John Mason returns to the Sally Ann mine to claim his half share. Janet Cater also returns although her father lost his half share to Joe Ryan. Ryan and his gang are also there to get the gold. A mysterious Phantom is also present. Mason's plan to expose Ryan as an outlaw and to force him to turn his share to Janet works. But when distracted by the Phantom, John is made a prisoner by the gang.

Members of a teenage gang are sent to the State Reformatory, presided over by the callous Thompson. Soon Patsy Gargan, a former gangster appointed Deputy Commissioner, arrives and takes over the administration to run the place on radical principles. Thompson needs a quick way to discredit him.

Although Vivian Revere is seemingly the most successful of a trio of reunited schoolmates, she throws it away by descending into a life of debauchery and drugs.