Plot

With the mastermind behind Kate's death uncovered, Peter and Neal explore their pasts to gain answers.

Upon learning who is responsible for Kate's death, Peter wants Neal to tell him all he knows about him, but because it means revealing some of his past criminal acts, Peter tells him that, for the next twelve hours, everything he says is off the record; so, Neal tells him of how a few years ago he first came to the city and how he first met Mozzie, then how he later met the man, Vincent Adler, then how he also met Alex and Kate, and of the con which first brought him to Peter's attention.—rcs0411@yahoo.com

Neal and Peter discuss, over elaborate flashbacks, how Neal was scammed years ago during his first major operation in New York by Wall Street guru Vincent Adler, whose wealth he and Mozzie targeted. To get to the password, Neal got himself hired as analyst and insisted for exceptional permission to have his generous bonus invested in his exclusive fund, only to find it's a huge Ponzi fraud. The point for Neal was to impress Kate, who became his lover, while betraying gold-digger Alex Hunter to Adler. It also puts Peter on Kate's trail as he expected her to lead the FBI to him.—KGF Vissers

Open with New York montage. Peter pores through old files related to Ponzi scheme crook Vincent Adler. He goes to see Neal with a bag of booze and tells him that he wants to get Adler. Since Neal claims Adler "made me who I am today," Peter wants to pick his brain and offers him one evening of complete immunity for any crimes he may tell in the process of providing background. Neal shows him the fractal Mozzie built and says the first time he saw one was in Adler's office. And so begins their night of candor.

The flashbacks begin with the story of how Neal and Mozzie met. Mozzie was running a sidewalk three card Monty scam that Neal out-foxed to the tune of $500. Mozzie hunts him down and wants to join forces.

Mozzie suggests a long-con, the "Everest of swindles."

This leads to Peter recalling the first time Neal's name came across his desk. Neal had been forging bonds and Peter gave this new case the nickname: "James Bonds."

Peter told Elizabeth at the time that the quality of Neal's forgery indicated a high level of talent.

Neal and Mozzie target Adler, who had just made $150 million the previous year managing a hedge fund. Adler keeps a significant amount of his profit in an offshore account and only he knows the account number. To get in contact with Adler, Neal sells a few more bonds to afford an expensive dinner.

After getting cash, Neal runs into an unsuspecting Peter who was outside the bank asking questions. Neal chats before giving Peter a lollipop.

Neal picks the alias Nick Halden for the con. He introduces himself to Adler with a fake bottle of expensive wine and some insight into finance. After telling him of his passion for art, Adler introduces Neal to his assistant, Kate. The two hit it off immediately and he tells her he's there to cozy up to her boss and find more work.

At dinner, Neal gives Adler some inside info he and Mozzie found through some spying which ends up helping Adler's business. Adler hires him a month later. Neal had a knack for spotting Adler's enemies.

Kate had a boyfriend at the time, so she and Neal wouldn't yet get together romantically, though he makes her aware he's interested. She tells him that her boyfriend asked her to move to Chicago with him. She's leaving in a month.

At this point, Neal is given an assignment to investigate someone looking into Adler's recent merger acquisitions. Around this time, he first sees one of the fractals in Adler's office.

The person looking into Adler's acquisitions turns out to be Alex. Neal tricks her into meeting with Adler, who threatens her but gives her a second chance and lets her leave. Adler gives Neal a huge bonus, which he promptly invests back into the fund, not realizing at the time it was a scam.

Neal and Alex become lovers, and she can spot a fellow grifter, too. She tells him about the music box, which she thinks Adler has information about. She tells him she thinks it's in Denmark and will send him a sign (origami flower) if she needs help getting it. Alex disappears soon after.

We forward to the day Kate leaves for Chicago. Neal is on the phone with Mozzie, who pushes him to get the password. Kate arrives at his door and tells him that she wants to be with him.

With just days before Adler is to make his annual deposit, Neal seems conflicted about continuing with the con. Mozzie reminds him nobody even knows his real name and says he's heard Peter has been showing a sketch of him around town.

Adler buys Neal an expensive custom-made suit and the two discuss the future. Adler mentions the relationship with Kate and it looks for a second as if Neal is going to come clean, but he spots a newspaper on Adler's desk with the sketch of him. Neal tells Adler he needs to investigate an irregularity in his offshore account. Adler gives him a password. Neal manages to slip a hat over the newspaper.

Neal almost tells Kate who he really is but stops short.

Neal lies to Mozzie and says he didn't get the password. He tells Mozzie he's in love with Kate, and Mozzie thinks they should shut the operation down.

Neal and Kate watch a news report. Adler has skipped town. The entire firm was a scam.

We see the formation of the White Collar task force, which begins with Jones lobbying to be included.

The password Adler had given Neal was an anagram for "nice try Neal" and there was only $1 left in it when Neal checked.

Kate is upset that they have been left with nothing. Neal says they can get it all back and tells her his real name. Neal, Kate, and Mozzie start to work as a team of criminals.

Neal tells Kate that Peter has been asking around some of his forgeries. He thinks they should leave the country for a while. She sees Alex has sent the flower and is upset he wants to go after the music box. He ends up going to look for the box without her but doesn't find it, barely ending up escaping uninjured. He gets back and finds Kate gone. Neal starts pulling off bigger cons in part to get her attention.

We see Peter's team closing in on Neal. Diana suggests using his girlfriend. Peter realizes Kate has been hiding from Neal.

Mozzie reluctantly tells Neal he's received news about Kate, but he doesn't trust the source. Mozzie thinks it's a trap, but gives Neal the address anyway.

Neal goes to see Kate at a storage facility. After she says she loves him, the FBI burst through the door and arrest Neal. Neal promptly shakes Peter's hand, thankful that Peter helped him find Kate. It seems as if he knew there was a trap but came anyway. After Neal is taken away in cuffs, Peter unwraps the lollipop Neal gave him many moons earlier.

Back in present day, Neal tells Peter he doesn't think there is any trail for Adler. Peter thinks the key is the fractal. Alex has been by recently, and they've discovered that the fractal is a frequency for an emergency beacon. The idea is if they build a real fractal and hook it up to a radio, it will lead them to a boat or plane which disappeared 70 years earlier. Since it's worth it to Adler, Peter wants to continue on with the investigation