In the late 90s and early 00s, before social media and smartphones, the coolest celebrities were coming in off a wave of grunge rock: Courtney Love, Eddie Vedder, Billy Corgan in music; Winona Ryder and Gus Van Sant in film. The fin de siècle vibe was parties, saturated colour, androgynous clothing. And the hottest literary commodity of the moment was JT LeRoy.

LeRoy, a 25-year-old writer in a wig and hat, looked like a Culkin kid gone to seed. He went to all the cool parties. The social pages ran photos of him hanging out with Bono, Debbie Harry and Shirley Manson. When he was too shy to do readings of his work, his celebrity friends such as Lou Reed stepped in and read for him. He kept in touch with his extensive network of celebrity pals through faxes and hours-long late-night calls, where he was sometimes suicidal and had to be talked down from the ledge.

JT LeRoy came with a tragic southern backstory: truck stop sex-worker mum, southern Baptist grandparents, LeRoy himself cross-dressing and turning tricks with his mum’s johns – a sort of precursor to the character of Jude in Hanya Yanagihara’s A Little Life.

Mining this background, LeRoy wrote extraordinary books – Sarah, Harold’s End and The Heart is Deceitful Above All Things – to widespread acclaim.

But with the celebrity profile and intriguing backstory, questions about the author grew. The identity of JT LeRoy prefaced today’s more gender-fluid society; was he a butch girl or a pretty boy? Was he even the author?

The truth, as they say, turned out to be stranger than fiction.

In late 2005 and early 2006, New York magazine, followed by the New York Times, revealed that the JT Leroy appearing in public, on the social pages and in the gossip columns was actually a young woman, Savannah Knoop. The author of all JT Leroy’s published works, the person who answered his phone and the brains behind “JT LeRoy” was Knoop’s sister-in-law, Laura Albert: a middle-class Brooklynite, 15 years older than LeRoy was purported to be.

While Albert had spent time in institutions and a group home in her teens, and says the JT LeRoy stories contained emotional truths about what happened to her as a child, the JT LeRoy backstory was not true. The hoax was uncovered, the jig was up. LeRoy never wrote another book.

A decade later, on the phone to me from San Francisco, Albert calls the whole thing a “reveal” – in the manner of, say, Extreme Makeover. She hates the word “hoax”. Others, however, see it as a swindle or deception. In public, Albert put on a wonky British accent and said she was LeRoy’s assistant, Speedie. She was sued for fraud after she signed contracts with LeRoy’s name and settled out of court.

Jeff Feuerzeig’s new documentary, Author: The JT LeRoy Story, is released this week in Australia. The film has come under criticism from AO Scott in the New York Times for being too heavily weighted to Albert’s version of events (she was interviewed over eight days for the documentary) but it is compelling viewing regardless, with echoes of the 2010 doco Catfish. (The film also uses recordings Albert kept of her conversations with celebrities and writers; some of those featured have complained that their conversations were recorded without their consent.)

On the phone, Albert talks a mile a minute. She is by turns defiant, angry, charming, nonsensical, strident – sometimes it’s hard to break her flow to ask questions.

She starts with the US president-elect, Donald Trump. “It just brings everything into relief,” she says. “A few months ago the people who were liberal hipsters had nothing to do but attack me – but now we really need to keep our sights on what really important, not who can or can’t make art.”

It was these “liberal hipsters” who, in the mid-00s, turned against Albert/LeRoy so viciously after the “reveal”, unwilling to see the deception as part of an extended performance art piece, or a kind of allegory or intervention. “If I murdered people, people might be more willing to give me a second chance,” she says.

But one wonders if the backlash might not be even more acute were it to occur today, considering that Albert not only wrote from the persona of a young gender-fluid person who had been sexually abused and was reported to have HIV but that she and Knoop also pretended to be that person [see footnote].

LeRoy’s agent at the time of the “reveal”, Ira Silverberg, was appalled. “To present yourself as a person who is dying of Aids in a culture which has lost so many writers and voices of great meaning, to take advantage of that sympathy and empathy, is the most unfortunate part of all of this,” Silverberg said.

Now, more than 10 years later, Albert says, “Seeing the movie brings up so many different issues … We are talking about art.”

She is angry at the assertions from some critics of the film that she an “unreliable narrator”.

“I went to a federal trial,” she says. “No one disputed that I was in a group home. All of that is substantiated. As a writer, I should be able to write in any voice I like. With Harry Potter, JK Rowling pulled it off because she wrote those books with emotional truth. For me, gender variance was very true. I did not appropriate a trans identity. A lot of kids – if you give them the movies and the books – they understand it, they understand it as an avatar. They understand curating other identities; they grew up on video games when they were [another] gender.”

It is the celebrity connection that makes Feuerzeig’s documentary particularly compelling viewing.

Those who met the bewigged Knoop/LeRoy at parties talk about a cheerful, joyous person who seemed to bear no taint of such a depraved recent past and no one on the street kid/hustler scene in San Francisco knew a JT. Meanwhile, celebrities and friends who had had long, intimate conversations with Albert/LeRoy over the phone were puzzled when, on meeting the person they thought was LeRoy in real life, found someone who was vague, cold, withdrawn or dismissive.

Albert had access to the celebrity inner sanctum as her other alter ego, Speedie: “I got to see how fucked up [celebrities] are and how money doesn’t fix it. I was unattractive and the assistant. Some people were really nice to me, [like] Bono … but [with others] I really got to see bad behaviour. I was the assistant. I was of low value. I was nothing. JT was given all the special treatment. They kept asking, ‘Why are you with Speedie? She’s a hanger on’.”

In hindsight, it seems obvious that JT LeRoy was not who he said he was. So how did Albert and Knoop get away with it for so long?

“Part of it was Luke [Skywalker], ‘trust the force’,” says Albert. She says that JT had a spirit and that Knoop was able to embody that – although they had to meet to “download” certain facts.

There would be a touch of schadenfreude in seeing so many celebrities fooled, if there were not so many ethically dubious aspects to the story. Consider the case of Asia Argento, for example, who had a romantic relationship with LeRoy and felt such kinship with his work she produced and starred in a film version of his book The Heart is Deceitful Above All Things.

Argento was completely broken by the deception. She told the Guardian earlier this year that the hoax was “something I cannot forgive … It made me feel worthless, to be honest. I didn’t have a lot of self-esteem after that. It took me a long time to rebuild it. I was lost.”

Albert says: “After the reveal, I felt really horrible. I didn’t have the language for it. I didn’t even know how to express it to people. It’s like an archetypal theme and there’s a fog of war – you don’t want to know who is alive or not.

“People felt like they were made a fool of,” Albert says, her voice rising. “My feeling was, there are people who want to pose as a victim. Well, you’re not.”

If it was stressful for Albert and Knoop before they were uncovered, it was a nightmare afterwards.

“The media came after me, calling me the antichrist – it was a very humiliating action. I tapped into so many different sore points. Celebrities need to attach themselves to something [but] I couldn’t be a fat Jewish girl who wrote those things.”

Once the people realised they’d been duped, they attacked “with the fury of wasps”.

Albert decided not to follow in James Frey’s footsteps, who, after it was revealed that his memoir A Thousand Little Pieces was in partly made up, went on Oprah to apologise. Instead, Albert kept her head down and said nothing.

“I went through it forever – wave after wave. It turned into a free-for-all – ‘you lied and we can do whatever we want to’. People who had power, they just attacked me. Courtney [Love] said, ‘You can’t stand up in tsunami’ and, ‘Shut the fuck up – you can’t shout during a storm.’”

In hindsight, she says the media storm was “a gift”.

“I needed time. I needed to be forced to shut the fuck up. It [the JT LeRoy character and everything that came with it] was the Taj Mahal. It was a complex construction. It was like, ‘Oh shit, how do I get out? How do I get down?’ It was a complex way to get healthy. We were sick people trying to get well.”

To the public, Albert invented JT LeRoy but she also argues that LeRoy was her – an element of her self, her personality, that was as real as the voice at the end of the telephone line during those long calls to friends who thought they were talking to a suicidal young man.

“If they feel bad about saving my life, well, thank you – you saved my life.”

• Author: The JT LeRoy Story is screening now at the Australian Centre for the Moving Image, Melbourne, and at the Golden Age Cinema, Sydney, from 5 January. JT LeRoy’s books are available from Hachette Australia

• This footnote was added on 3 January 2017. A representative for Laura Albert contacted us after publication to say that it was not part of JT LeRoy’s persona to have HIV and that no reference was made to JT LeRoy being HIV-positive in his writings or interviews. A reference to LeRoy being presented as a trans person has been amended to “gender-fluid person”.