job and her car had broken down. Schulder gave her a lift back to the motel, declining her invitation but taking her phone number.

The next day snowed heavily. A few hours before Jimmy’s afternoon-to-midnight shift, Tommy called. Billy had come back for a morning rendezvous. Jimmy called Charlie right away.

“My brother says he has it,” Jimmy said.

Silence. “You’re kidding,” Charlie said. “Tell him to bring it up here.”

Charlie and his business partner, Seryl’s brother Richard Stadtmauer, took the tape to a conference room. They covered the glass windows with newspapers and laughed as they watched the girl give Billy a blow job (“I feel like I’m in a movie,” Billy cried out). Charlie instructed Tommy to make copies.

The snow kept falling. That afternoon, Jimmy called the girl to make sure she got back to the city safely.

“Are you okay?” Jimmy asked. “I feel dirty.”

“Yeah,” she said, “I don’t feel good either.”

Three days later, Jimmy went to Charlie’s house to discuss setting up Bob Yontef, the bookkeeper who Charlie believed had been Murray’s mole inside Charlie’s company. Jimmy was startled to see Jared’s mother, Seryl, sitting there, too. “I assume everyone in the room knows about this?” Jimmy said.

“Yes,” Charlie answered.

Yontef rejected a second hooker’s advances several days later.

Months afterward, in early May, the Feds sent target letters to several of Charlie’s top executives. Two days later, Charlie told Tommy to mail Esther the tape and photographs, along with copies to Esther’s adult children. Her son Jacob was celebrating an engagement party in a few days. Jimmy persuaded Charlie not to send the tape to the kids. (Charlie denies they planned to send it to the kids.)

Three days before the engagement party, Esther saw a bulky envelope with no return address in her mailbox. She flipped through the black-and-white photographs. She picked up the phone and called Murray.

“Don’t go home,” she said, “he’ll kill you.”

Murray hired a former cop to be his bodyguard. Lee told friends she was scared to come home—she thought her house would be set on fire.

In early July, Charlie hosted more than 200 guests at his Long Branch, New Jersey, mansion for his youngest daughter Nicole’s wedding. His world was spiraling down. Days before the wedding, Jimmy, cooperating with the FBI, caught Charlie on a wire talking about the setup. A week later, Charlie surrendered to the FBI. Jimmy was on his way to the station when the FBI notified him of Charlie’s surrender. Cops were glued to the TV when he walked in. The media hadn’t yet connected him to the plot. Jimmy got into his squad car and drove to a parking lot down the street. He knew that his life, as he’d known it, was over. He sat there and sobbed.

Initially, Charlie’s legal team signaled he would contest the allegations and go to trial. “The charges in this case are entirely baseless,” Charlie’s lawyer Benjamin Brafman told the Star-Ledger.

Most people who knew Charlie expected him to fight the charges. “It’s not his nature to plead,” a synagogue member told me. But Christie, the New Jersey U.S. Attorney, exerted pressure. Prosecutors said that they wanted to issue a “speaking indictment” that would air embarrassing evidence gathered in the investigation beyond what was already public. Charlie’s legal team discussed options for a resolution.

Charlie pleaded guilty a month later. As one person familiar with Charlie’s thinking says, “The case would have revealed a part of Charlie that he couldn’t himself face.”

The conviction meant that Jared had to grow up immediately. “He was the best son to his father in jail, the best son to his mother, who suffered terribly, and he was a father to his siblings,” Charlie tells me on the afternoon of June 24. Charlie is seated in a conference room at 666 Fifth Avenue, across the table from Jared and Howard Rubenstein, the family’s publicist.

Every Sunday, Jared flew to Alabama and visited his father in prison. He helped run the family business. It was a huge weight to put on a 24-year-old, but in truth Jared had been training for this role all his life. As the eldest, Jared had always enjoyed special privileges and responsibilities. (His younger brother Josh so far is working outside the family business at Goldman Sachs; Dara is a young mother; Nicole works for Ralph Lauren.) From the time he was 4 years old, Charlie brought Jared to look at properties, and as soon as he could, taught him to read financial statements.

Jared’s outward charm and self-discipline echo Charlie’s. Over and over, people remark on his unfailingly polite demeanor. But he seems more rehearsed than his father, more guarded. There can be a sadness about him. It’s hard to discount the experience of seeing his father sent off to prison. “He knows what it’s like to pick up the newspaper and read horrible things,” Charlie says. There’s also the burden of meeting his father’s vast expectations. He’s submerged himself in the business, largely to the exclusion of more-frivolous twentysomething pursuits.

“He was the best son to his father in jail,” Charles Kushner says about Jared, “the best son to his mother, who suffered terribly, and he was a father to his siblings.”

When Jared applied to college, Charlie was determined to get him into the most prestigious schools, and he called in favors to achieve his goal. In 1998, Charlie made a $2.5 million pledge to Harvard. According to The Price of Admission, the best-selling book written by Pulitzer Prize–winning Wall Street Journal reporter Daniel Golden, Charlie asked New Jersey senator Frank Lautenberg to lobby Ted Kennedy to put in a call to Harvard admissions dean William Fitzsimmons on Jared’s behalf.

At Harvard, Jared joined the Fly, one of the most glamorous of the school’s “final clubs.” “He looked good in a bow tie,” a classmate says. He developed a reputation as someone who was going places.

Every week, Charlie shipped Jared financial documents from the business to review. The summer after freshman year, Jared bought his first investment property in Somerville, Massachusetts. Charlie put up half the money, and Jared tapped his dad’s friends for the rest. Jared bought other buildings, conferring with Charlie on every deal.

In 2001, Charlie had pledged $3 million to NYU and was later appointed to the board of trustees. In 2003, as Jared prepared for law school, Charlie leased three floors of the Puck Building, which he’d bought in 1999, to the university at below-market rates.

Around the time Charlie got out of jail in the summer of 2006 (his sentence was reduced because he went to a halfway house for alcoholics), Jared was attempting his first Manhattan acquisition. In July, Jared unsuccessfully bid $1.4 billion for News Corp’s headquarters at 1211 Sixth Avenue. He then turned his attention to 666 Fifth Avenue. Barclays and UBS agreed to lend the Kushners $1.6 billion on the condition that Charlie would not play a public role, given his criminal record. “Because of Charlie’s background he’s not a borrower,” a senior real-estate investment banker close to the deal explained. “He has no controlling interest in any aspect of the property.”

But owning the Observer opened doors that real estate never could. Jared was a sudden celebrity. He attended Men’s Vogue parties and appeared in Vanity Fair alongside European aristocrats. He made friends with Rupert Murdoch and his wife, Wendi Deng. In Murdoch Jared saw a rabbi who could teach him the newspaper business. While vacationing on Murdoch’s yacht in June 2007—Google founder Sergey Brin was also aboard—Jared was thrilled when Murdoch asked him to contribute ideas on his bid for The Wall Street Journal.

A few months after buying the Observer, Jared began dating Ivanka Trump. Behind the “Page Six” fodder, the pair are a genuine match. “Jared and I are very similar in that we’re very ambitious,” Ivanka tells me one morning in her office on the 25th floor of the Trump Tower. “That’s what makes it so amazing to be in a relationship with someone who is supportive of that. I’m happy for him when he is in the office working late. I know how good that feels when you sit down and return e-mails.”

Dating Ivanka was fraught with family peril. Though she is converting to Judaism, studying with Rabbi Haskel Lookstein at Congregation Kehilath Jeshurun on East 85th Street, it has not always been easy. Jared’s mother, in particular, has struggled with their relationship. Last summer, Seryl told Jared to cool it. They broke up for a time but soon got back together.

Ivanka told me she and Jared plan to marry, but they aren’t officially engaged. “I am studying,” she said of her conversion, “and it’s been an amazing and fulfilling experience for me … One of the jokes I first started making when Jared and I first started dating is, I’m a New Yorker, I’m in real estate. I’m as close to Jewish, with an ‘i-s-h’ naturally as anyone can start off.”

When Jared bought the Observer, he and Peter Kaplan positioned themselves as partners. “I had no vision for what it should be,” Jared says. Kaplan would teach Jared how to be a publisher. Kaplan was a storyteller, a protégé of New York founder Clay Felker’s, and a lover of old Hollywood whose mordant wit, Yiddish-inflected headlines, and casual regard for deadlines made the Observer a literary playground for young talent, a kind of postcollegiate newspaper. He liked to tell his writers to imagine the paper as a kind of Victorian novel.

In truth, Jared and Kaplan’s relationship swerved between grudging respect and conflict. Though they grew up in the same part of New Jersey and both went to Harvard, in other ways they were the oddest of couples. Jared found a lot of the paper incomprehensible and fuddy-duddyish, while Kaplan couldn’t quite get over the fact that Jared was the same age as many of his reporters. Kaplan at first tried to mentor Jared like one of his writers. But that only worked for a while. Six months into owning the paper, Jared hired Bob Sommer, a former publicist whose New Jersey communications firm represented the Kushners, to be president. “When I first hired Bob, I said, ‘I’m so happy you’re here,’ ” remembers Jared. “He said, ‘Why? Because I’m helping you?’ And I said, ‘No, because no one would believe what was going on here if I tried to explain it.’ We called it Weekend at Bernie’s, because it was like dead people walking around.”

In April 2007, after the New York Post reported the Observer had missed newsstands, Jared was furious. He told Sommer to force Kaplan to get the paper to press no matter what, leading to a shouting match between Kaplan and Sommer.

Jared pushed through a redesign that essentially created two front pages, and added a real-estate section. He also insisted on shorter stories and drove Kaplan to shovel stuff onto the web, which Kaplan thought was the wrong strategy. “We had benchmarks,” Sommer says. “And Peter hated it.”

Last fall, Jared told Kaplan he needed to cut the Observer’s budget. A 2007 plan to launch a national network of political websites had failed, and now he needed to pull back amid the recession. He wanted layoffs. Kaplan resisted, asking writers and editors to take a 5 percent pay cut and leaving positions unfilled. Jared insisted on even more cuts. Finally, in late March, Kaplan told Jared he was going to resign when his contract was up on June 1.

It is deeply frustrating to Jared that the Observer continues to lose money, partly because the media business is a way for him to make a name as a businessman independent of his father. Content-sharing deals with the Huffington Post and Politico stalled. The New Jersey website Politicker NJ, while small, is a success he takes pride in—he say it makes a small profit. “It dictates the political agenda in the state of New Jersey,” he says. In mid-June, he bought Very Short List, the highbrow e-mail newsletter backed by Barry Diller, and claims it’s already profitable.

For the Observer job, Jared reviewed twenty résumés and ultimately gave deputy editor Tom McGeveran the interim position and a bare-bones budget. McGeveran is said to have believed that if he didn’t accept the budget, Jared would give the job to former Village Voice and New York Press editor David Blum, who had been lobbying heavily for it, saying he could run the Observer for a rock-bottom $900,000. “I didn’t expect the public side of this,” Jared says. “And I didn’t expect to be walking into this at the worst time to be buying newspapers.”

At a meeting last month, Jared told his staff that the Observer needed to move on. “Kaplan is a classy guy, but he’s old-school,” Jared said. “If we were doing our jobs right, Gawker wouldn’t have a reason to exist. Curbed wouldn’t have a reason to exist.

“Every Observer writer wants to be a novelist,” he went on. “But we need to be deliberate about when we are short and when we are long.”

On the evening of June 24, Jared stood in the center of The Four Seasons’ Grill Room. Dozens of real-estate machers orbited him at a party celebrating the Observer’s real-estate power list. The mayor was on his way, and Assembly Speaker Sheldon Silver hovered in the corner. “You have to give Jared a lot of credit,” Stephen Ross, the CEO of Related, told me. “I think buying a newspaper is a good way to make a name for yourself. He got everybody’s attention.”

The Observer already seems a slighter product. Still, no matter how much the Observer loses, this kind of respect may be worth it for the Kushners.

The next stage, however, may be harder. The Observer’s problems have hit just as the commercial-real-estate crash imperils Jared’s purchase of 666 Fifth Avenue. Jared and Charlie paid a record price based on the assumption that office rents would continue to climb over the next few years. “It was the poster child for bad underwriting,” says Robert White, the president of Real Capital Analytics. Midtown leases have dropped 50 percent below their peak. At the time of the purchase, rents at 666 Fifth Avenue generated only 65 percent of the cash flow needed to cover the monthly mortgage payments. The Kushners believed they could get the building’s second-largest tenant, the law firm Orrick, Herrington & Sutcliffe, to renew at more than $100 per foot, but negotiations have dragged on. An $80 million reserve fund will run out sometime next year, leaving Jared with two options: Inject more cash or default on the $1.2 billion debt and lose control of the building.

These days, Charlie is a kind of invisible man, not gone but not entirely here either. He spends most of his time shuttling between his office, the Fifth Avenue apartment he purchased in 2003, and his beach house in Long Branch. At The Four Seasons, Charlie and Seryl mingled, but it was apparent he preferred to avoid these kinds of public appearances. “At Jared’s event, I enjoy [being] Jared’s dad,” Charlie told me in his office earlier that afternoon. “For many years, [it was] ‘That’s Charlie’s son.’ ”

He says he has moved on. “I know what I did,” he tells me. “I still have to shave in the morning. I know I’ve done good things, I know I’ve done bad things.”

Ironically, the Kushners may be headed back to New Jersey. Jared and Charlie are pursuing deals, including buying their old portfolio back from troubled AIG. “You can’t be dynastic about these things,” Jared says. “You have to make a decision about what’s best at the time. Facts change.”

Near the end of one of our interviews, Jared shows me around his sparely decorated office. Jared’s mood lifts when he points to a framed Garry Winogrand photograph of JFK that leans against the wall beside to his desk. “I saw this photo and was just obsessed with it,” he says. “I had to buy it as part of a series. The rest are in a box.” The photograph shows JFK from behind as he delivers his 1960 Democratic Convention speech. A television set in the foreground broadcasts JFK’s face from the front.

“I love the juxtaposition of him looking that way and seeing him the other way. I love the glow in his face,” Jared says with a smile. “I look at it all the time.”