This one starts with a stoner pizza delivery guy (Corny) getting tased and mugged as he makes a delivery. At school, Dick dents Veronica’s car door, but he’s distracted by another student (Kelly) making gay jokes about Dick’s unwitting encounter with the transgender prostitute last episode. Veronica doesn’t like Dick, but she likes homophobes even less. Logan is making out with Hannah, trying to be sneaky because he assumes her dad gave her shit about seeing him. Logan’s surprised to learn Hannah’s dad didn’t say anything to her about him. She invites him over on the weekend. At Keith’s office, Terrence is complaining about Sheriff Lamb and the media making his life hell, but Keith assures him that’ll stop if they can clear him of causing the bus crash. Unfortunately, Terrence can’t remember where he was between five and eleven on that day, and the crash happened at 7:03. Keith thinks that’s a little strange, but Terrence asks what he was doing at 7:03 that day and Keith can’t remember either.
At school, Madison reveals herself to be a bigger asshole than previously thought, as she makes fun of a lesbian student (Marlena) who supposedly left a love letter taped to Madison’s locker. Marlena denies it but Madison seems convinced. Ryan (who Veronica has met before) asks for help, saying Corny was the fifth pizza delivery mugging victim and Ryan was the fourth. Unfortunately, Ryan had a list of gay students from a chatroom he administers in his wallet and he says the mugger is using the list to blackmail the students, asking for $5000 to keep their secrets. Marlena was outed because she couldn’t afford to pay.
Veronica talks to Ryan and Corny, learning the orders setting up the muggings were fake and were to roughly the same part of town. She asks for a list of all the fake orders. When Hannah tries to talk to Logan in the hall, he completely ignores her. A really hot cheerleader named Kylie (played by Kristin Cavallari) tells Veronica she’s being blackmailed and Ryan told her to ask Veronica for help. Veronica’s blown away because she never suspected Kylie was a lesbian. She tells Kylie to ask the blackmailer for some extra time to get the money and let her handle the drop-off.
At the office, Veronica finds out Keith is helping Terrence and wonders why. Keith says his gut tells him Terrence is innocent and Veronica offers to help. Terrence comes in later and Keith says he’s been calling around trying to find someone who saw Terrence that day. Veronica tracks down a possible alibi and Terrence thinks he may have been at a casino when the bus crashed. Keith is happy, since casinos are chock full of cameras, but Terrence says he might have a hard time getting cooperation from the casino owner (Lobo), since Terrence owes him millions in gambling debts. In fact, Lobo was the one who sent the Fitzpatricks to Terrence’s house to remind him of his debts.
At school the next day, Veronica tells Ryan her efforts to track the blackmailer’s email got nowhere and Ryan gives her the list of names who made fake pizza orders. On the student news channel, Kylie does an interview with Kelly (the homophobic dude who was taunting Dick) about being jumped by the pizza mugger. Yeah, it looks like the guy isn’t just mugging delivery boys now; he stole Kelly’s wallet and the fancy rims from his car (worth $6000). Kylie signs off her newscast by coming out as a lesbian, saying Marlena is her girlfriend. So I guess nobody will be blackmailing them anymore. Later, Kylie and Marlena hold hands in the hall and a lot of people seem supportive (although there’s the usual crop of dudes who think it’s hot). Kylie looks happy, but Marlena’s uncomfortable with all the attention.
Veronica talks to Carmen, whose popsicle-fucking scandal has been all but forgotten (“Pleasuring inanimate objects is so 2005.”) Carmen doesn’t know why the mugger would use her name to set up the muggings, but she mentions everyone on the list of fake calls (including her) is considered to be a “coconut” … a term for Latinx people who “act white” (because they’re brown outside and white inside). Veronica asks for a list of other “coconuts”. Outside, Veronica talks to Kelly, asking him about his rims getting jacked. She points out it would take a hell of a long time to get rims off someone’s car and the mugger would have to have a jack and tools. Kelly’s pretty evasive about answering her questions.
Logan goes to see Hannah, but she’s pissed off about him ignoring her at school. He says his first girlfriend was murdered and his last one almost got shot, so he was just trying to protect her. She lets him in and her father’s not happy about Logan being in his house. He gets Logan alone and tells him to get out, but Logan says Dr. Griffith better change his false testimony about seeing Logan kill Felix on the bridge. Logan knows Griffith is lying for the Fitzpatricks and says Hannah wouldn’t be happy to learn that … which Griffith probably knows, since he hasn’t told Hannah he’s the mystery witness at Logan’s murder trial. Keith talks to Lobo, who isn’t keen on helping Terrence Cook until Keith reminds him Terrence will have trouble paying him back if he’s in jail. Lobo agrees to look for surveillance tapes of Terrence the day of the bus crash.
Veronica is at the pizza place, checking incoming orders with the lost Carmen gave her until she gets a hit. She asks Corny to act as bait to catch the mugger and he’s all for it. (“I’m what you call the master bait.”) At the casino, Keith gets stills of Terrence from the day of the crash, but none of them show him at exactly 7:03. On the way out, Keith tries to make a call and finds out the casino jams all cell signals within 100 yards to keep people from cheating with their phones. Veronica and Corny catch the mugger, a guy named Arturo who’s been mugging people to prove how gangsta he is so he can join Thumper’s motorcycle gang. Arturo admits he mugged all the pizza dudes, but denies stealing Kelly’s rims or blackmailing anyone. Veronica records his confession and leaves him tied up for the cops.
At school the next day, Veronica asks Mac to get her onto the gay chatroom website. (Mac: “You’re not …?”; Veronica: “No, I’m just curious … curious about what’s on the website.”) Turns out Mac set up the website, so she doesn’t want to betray a client. Veronica convinces her she’s trying to shut down homophobes, so Mac prints out some chat logs, making Veronica swear to burn them. Jackie offers Veronica a ride to the game (which Veronica’s photographing for the school paper) and she accepts. Ryan sees Veronica with the chatroom printouts and she tells him they’re just for research. She mentions catching the mugger and that he’s too stupid to blackmail anyone, so the blackmail probably isn’t Ryan’s fault. She tells him it might be someone from the chatroom itself, pointing out one user who promised a big outing was coming. Ryan says that particular user (Peter Ferrer) died in the bus crash, so he’s definitely not the blackmailer. He also mentions someone else got a blackmail letter, but won’t say who.
Logan talks to Hannah, whose father told her about seeing Logan kill Felix on the bridge. Logan says her dad’s full of shit and swears he’s innocent. Logan tells Hannah her father is a coke addict and in bed with the Fitzpatricks. She doesn’t want to believe him, so he tells her to look around the house and see what she finds. Keith shows Terrence the photos proving he was in the casino (where there’s no cell signal) during the bus crash, so he couldn’t have detonated a bomb with his phone. Terrence points out that Lobo is on the baseball league’s shit list for trying to fix games, so if he admits he was hanging around with Lobo, his reputation and career are over. Keith says they can use leverage to force Lamb to drop the charges.
At school, Veronica confronts Kelly (whose username she deduced from the gay chat logs), getting him to admit he was never mugged. He sold his rims to pay off the blackmailer so no one would find out he’s gay. Kelly admits it, but says he just wants to pay the bastard and move on. He shows Veronica the blackmail note (signed Rick Santorum) directing him to send the money to a local address, which seems a bit careless for a blackmailer. At home, Hannah snoops around, finding her dad’s coke stash in the bathroom and numerous calls to and from the Fitzpatricks in the phone log.
The blackmailer’s address turned out to be fake, so the pay-off gets routed to the local post office. Veronica put a tracker in the pay-off and traces the money to a familiar address … Kylie’s. Kylie’s not surprised when Veronica confronts her, since she found the tracker in the package. (She even returns it, which Veronica appreciates, since those bugs are expensive.) Turns out Kylie was the blackmailer all along. (Her mom works at the post office, which is how she got the package.) She admits the whole thing was because she wanted to come out and Marlena didn’t, so she basically forced the issue, even telling Marlena the blackmailer was bluffing and not to pay. Kylie says she wanted to be able to walk down the hall with her girlfriend, so she had to find a way to out Marlena so she could come out herself. As for blackmailing Kelly, she needed money to go to college, but promises to give it back (even though she doesn’t really give a shit about Kelly and his rimless car).
Hannah tells Logan he was right about her father and Logan walks down the hall holding her hand. Veronica realizes who Hannah’s father is and wonders what Logan’s planning. Veronica and Jackie head to the game, but they stop at an old airplane hangar where Jackie’s dad keeps a bunch of expensive cars. (The hangar belongs to Woody Goodman, but he lets Terrence keep his cars there.) They borrow one of the fancy cars to drive to the game. At the Sheriff’s office, Keith shows Lamb the photos of Terrence at the casino and points out he couldn’t have triggered a bomb because there’s no cell service there. Lamb doesn’t want to admit he was wrong, so Keith plays the tape Veronica made of him blackmailing Terrence. It doesn’t work though; Lamb says he’s got a hell of a lot less to lose than Terrence, so they might as well go public with the tape. When Veronica and Jackie get back to the hangar, the convertible top on the car won’t work. Veronica figures it’s just a fuse and roots around the hangar for a screwdriver, but she finds something much more ominous. She heads home and wakes up her dad, telling him she found explosives and detonators in the hangar where Terrence keeps his cars. Keith figures his gut must’ve been way off this time.