updated 10/10/2005 AT 01:00 AM EDT
•originally published 10/10/2005 AT 01:00 AM EDT
Moss, 31, in New York City for Fashion Week, holed up in the Mercer Hotel when the story broke. She then pulled out of Naomi Campbell's Katrina fashion benefit, according to a source from the show. "Naomi thought it would help if Kate had come out with her head held high," says the source. "But that's not her style; Kate hides." Says Campbell of the story in the Mirror, whose sister publication lost a libel suit to Moss in July: "It's really like a vendetta."
Moss met with H&M execs to try to salvage her deal, but that company dropped her (as did jeweler H. Stern), resulting in millions of dollars lost.
But can the fashion world—even its stodgiest ad suits—claim to be shocked by alleged cocaine use by a model? Insiders say it's an open secret: Moss's real problem, in their eyes, is that she seems to have gotten caught.
"There were always drugs," says a former model's assistant. "It wasn't like they stayed in and watched Ally McBeal." Adds Moss pal Michael Gross, author of Model: The Ugly Business of Beautiful Women: "Everyone knows what they bought when they bought Kate: an image of louche glamor. When it's convenient to ride that horse, they ride it. When it's not, they send it to the glue factory."
Meanwhile, on-and-off boyfriend Pete Doherty, 26, who was with Moss at the recording studio where the tabloid photos were shot, continued touring with his band Babyshambles. Before a show in Dundee, Scotland, he was stopped at 9 a.m. by police for drinking in public. But her flaky beau is the least of Moss's potential problems. The London police have opened an investigation, though some legal experts say Moss cannot be arrested until there is proof the substance in the photos was cocaine. Moss, who spent a month in rehab in 1998, never admitted to drug use. Nonetheless, she issued a carefully worded apology reading in part: "I take full responsibility for my actions. I also accept that there are various personal issues I need to address and have started taking the difficult but necessary steps to address them." At press time there was no confirmation that she had checked into rehab, but as her longtime agent Sarah Doukas told The Times, "She's not an idiot. She'll do what she has to."
Then there is the matter of Lila, her daughter with magazine publisher Jefferson Hack, 34. A police probe could present custodial issues for Moss. "He is not as angry as he is upset," says a Hack friend. "They are not fighting over their daughter."
Is this the end of Moss's influential era? Maybe not. At press time she was still under contract with cosmetics brand Rimmel, for which she had recently shot a commercial for the new foundation Recovery. "Kate will bounce back," says London PR man Mark Borkowski. "She's got a lot of cred." Some hope good comes from the ordeal. "She could have died," says one observer. "Maybe it's the jolt she needed."
Marisa Wong. Liz Corcoran, Caris Davis, Laura Hahn and Pete Norman in London and Nina Burleigh, Joanne Fowler and Rebecca Paley in New York City