Loretta Lee is the owner of the purse Kevin finds. She lives in the "Testaments," a housing project in an extremely rough neighborhood, and coincidentally knows both Kevin's mother Gwen, and Max's father, "Killer Kane."
Kevin, who is always looking for adventure, gets Max to come out one morning at three o'clock, so that they can go on a treasure hunt. He has spotted a purse stuck in the sewer, and is determined to retrieve it and return it to its rightful owner. After much difficulty, Max manages to raise the sewer grate while Kevin sticks his small hand underneath to reach the purse. The purse is soggy and disgusting, but Kevin is delighted with his find. Upon examination of the purse's contents, he discovers that it belongs to a woman named Loretta Lee, who lives in the unsavory New Tenements. Kevin prevails upon Max to take him there so that they can give Loretta her purse.
When Kevin and Max arrive at the tenement, the door is opened by
"a scrawny, yellow-haired woman with small, hard eyes and blurry red lips. She's wearing this ratty old bathrobe and she's smoking this cigarette..."
Taken aback by her appearance and the general aura of depravity in the house, Kevin tries to tell Loretta Lee that they have the wrong address, but Loretta's husband Iggy Lee, the leader of a notorious motorcycle gang, forces them to come in. After wracking her brains for the connection, Loretta realizes that she recognizes Max because of his resemblance to his father, Killer Kane. Putting two and two together, she figures out that Kevin is the son of another old acquaintance of hers and Iggy's, "stuck-up Gwen." Loretta Lee plays a big part in the lives of Kevin and especially Max later in the story. When Max is kidnapped by his father, she risks her life to save him.