Jennifer is at Mike's house, in tears, and she tries several times to get up the nerve to confess to Mike about her drunken one-night stand with Craig, but she can't bring herself to tell him. Jennifer admits that she was hurt when she saw Katie and Mike talking together privately but says she knows she should trust Mike, because he has always been honest with her. This leads Mike to confess that he and Katie almost had a "moment" together and that if Henry had not called at that time, he would have kissed Katie and perhaps gone on to make love to her. Jennifer again tries to tell Mike about her night with Craig, but Mike says the two of them should "take it from right here" and forget the past, and that if Jennifer is willing to try, he wants to build a family with her.
Craig is celebrating the success of Street Jeans in his apartment, alone, when Barbara comes to the door. She suggests that she sell her interest in Street Jeans to Craig with one condition: that he release Jennifer from any involvement in Street Jeans. Craig tells Barbara that she is insanely jealous of her daughter's success, and that the only person who can push him out of Street Jeans is Jennifer herself, which he says will never happen. Barbara leaves, and Craig goes to Mike's house, where he peeks in the window and sees Jennifer and Mike embracing; he realizes that Jennifer has not told Mike about their one-night stand.
Henry tells Katie that they should end their marriage to save their relationship, because she is meant to be with Mike. Katie can't believe Henry is ready to let her go that easily and wants to know who's been trying to talk him into leaving her. He says that she herself has, because she couldn't go through with making love with him and because of her actions with Mike, and he admits to having been in town spying on them when they almost had their "moment." Katie tells Henry that she and Mike realized after that moment that they each were in love with someone else and that all they shared was a history. Henry tells her she's a good friend, but she replies that she's a better lover and kisses him deeply. He tells her that if she is still there after he counts to 3, he'll kiss her again and won't stop until tomorrow morning; he gets to "1" before Katie begins kissing him again.
At the police station, Tom tells Keith that he is now free to go. Keith insists that Jack should not be handling the investigation of Julia's death because of his conflicts of interest and says he thinks Lily and/or Carly are guilty of murdering his sister. Tom suggests Keith stay out of it and go back to Chicago with JJ. Meanwhile, at the church, Holden tells Jack that he thinks he knows whose fingerprint might be on Julia's watch band. He takes the funeral program that Luke had torn in half and gives it to Jack, telling him to run it for fingerprints, and that what he finds will probably match the unidentified print from Julia's watch band. Jack wants to know whose print Holden thinks it is, and Holden confesses that he thinks it might be Luke's. Jack insists that that is nonsense, but Holden points out that Luke had motive and has been very angry and acting suspiciously, even trying to burn something the night of Julia's death. Jack agrees to run the print, and while Holden waits for the results at the station, he has a flashback to Luke's birth, when he delivered Luke for Lily. Jack comes in and lets Holden know that the print is indeed Luke's.
At Lily's house, Luke cryptically tells Lily not to worry about anything because he "took care of things" and "did what he did" because the police would never believe Julia's death was an accident. Lily worries aloud to Carly that this means Luke killed Julia, saying no one else is likely to have entered Julia's apartment between the time Lily left and the time she and Carly came back. Carly tells Lily to just keep calm and no one will have to know that any of them were in Julia's apartment, and that the murder investigation will eventually just be pushed to the side because of lack of evidence. At that point, Keith rings the doorbell and begins accusing both Lily and Carly of being responsible for Julia's death. Lily asks Carly to call the police, and as Carly leaves the room, Keith advances on Lily, demanding to know whether she killed his sister. Luke rushes in and jumps on Keith, telling him to leave his mother alone. At that moment, Jack, Holden, and some uniformed policemen come into the house, and they separate Luke and Keith. Keith and Luke both want to know why they're there, and Jack says it's because they found out whose fingerprint was on the watch band. Luke asks whose print it was, and Jack says it was his. Keith then shouts that Luke is the murderer and should be charged with the crime, which Carly insists will never happen; Lily, unable to deal with the accusations against her son despite her own suspicions, blurts out her confession, saying, "I did it! I killed Julia!"
Katie and Henry bask in the afterglow of their first night together as "real" man and wife. Henry panics a little, believing he surely wasn't as good a lover as the other men in Katie's life, but she, who truly seems happy for the first time ever, spends the rest of the day trying to convince him otherwise.
Jennifer is in quite a pickle. She meant to tell Mike that she slept with Craig, but he mistook her angst for anger at him and he explained that he saw Katie and that they almost kissed, but didn't. He then told her that she didn't need to apologize, that he understood she just got caught up in her work. "Besides, it's not like you slept with another guy." Her omission, however, may come back to haunt her. When she refuses to accompany Craig on a business trip to Singapore, he threatens to tell Mike about their night together!
Lily has confessed to Julia's murder, but Luke is emphatic that he killed her. Lily insists on telling the story about their fight and that she pushed Julia who fell and hit her head. "It was an accident," Lily claims. Jack reminds Lily about Luke's fingerprints on Julia's watchband and that he doesn't believe her story. At this point, Carly has heard enough and risks her marriage to tell the truth. She backs up Lily's story and Jack is so angry that he pulls her out of the room so that he can talk with her alone. Carly tells him everything, including that Lily went to Julia's house because Luke had trashed the apartment and Lily wanted to clean it up. Carly even told Jack that Lily had told her that Julia was alive when she left and her body was in a different spot when they returned. Jack is still angry, but believes Carly is telling the truth. Meanwhile, Luke is telling Holden his side of the story. He explains that he went to Julia's apartment to tell her to leave town and leave their family alone and Julia -- very much alive and in character -- told Luke she wasn't going anywhere and that he couldn't do anything about it. In his anger, he grabbed her shoulders and hit her head against the table repeatedly. Moments later he realized what he had done and regretted it. He checked her pulse while he tried to revive her, putting his fingerprints on her watchband. He even tells Holden that he found Lily's gloves at Julia's and that he later tried to burn them. Holden asks Luke how he could do this to Julia, but Luke yells at him that it is all Holden's fault.
While Jack interrogates Luke with Holden, Lily confronts Carly and is very angry that Carly told Jack the truth. Carly, however, has risked too much and worked too hard to get her marriage back to lie to Jack now. "I did it to save my marriage -- and your life!" she says with regret.
Jack finds that Luke and Carly's story match and that Lily's confession is fake. Horrified, Lily looks on as Jack arrests her son.
Jennifer called a meeting with Sierra to discuss Craig. Jennifer told Sierra that she wants Craig out of Street Jeans and if Sierra can't make that happen she will no longer be a part of the company. Just in the nick of time Craig interrupted and wanted to know why he was not called to the meeting. Sierra wanted some answers as to what was going on between Craig and Jennifer. Jennifer tried to convince Sierra that nothing was going on between her and Craig but that they just had a difference of opinion on some work issues. Sierra told them that she didn't believe their story and Jennifer told Sierra that she would work around the problem. Sierra stormed off and Craig threatened Jennifer never to go behind his back again. Jennifer continued to tell Craig that she wanted nothing to do with him and that she can't stand to work with him. Craig told Jennifer that if she doesn't stop this charade she should prepare to lose Mike.
Carly went to Lily's house to try to apologize for telling Jack the truth about how Luke went to Julia's and trashed her apartment the day she was murdered. Lily told Carly that she can't accept her apology and shut the door in Carly's face. Carly forced her way into Lily's house in an attempt to convince Lily that she had no other choice but to tell Jack the truth. Carly said that Jack would have found out for himself sooner or later what really happened. Lily still did not want to hear anything Carly had to say and showed her the door. Lily asked Carly to do her one more favor, "Don't help me anymore."
Luke woke up in his cell to find Holden there, who has slept outside the cell with him all night. Holden tried to explain to Luke why he turned him into the police. Holden said he had failed him and explained how he should have handled things better after he moved out. A police officer interrupted to take Luke to the court house for his arraignment.
Keith went to the police station to tell Jack that he was taking JJ away from him tonight, and that he will be back tomorrow to make sure that Carly pays for her part in Julia's murder. Lily showed up at the police station just as Luke was being taken away to his arraignment. Holden and Lily argued over Luke. Holden told Lily that she needed to find proof that Luke did not kill Julia because Luke was willing to go to prison in order to protect her. Carly came to the police station to see Jack and try to convince him to let Lily see Luke. Jack told Carly that Keith was there and that he was taking JJ away from him. Jack asked Carly to go shopping so he could have some time alone with JJ before Keith took him away. Meanwhile Lily invited Keith over to her house to ask for his help so he could receive justice for his sister.
At Katie and Henry's house, Mike showed up to try to find out what Henry knew about Jennifer. Katie told Mike that Henry lied about his heart problem and that he was in town the whole time. Henry apologized to Mike and asked his forgiveness. Mike wanted to know why Henry sounded so weird when he was talking about Jennifer the other night. Henry denied knowing anything about Jennifer and began to tell Mike that Katie added Henry's name on the lease at the gym. Everyone agreed that Henry would finally have to do some real work for once in his life.
Lily surprises Keith when she presents him with solid evidence that could put her away for his sister's murder. But while Lily thought having her sent to prison was exactly what Keith wanted, she's thrown when he hesitates, accusing her of using him to protect her son. Lily doesn't deny wanting to spare Luke but sticks to her story that she did, indeed, kill Julia and later, when Keith shows up at Jack's with Lily's evidence, a threatening note to Julia, it's clear he's seriously considering turning it and her over to the police.
Meanwhile, after Jessica's failed attempt to convince Luke to give up the notion of a guilty plea, Holden tries his hand at convincing his son not to throw his life away but Luke continues to stick to his story. Meanwhile, Carly and Jack face off over Carly's lie that she knew nothing about Lily and Luke's role in Julia's murder. Carly refuses to apologize for helping a friend and Jack refuses to approve covering up a murder. Into this argument comes JJ who has one final good bye with Jack before leaving with Keith. The moment is emotional but when Keith arrives and prepares to leave, he stops causing everyone to wonder if he really does plan to go.
Sierra reveals to Dusty her concerns about Craig's involvement with Street Jeans and with Jennifer. Dusty offers to help flush out the situation by talking to Jennifer and Sierra agrees to question Craig. Later, when Sierra suggests Craig think about taking a break from Street Jeans, he responds with cutting insults and she realizes Barbara may not have been so wrong after all. Meanwhile, Craig smoothly reminds Jennifer all she stands to lose should she pursue the idea of cutting him out of Street Jeans. Later, after a talk with Dusty about Craig and honesty, Jennifer feels determined to tell Mike the truth. She goes home to an ever-committed Mike who has drawn up plans to build her an office close to home. Knowing the truth could cost her everything, she prepares to tell Mike the secret she can't hide any longer.
Mike tries to give Jennifer the blueprints he's made to build office space for her at the cottage, but she insists she has to tell him something first. She confesses everything to Mike about her drunken one-night stand with Craig. Mike at first believes Craig took advantage of Jennifer and is furious at the idea, but Jennifer sobs that it was all her fault and that she made the first move. Shocked, Mike sits down and tries to process this information, becoming angry again, this time at Jennifer. He tells her he once did something similar, when he slept with Carly while dating Molly, and he says he now knows how Molly must have felt and why she couldn't forgive him for it. He also wonders out loud what would happen if he and Jennifer remained together and ever had a real fight --- would she run out and hop into bed with the first man she saw? Jennifer, stung by the implication that she is "a whore," tells Mike that at least with that attitude, it will be easier for her to leave him. She packs some of her things, telling Mike that she'll send for the rest and that she will always love him. As she opens the door to leave, Mike shouts, "Stop!"
Celia, Casey, and Will arrive at Celia and Rafi's place, with Casey asking Celia to go to dinner and a movie with him. Celia says he'll have to ask Rafi, but they find Rafael in a bad mood because he hasn't been able to find another job since being fired from Metro. Will decides to ask Alison if she can try to convince Aaron to rehire Rafael, so that Celia can have some time without her big brother breathing down her neck. Alison says she can't do that, but when Aaron walks in a few minutes later, he complains that he doesn't have enough time to spend with his family in their time of crisis, because he hasn't been able to find someone to help run Metro. Alison suggests that he rehire Rafael, and he agrees that it would be a good solution to his problems. Aaron calls Rafael, who goes to Metro to talk to him. But when Aaron offers him his job back, Rafi refuses, saying he doesn't take handouts. Alison takes him aside and convinces him that he should take the job; he tells her his biggest problem is keeping an eye on Celia, and Alison volunteers to help him do that if he takes his old job back. Rafael agrees and tells Aaron he accepts the job offer. Will is thrilled when Alison calls him with this news, and she tells him that she even got Rafael to agree to let Celia go out with Casey, on one condition: she and Will will go with them as chaperones. Will is happy to hear this bit of news.
Earlier, at the police station, Aaron paid a visit to Luke, at Holden's request. Luke, however, is angry with Aaron for having told Holden that he saw Luke burning the gloves outside Metro the night Julia died, which led to Holden turning Luke over to the police. Aaron tells Luke he's convinced that Luke could not have killed Julia intentionally no matter how angry he was, but he leaves having failed to talk Luke out of his confession. Holden then asks Luke to look him in the eye and tell him whether he killed Julia; Luke looks at Holden and says, "Yes!" but then quickly looks away, which convinces Holden that Luke is not telling the truth. Luke, however, tells Holden that he can't see the truth just by looking and that all he has is wishful thinking.
Meanwhile, Keith has given Jack the letter Lily gave him that purports to be a written death threat against Julia. Jack is in disbelief that the police would have missed something like this letter when they went through Julia's apartment, but Keith tells him that was where he found it. Keith demands that Jack bring Lily and Carly to justice for their roles in his sister's death, and then he leaves. Jack puts the letter in an evidence bag, telling Carly the letter details Lily's plan to kill Julia, but Carly insists the letter must be a fake. If the letter is real, it could result in both Lily and Carly going to jail, because Julia's death would have been premeditated; Jack says he knows that, but he leaves to take the letter to Tom Hughes anyway and try to help get Luke out of jail, if possible.
Carly goes to see Lily and tells her about Keith's visit. Lily pretends to be upset that anyone found the letter, claiming that she thought Julia must have destroyed it since no one had mentioned it yet. Carly tells her to save the acting for the others, because she's not buying any of Lily's story. She also tells Lily that she's not going to bring her down with her. Lily continues to pretend that the letter is real, but Carly says Lily could not have done anything that malicious on her own, that she had to lead Lily every step of the way into doing anything nasty to Julia at all. Lily agrees and says it's all Carly's fault that her son is sitting in jail right now, and she asks Carly to leave. Carly leaves, but she swears she will prove that Lily is lying.
Keith and JJ are at the Lakeview, waiting to talk to Lisa. Keith tells JJ that they'll be leaving Oakdale in the future, but JJ wants to stay to be near his "dad," Jack. Keith tells JJ that Jack isn't really his dad, but that as his uncle, Keith will always take care of JJ. Lisa arrives and sits down to chat with JJ. At the same time, Carly comes in and asks to speak with Keith. She tells Keith that he's being played, and she wonders if he really wants to get the justice he "keeps yammering about." She tells Keith that she suspects Lily gave him the letter and that Lily is doing this for one reason only: to save her son.
Back at the police station, Jack tells Tom that he has new evidence in the case, and Holden wants to see it. Holden reads part of Lily's letter and realizes he can use this to convince Luke to recant his confession. They bring Luke into the room and show him the letter, which he immediately claims must be a fake. But Holden points out that it's his mother's writing, and he tells Luke that if he wants to help his sisters, Faith and Natalie, he needs to finally tell the truth. Jack asks Luke again, "Did you kill Julia?" and Luke says, "No, I didn't kill her." At that moment, Lily walks in and says, "Of course, you didn't; I did it."