The Baudelaire children walk with Mr. Poe to their new home on 667 Dark Avenue. It is very dark, due to the fact that there are giant trees blocking out sunlight. When the Baudelaires enter the apartment building, they find that elevators are “out” (not out of order) which means they have to use the stairs up to the penthouse. When they get to the top, Jerome Squalor welcomes the children to their new home. He offers them “aqueous martinis“, (water with an olive in it served in a fancy glass), and introduces them to his wife Esmé Squalor, the city’s sixth most important financial adviser, who is concerned about what’s “in” and what’s “out”. Generally, Jerome seeks to avoid disputes with Esmé, as he hates arguing with her, and follows her instructions. Esmé describes that the children and Jerome will have dinner at Café Salmonella, because she will be busy privately discussing arrangements for an auction with trendy auctioneer Gunther.
The Baudelaires immediately recognize Gunther as Count Olaf, despite his attempt to disguise his eyebrow with a monocle and high boots to cover up the tattoo of an eye on his ankle. Despite their protestations, Jerome takes the children to the restaurant. Jerome believes the children are being xenophobic and dismisses their suspicions of Gunther.
Klaus notices that there is one elevator on each floor except for the top floor which has two. The children investigate and find that the extra elevator is a fake, “ersatz” and consists of nothing but an empty shaft. They climb down the shaft, to find the two Quagmire triplets trapped in a cage at the bottom of the shaft. The Quagmires say that Count Olaf is planning to smuggle them out of the city by hiding them as an object at the “In” auction, which one of his associates will bid on. The Baudelaires return to the penthouse to find tools with which they can free the Quagmires, but they return to find that Gunther has cast the Quagmires away already. They return, dispirited, to the penthouse.
Klaus finds a Lot #50, V.F.D., in the auction catalog. Esmé pretends to believe the children’s story about Gunther’s plot to kidnap the Quagmires, but when they show her the ersatz elevator, she pushes them down the empty shaft. They land halfway down in a net.
Sunny climbs up the shaft with her razor sharp teeth, gets their ersatz rope and jumps back down into the net. Sunny bites a hole in the net, and using the rope they climb down from the net and travel along the hallway at the bottom of the shaft, with Violet’s ersatz welding torches as light, only to find that it is a dead end. Pounding on the “ceiling” reveals that it is in fact a trap door; the children escape through it only to find themselves in the charred remains of the Baudelaire Mansion.
They rush to Veblen Hall, the location of the auction, and join the crowd already there. The auction has begun, and Gunther and Esmé are on the stage auctioning off Lot #46. The children ask Jerome and Mr. Poe to buy them Lot #50. Mr. Poe and Jerome back down but Sunny bids on it and wins. The Baudelaires open the box, only to reveal Very Fancy Doilies. Gunther slips on the doilies and is revealed as Count Olaf when his boots and monocle fly off, revealing his eyebrow and tattoo. Count Olaf and Esmé flee, pursued by the audience. The doorman is revealed as The Hook-Handed Man, and the Quagmires are hidden in the red herring statue. Although Jerome wants to keep the Baudelaires, he insists on taking them far away. They refuse this, however, because they want to rescue the Quagmires.
The story ends when Jerome is forced to give them up, because he is too cowardly to help them, Mr. Poe is calling a Vietnamese restaurant instead of the police and the three children sit on the stairs of the hall.