By Ken Gross Michael Neill and Benilde Little
Updated August 14, 1989 12:00 PM

At the end of May, just two months be fore his death at 45 from hepatitis and septic shock, Steve Rubell told a story showing how times had changed. “I was walking down Fifth Avenue,” he said, “and all of a sudden I see all these faces I knew from Studio 54 coming out of a church. Lots of them. Same people. I knew them. Then I looked and saw the bulletin board of the church, and they were coming out of an AA meeting.”

Indeed, Studio 54, which Rubell and lawyer Ian Schrager founded in 1977 and sold in 1981, seems to belong to a long-ago time, as distant now as such fabled New York nightspots as Delmonico’s or El Morocco. At its height in the late 1970s, Rubell’s midtown mecca was the bright-lights, big-city epicenter for those who reveled in the glitzy, often coke-fueled glow of celebrity. The famous regulars—Liza Minnelli, Bianca Jagger, Calvin Klein, Halston, Maggie Trudeau and others—could prance and preen in the flash of strobes and the din of disco into the early hours. Hanging in the darkness, higher even than many of the dancers, was a huge, luminous man-in-the-moon that would periodically toot cocaine from a delicate spoon.

To the late Truman Capote, it was all wondrously democratic: “boys with boys, girls with girls, girls with boys, blacks and whites, capitalists and Marxists, Chinese and everything else, all one big mix.” Court chronicler Andy Warhol would later titillate the readers of his posthumously published diaries with tales of sex, drugs and other shenanigans. But to Rubell, “the stuff that happened was much worse. You couldn’t believe it.”

The 54th Street club was “the innest of the in discotheques,” as one newspaper put it, and Rubell protected its exclusivity with a capricious door policy that held his would-be customers at bay in block-long lines. The President of Cyprus showed up one night—and was turned away. Rubell explained: “I wasn’t at the door at that moment. My doorman, Marc, thought he was the president of Cypress Cemetery in Brooklyn. But I wouldn’t have let him in anyway, because he had 20 security guards with him.” Even John F. Kennedy Jr. was once barred from entry (he didn’t announce his name). “I don’t want any Bagel Nosh-polyester types,” Rubell would say. In fact, he mused once in 1977, “a year ago I wouldn’t have let myself in.”

Indeed, Rubell’s own origins were quite modest. He grew up in Brooklyn, the son of a mailman and a teacher, attended public schools and majored in business at Syracuse University (where he met Ian Schrager, his friend and business partner). He had a brief stab at Wall Street, hated it and bought a chain of steak houses on Long Island before launching Studio 54.

The party for the partners ended in 1979, when each was heavily fined and sentenced to 3½ years in prison (they served 13 months) for cheating on their taxes. Their send-off at Studio 54, hosted by Halston, drew 2,000, including Richard Gere, Reggie Jackson and Diana Ross, who sang from the deejay booth. “I hope he gets out soon,” said Warhol. “He’s a heck of a guy.”

When Rubell and Schrager returned, they jumped back into the Manhattan club world by opening the Palladium, which reigned briefly as the place to be. Then, as the scene changed in the mid-’80s, they invested in two aging Manhattan hotels that they then refurbished. Two months ago Rubell proclaimed himself a changed man. “The only people you can trust,” he said, “are your family. Celebrities—I can’t stand them. I don’t like parties and I’m not impressed anymore.”

Rubell’s death, which friends insisted was not AIDS related, caught many by surprise. Five hundred turned out for his funeral, including Bianca and Calvin and many others from the bygone party days. All were hoping, surely, that the gates Rubell approaches next will have a gentler policy of admission.

—Michael Neill, Benilde Little and Ken Gross in New York