Mr. Poe takes the Baudelaires to live with their Aunt Josephine, an irrationally afraid woman who lives in a dilapidated house overlooking Lake Lachrymose and refuses to speak about their parents.
Olaf, who has followed the siblings, disguises himself as a sailor named Captain Sham before encountering Josephine and pretending to fall in love with her. Despite the siblings' warnings, Josephine accepts his invitation. Later that night, the siblings discover that Josephine has jumped out the library's bay window and left a note informing them that "Captain Sham" is their new guardian.
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