Julia had a note sent to Craig telling him that Carly is wearing a wire. Hal and Jack are listening outside the hotel in a van. Jack can tell that Carly is in trouble. He calls her on her cell phone and when Carly answers the phone Craig takes it away from her. Craig says nothing and Jack says nothing. Jack realizes that Craig has the phone and hangs up. Craig hangs up the phone and corners Carly. He asks Carly what is she up to? Is she betraying him? She tells him she doesn't know what he's talking about. He starts to touch her jacket and she pushes his hand away. She walks away from him so he doesn't know she has a wire under her jacket. Out in the van, Jack realizes she is in trouble. Jack tells Hal that he has to go inside and help her. Hal tries to stop Jack, but he can't catch him. Jack runs into the hotel and tries to get on the elevator but misses it. He can't get the elevator to come back, so he looks around to see what he can find. He sees the fire alarm and he pulls it. Carly and Craig hear the alarm go off and Carly knows that Jack is there to save her. A bellhop comes to the door and tells them that they need to leave the room. Craig tells them that they will leave in a minute, when they are decent. Carly says that she is as decent as she is going to get, but it will take a minute for him and points at Craig. She pushes past him and leaves. Down in the lobby they find out that the alarm was a hoax. As Craig and Carly starts to leave the manager stops them. The manager tells Craig that he has a problem with his bill. Craig tells him he will take care of it later but the manager won't let him leave until he has paid the bill. Craig tells Carly to stay in that spot and not leave. Craig leaves with the manager and Carly starts to look around and she sees Jack standing in the hall. Craig is keeping his eye on Carly and she slowly walks over to the end of the hall and asks Jack what is he doing there? Jack tells her that Craig knows she is wearing a wire. She slips into the hall with Jack and he helps her take the wire off. They get the wire off and Jack wants her to leave with him. Carly tells him that she wants to go ahead with the deal so they can catch the crooks and she can be done with Craig. Jack tries to argue with her but she won't listen to him. She tells Jack to follow her and keep her safe. Jack slips away just as Craig returns. Craig makes Carly go back upstairs with him. When they get into the suite, Craig starts to strip Carly down. She yells at him to stop. He feels all over her body and she pushes him away. She says, "At least you could kiss me first." She looks at him like he is crazy. He tells her that he can't be too careful. This deal is his whole life. She says that she understands and it holds a lot for her. She starts toward the door and Craig asks her where is she going? She says that she doesn't trust him and he doesn't trust her so she is leaving. He tells her to wait. He takes out the earrings that contain the microchips and says, "Le

At the old mill, Carly and Mei-Lin walk through the door and they see Cindy and two men standing there. Cindy says that she hopes that it won't be like last time and they get some unwanted company. Carly says that they need to get on with it. Cindy asks for the goods. Carly takes off the earrings and gives them to Cindy. Cindy opens the earrings and takes out the microchips and hands them to a nerdy looking guy. Carly asks who he is and Cindy tells him that he is the computer geek that will check to see if the microchips are real. The nerdy guy drops the chips in a small hand-held machine and Carly puts her hand on the machine and stops him. She tells Cindy that she has seen the chips, now they need to see the money. Cindy motions to the other guy, who is a big brawny guy and he brings over a briefcase and puts it on the table and opens it up. It is full of money. Carly starts to touch the money and Cindy slams the lid on her. She motions for the nerdy guy to continue. He pushes some buttons and then he tells Cindy that the chips are fake. Cindy gets upset and accuses Carly and Mei-Lin of trying to pass off fake microchips on her. She asks if they thought she was stupid enough to not check the chips out. Carly asks Mei-Lin if this is another one of Craig's loyalty test? Mei-Lin shakes her head no. Mei-Lin tells Cindy that Craig thinks these chips are real. Cindy looks at the big brawny guy and tells him to destroy them. Carly starts to beg for her life. Cindy laughs and says, "Oh, you thought I meant you? I am talking about the chips." The big brawny guy takes the chips and cuts them in two with some wire cutters. Cindy and the two men leave. Carly tells Mei-Lin that her life is as worthless as those microchips.

At Jack and Julia house, Julia is pacing the floor. She calls the station and asks if they can tell her where Jack is doing his stakeout. They tell her that they can't tell her. She hangs up the phone and says that she will find him herself. She goes to the hotel and finds the van. Hal is in the van and she asks where Jack is. Hal tells her to go home. She begs Hal to tell her. He tells her that she had better hope that he isn't somewhere getting shot. He says that he has to take the van back because there was no use for it now since Carly no longer had a wire on her. She tells Hal that she is sorry. He yells at her again and tells her to just go home and wait for Jack there. She looks very sad and she leaves the van.

Jennifer goes to the pool house to see Bryant. Bryant can see that she is upset. She tells him about her mother fooling around with someone. He tells her that he knows how she feels. She tells him to get ready to feel it again, because the man her mother is fooling around with is his father. There is a knock at the door and Margo and Tom is there to tell Bryant what they found out about the guy he found in the mug shots. They tell him it is not good news. The guy that he pointed out has been dead for two years. Bryant can't believe it. He tells them that he remembers faces and that was the guy. The four talk everything over and try to come up with something. Tom tells Bryant that he has to come up with something or change is story before tomorrow. Tom and Margo leave. Jennifer has a bright idea. She suggests that they go looking for the crooks.

Emily is sitting in her office and Henry comes in to needle her about her "boy toy." She tells him to get lost. Chris comes in and tells Emily that he has got his notes for the story he has been working on. She tells him to send them to another reporter. Chris argues that this is his story. Henry watches the two and realizes that they are having a lovers quarrel. They both jump on Henry and tell him to leave. When he is gone, Emily tells Chris that he shouldn't have told Tom that he was in love with her. Chris says that he was just protecting her from Tom. She teases him about protecting her virtue. Chris gets mad and leaves her office. She chases him, but he is gone.

Holden has picked Luke up at Lily's house for a riding date. When they are finished, Holden goes to put Luke's saddle away before he takes him home. While Holden is gone, Rose pops into the barn and tells Luke that she was at the house with Emma exchanging recipes and she saw he and his dad at the barn. Luke asks about what kind of recipes they were exchanging. Rose tells him that they were making Italian cookies. Luke is excited about cookies and wants to go get some. Rose tells him that first, she wants to dance with him. She shows him how to stand and then how to move his feet. She tells him to really get down and they start to twirl. Rose twirls right into Holden's arms. Rose and Holden start to dance and Holden tells Luke that this is how it is done. Luke is not impressed and he asks if he can go get his cookie? Both Rose and Holden tell him to go and as the boy runs out of the barn, Holden kisses Rose. Rose kisses Holden back and then they pull apart. Holden apologizes and Rose says that it is Ok and does he want to do it again? Holden says that he was feeling down because it is he and Lily's anniversary today. She says that she looked so much like Lily he just had to kiss her? Rose tells him that she is going to go home and mark this day on her calendar. He asks if it is because he just made a fool of himself? She says that it is because he kissed her and knew who she was. Chris Hughes walks into the barn and apologizes for interrupting. He asks if he could speak to Holden. Holden says that he doesn't have time, he has to take his son back home. Rose clears her throat and tells Holden that she can take Luke home. Holden agrees and Rose starts to leave the barn. As she gets to the door, she looks back and sees Holden looking at her. She says, "Ah, caught you looking!" And she leaves. Chris tells Holden that he has been doing some investigating on Henry and he knows that Holden has been asking questions about Henry also. Chris says that the only thing that he can find on Henry is a gap on his resume. Holden says that he doesn't see what is wrong with that. Chris tells him that when he asked Henry about it, he acted very strange and didn't want to talk about it. Chris asks Holden if they could team up and investigate Henry together. Holden is reluctant at first and then he agrees to help Chris. He tells Chris that the only information he has on Henry and the horse show is a name. He tells him about Mr. Phillips and Chris says that he will see what he can find on the man. Holden tells him that the man is in jail now. Chris leaves and Holden feeds Flashdance. He rubs the animal behind the ears and asks, "What kind of secrets are you hiding?" Holden's cell phone rings and he answers it. Jack is returning Holden's call. Holden asks him if he can help him catch a crook. Jack asks if he has looked in the yellow pages? Holden asks if he has any information on a Mr. Phillips, who is in jail. Jack tells Holden that the man was the one who escorted Carly out of town on his wedding day.

Craig is pacing the floor in his suite at the Lakeview. Finally, Carly and Mei-Lin come in. Carly marches in and asks Craig what kind of set up did he pull on them? Craig asks where is his money. Carly says that there is no money. She explains that the microchips were fake and Cindy took her money and left. Craig asks where the microchips are and Carly tells him about the big brute of a guy with Cindy destroying them. Craig says that they did a switch on them. Carly says that the microchips were no good and she tells Craig to ask Mei-Lin. Carly leaves. Mei-Lin tells Craig that Carly is a jinx. She says that Craig should not have brought her in on this deal and he needs to get rid of her. Craig says that they still need Carly. Mei-Lin tells Craig that Carly is probably at the police station informing the detectives on the events of the evening. Mei-Lin picks up her coat and reminds Craig that her superiors will be wanting their money. As she goes out the door she says that he will be a target and to watch himself.

At the police station, Jack comes in and is questioning Hal about Carly. Hal says that he would just bet that Carly took off with the money. Jack takes Carly's side and says that she put a lot on the line last night and she could be in trouble. The two men argue about using Carly in the undercover work. Jack says that when she shows up, they won't be using her again. Hal reminds him that he is the head of the department and they will use Carly again if they need her. Carly walks in and tells Jack and Hal about what had happened the night before. Hal accuses Carly of running off with the money. Carly says that she just went through this with Craig and she didn't want to go through it again. She mutters that Barbara really knows how to pick her men. Hal looks at her seethingly. Carly looks up and quickly apologizes to Hal. Jack says that the investigation is over. Hal yells that the investigation is over when he says that it is over and he leaves. Carly asks Jack about how Craig found out that she was wearing a wire. Jack covers for Julia and says that they know who did it and they are handling it. Carly tells Jack that she doesn't know what she is going to do now. She adds that she has probably ruined her chance of getting custody of her son. Jack says that Hal will follow through with what he promised. Jack suggests that she find a job. Carly says that no one will hire her, she is the pariah of the town. She tells him that she will figure out something, she has to, for Parker's sake. She picks up her coat and purse and looks at Jack and leaves the station.

Back at Craig's hotel suite, Bryant pays him a visit. He is delighted to see his son. But, Bryant starts to jump all over his father. He tells him that he knows that he has been seeing Jennifer's mother. Craig reminds his son that he is divorced from his mother. Bryant in turn, reminds his father that the woman he is involved with is married and she is married to the Chief of Detectives, who just happens to be after him. There is a knock at the door and Craig goes to the door and opens it. The manager is there asking for Craig to please pay his bill today. Bryant listens to the conversation and he hears the manager tell Craig that he has forty-eight hours to pay up or the locks will be changed. Craig walks back into the suite and his son says, "Welcome to the deadbeat club, dad. If you are so hard up for cash, you could always knock off the cash register at Java Underground!" Craig laughs at his son and Bryant leaves. After Bryant leaves, Carly returns. Craig tells Carly that he thinks an apology is in order. Carly says that this is more like it. Craig looks at her and she asks if that is it? Craig informs her that they are both targets now. She says that she didn't do anything, why would she be a target? He says that she is with him, that's why. He tells her that their next move is to find where her dead husband has hid his money.

Rose brings Luke home and he runs off to find his sister to play with her. Lily asks Rose about Holden. Rose explains that Chris Hughes had stopped by to talk to Holden, so she volunteered to bring Luke home. Rose asks her about how she and Holden have been lately? Lily says that she knows it is not fair to keep Holden hanging on while she tries to decide what to do. Rose asks about Simon. Lily tells her that they have not spent much time together because the INS has their eye on them. Rose tells Lily that she has a great idea. If Lily is spending time with Holden, then the INS will not suspect them. Lily looks at her with a question on her face. She doesn't understand. Rose says that she will be the decoy. She will pretend to be Lily and Lily can go spend time with Simon. Lily looks at her like she doesn't think that will work.

Kim tells Molly she has a problem that only Molly can solve. Holden enlists Chris's help in investigating the connection between Winston Lowe and Henry. Lily agrees to let Rose impersonate her with the INS agents so she can be with Simon, but is uneasy knowing that Holden kissed Rose.

Molly is stunned when Kim asks Molly to return to her old job at WOAK. Henry warns Holden and Chris to stop their investigation of him. Katie surprises Simon with a guitar and begs him to play for her. Lily is stunned by the results of Rose's transformation. When Agent Hollowell arrives early, the sisters quickly exchange places.

Kim is disconcerted when Molly asks for time before having to make a decision. When Lily interrupts the cozy scene between Simon and Katie and whisks Simon away, a frustrated Katie decides to call Henry. Hollowell tells an increasing uncomfortable Rose/Lily that he's deduced that her marriage broke up because she fell in love with Simon on the island and is still in love with him now. Molly tells Jake she wants to help pay for Abigail to go to college, but is worried about their being haunted by Vicky and what it means.

Jake assures Molly he won't resent her if she goes back to work. Holden and Chris visit Gus Phillips in prison, where he's serving time for kidnapping Carly, and he admits to having the stolen videotape from WOAK, but refuses to talk about Henry's role.

Katie asks Henry for advice on how to make her marriage to Simon a real one--she needs to have his undivided attention. In exchange, Henry asks Katie to report to him what kind of questions Chris is asking about him. Rose/Lily denies being with Simon on New Year's Eve and offers to take a lie detector test--Holden is the only man I love, she declares. Luc walks in and recognizes her, calling her "Aunt Rose."

At Jake's urging, Molly calls Kim and accepts the job offer. Rose covers by telling Luc she's wearing his aunt's perfume, then opens the door to find Holden. After vexing Katie by strumming Simon's guitar, Henry comes up with an idea but tells Katie he doubts she's up to it. Lily tells Simon she's decided she has to be with him.

Chris and Holden pay a special visit to one of them men behind the story of Flashdance while Katie enlists Henry into helping her now get Simon, and keep him away from Lily who has enlisted the help of Rose so she can go see Simon. Katie asks Henry how she can keep Simon and Henry asked her if she were pregnant. Lily goes to see Simon and Holden finds out Rose is playing Lily again in front of the INS agent. Rose tells him it was her idea while Lily is busy telling Simon she loves him and they try to think of ways to get together. Lily returns only to tell Rose that she wants to be with Simon and that she is willing to leave while Katie tells Simon she is pregnant with his baby.

Carly attempts to leave Craig and he wants her help in getting Winston's money. Carly wants nothing to do with him but Craig seems reluctant to accept. She later caves and agrees to help him find the money Winston may or may not have left.

Jack and Julia have a talk...he admits to still having feelings for Carly, while Julia never mentions the fact that she may be having problems with the baby. Jack tries to assure Julia that he loves her and will stay with her however gets called away to go see Holden and he leaves...then Julia starts to have pains and realizes this may be trouble. She wants to get a hold of him but can't so she calls Carly in case Jack went there, however Carly decides to go help her.

Lily and Lucinda argued when Lily informed her that she would be unable to attend Sierra's going away party. Lucinda was outraged over Lily's decision to divorce Holden so that she could spend her life with Simon.

Just as Simon was about to tell Katie that he wanted out of their marriage, she informed him that she was pregnant. Simon was shocked but disbelieving when she couldn't remember the doctor's name who confirmed the pregnancy. As he interrogated her further, Katie feigned morning sickness to stop the barrage of questions. Although Simon was upset and stunned at the news, he told Katie he would do the right thing and stick by her. His suspicions were renewed, however, when she didn't even know her own due date. To learn more about what it's like to be pregnant, Katie talked to Margo under the pretense of writing a story about teen pregnancy. When Margo saw through her ruse, Katie lied to her, as well, and informed her sister of her pregnancy.

Carly rushed Julia to the hospital. At the Snyder farm Holden tried to convince Jack to find out what Carly knew about the stolen horse. As they were talking, Carly showed up and told Jack that Julia was in the hospital and could possibly lose their baby. They raced to the hospital where the doctor informed Jack and Julia that their baby was no longer alive. Jack was horrified at the news and blamed himself for not being there for his wife when she needed him most. Carly tried her best to console him but he was racked with guilt.

Meanwhile, back at the farm, Lily dropped by to give Holden the news that she wanted a divorce. Her announcement was put off when she found Holden and Luke playing and she decided to join in their fun and stay for dinner. In the middle of dinner, they were interrupted by a phone call from Simon, who informed Lily of Katie's pregnancy.