No sooner does the honest new commandante arrive than he is assassinated by a mysterious stranger who frames an elderly beggar for the crime and appears to be part of a larger conspiracy.

Sergeant Garcia receives a mysterious note from Zorro. The happy soldier reads that Zorro will give himself up. When he returns for his sword, it is gone, so he sadly returns to the cuartel without having captured his foe.

The King's tax collector and his nephew are stopped by conspirators, while on their way to Los Angeles. The conspirators threaten the men unless they cooperate, then they seize Morales' official documents.

Another agent sent by the Eagle arrives in the pueblo, this time smuggling jewelry to finance the conspiracy. Carlos Murietta, an Argentine who is contemptuous of the locals, particularly Sergeant Garcia, visits a tannery run by Jose Mordante. The two men discuss the disposition of the gems, including a famous piece known as "The Cross of the Andes", which were stolen from churches in Argentina.