It would seem Hollis' alleged lover was his wife's daughter and sister, making Katherine his stepdaughter and/or sister-in-law...

Jake also uncovers some heavy family secrets about the young girl Katherine (the one Hollis was supposedly seeing)...

Evelyn denies everything but finally confesses the secret she's kept throughout the movie: the blond girl, Katherine, is really her daughter as well as her sister, the result of an incestuous relationship Evelyn had with her father, Noah Cross.

Using as an entry pass one of the business cards he lifted from Yelburton's office, Gittes is easily allowed admission by police guards through the gates into the Oak Pass Reservoir when mistaken as Yelburton. [This is another of the film's running themes and examples of someone being mistaken for another: there's also the imposter Mrs. Mulwray, and Katherine mistaken as Hollis' lover.]
Source(s):
http://www.sover.net/~ozus/chinatown.htm
http://www.sparknotes.com/film/chinatown/summary.html
http://www.filmsite.org/chin.html


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