3. The Jewel of Denial

Serena and Charlie return to New York. Worrying that her identity will be revealed, Ivy decides to start forging her own path by becoming a part of New York's social scene as Charlie. Meanwhile, Dan learns that his former mentor, Noah Shapiro, is responsible for publishing his novel. After his attempts at stopping Noah fail, Dan soon ends up in the spotlight. Chuck tries to break through his emotional block. Unknowingly, Nate is persuaded by the ruthless maneater Diana to cross moral lines while interviewing a couple at the Jenny Packham fashion show.

Lily is finally released from house arrest and attends the fashion show with Rufus, despite the fact that her social life is in shambles. After learning that Ivy stole some of Charlie's trust fund money for herself, Carol Rhodes tracks down Ivy to New York where Ivy threatens to reveal their scam, as well as implicate Serena and the entire Van Der Woodsen family, if Carol does not back away. Elsewhere, a very reluctant Blair decides she does not want to learn who the father of her unborn child is, but is later seen telling Chuck that she is pregnant with Louis' baby, but adds "Part of me wished it was yours".

He is both amazed and hurt. When Blair tells Louis that she is pregnant, he is ecstatic, but at the end Blair is seen hiding the paternity test results in a drawer. Also, Nate finds Ivy's missing cell phone with her text messages from her boyfriend Max, but does not make the connection that Ivy and Charlie are one and the same. Title reference: The 1985 film The Jewel of the Nile.