Karen's kidnapper, Phil Harbert, brings her to a guestroom in his home. He's laden it with food and new clothes for Karen, telling her he wants her to be comfortable. He tells Karen she hasn't been kidnapped, she's just disappeared. Greg uses the cleanup of Empire Valley as publicity for Peter. Greg tells him that he won't really clean it up until Lotus Point goes bankrupt. Peter tells Jill, who tells Gary.Val is overjoyed when Ben comes home. Later Ben receives a note from his old friend Jean Hackney to meet her. He goes to her boutique, which is a cover from underground activities. She asks him to spy on Greg, and kisses him. He tells her he no longer can do either activity. Flashback Scene: Young Mac, Greg and Phil go to the Matheson's, only to find out they've gone to their summer residence. Mac is upset because he didn't get to say goodbye to Anne.

Phil makes Karen cut her hair because he likes short hair better.Ben refuses to spy for Jean. The arsenic levels at Lotus Point are rising. Gary decides to run for the senate himself, against Peter. He thinks that this will pressure Greg to really clean up Empire Valley. Jill agrees to be Gary's campaign manager, and this angers Peter. Jill tells Peter that only Gary is important to her now. Mac breaks down to Val over Karen, and Val comforts him. Flashback Scene: Mac, Phil and Greg see Anne on a train, but Mac is afraid to approach her. Greg speaks with her, and she slaps him. Mac apologizes to Anne, and she agrees to go out with him. He falls asleep by her pool while waiting for her to get ready on their first date.

Flashback Scene: Mac tells Phil that the firm he is working for is involved with the mob, but Phil says he has a wife to support. Later Phil is indicted, and asks Mac to lie on the stand, but Mac says he can't. The polls begin to shift in Gary's favor. Peter decides to use married Gary's affair with Jill against him, although they've decided to hold off until after the election. Mac has a phony story released that they found the kidnapper's fingerprints and know who he is. This makes Phil very nervous, and Greg figures out that he is the kidnapper. Greg confronts him and gives him one day to undo the situation. Phil pours gasoline all over the house and lights a match. As the house starts to go up in flames, Karen discovers a trap door to the attic.

Mac and Karen confront Paige and Michael separately. Paige agrees to stop the affair, but Michael maintains they are in love. Sylvia tells Peter about the letter she gave to her attorney. The producer tells Val that they need the first draft of her script in a few days, so she hires a personal secretary. Ben is afraid he has ties to Jean. Jean tells Ben that if they bury Peter in the media, she'll get out of his life. Ben and Mac question the witness, Paul Kelly. They find holes in his story and Ben figures he is working for Jean and confronts her. Greg thinks someone is trying to ruin Peter's career, and tells Peter that he and Jill's story better match when she wakes up. Jill loses the baby. Jill wakes up and Gary is mad that she requests to see Peter instead of him.

Ben gives Abby his resignation. Greg tells him his job is to keep Peter's nose clean. Peter tells Ben that he is not Greg's puppet. Jean's lover asks her what Ben will do if he finds that she is no longer with the CIA. Michael is jealous when he sees Paige fawning over Peter at the Lotus Point Christmas Party and at the mall. He blames Karen. Abby shows up at Peter's nude under a Fur Coat. Karen leaves a message for Paige's grandparents, the Winstons. When Karen tells Paige, she flips out and says her grandparents hate her because they hated Mac. Mr. Winston calls Karen and says that she's sick, because Paige is dead. Laura tells Greg she is pregnant, and he's not happy. Olivia buys some drugs, and then Abby and Gary give her a sports car for Christmas. Olivia takes Lilimae for a ride, and they get into an accident.

Gary goes to Jill's to get her some clothes. He sees her yearbook where her name is Dorothy Simpkins, and pictures of Peter that are signed ""for my sis."" Home, Jill asks Gary to marry her, but he says he needs to get to know her better. Lilimae gives Abby a packet of cocaine she found in Olivia's car. Abby searches Olivia's room as Olivia is in the barn snorting coke. Abby follows Olivia and sees her buying drugs. Abby grabs her purse and dumps out the drugs. Greg wants Laura to have an abortion. Paige tells Mac and Karen that she faked her death to get away from her grandparents. They are not sure if they believe her. Karen researches and finds an obituary saying Paige died in a boating accident. Mac decides to call the Winston's, and Mr. Winston tells him to stop calling because it upsets Anne. Mac is surprised to hear that Anne is alive.

Mr. Winston flies into town and confirms that Paige really is his granddaughter. Paige is upset to see him. Karen convinces Mac he needs to fly to New York and tell Anne that Paige is alive. Paige cooks a romantic dinner for Peter.Jill admits to Gary that Peter is her brother. Gary thinks she means she is Galveston's daughter. Gary asks Jill to marry him. Abby demands Olivia give her all of her drug paraphernalia, but Olivia gives her baking soda. Gary invites her to AA, but Olivia refuses. Gary tells Abby they'll have to wait until she hits bottom. Abby finds out that Olivia has drained her and Brian's bank account, has been skipping school, is failing all of her classes, and didn't pay her tuition. Out of money, Olivia decides to sell drugs, and her dealer hits her when she uses them instead. Abby takes Olivia's house and car keys and puts her under house arrest.