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Pete begins organizing Kidsboro's scattered laws into a real constitution. Meanwhile, Nelson invents a chemical mixture that removes the stink from his clubhouse. Two more houses are attacked, and the council blames Rodney Rathbone's gang, the Bones of Wrath. The trouble earns Nelson a government job producing his neutralizing formula for every citizen.
Paying for the program requires higher taxes, but everyone initially accepts the cost as protection. Then Nelson's sister Valerie spills the mixture on an expensive pink shirt and demands forty Kidsboro dollars from the government. Ryan dismisses the complaint as a mere stain, so Valerie sues.
Kidsboro creates a court. Ryan represents the government, and Alice serves as judge because of her love for law. Valerie establishes that neither Nelson nor the council tested the formula on fabric. Ryan offers no witnesses and relies on calling the lawsuit silly while warning that a loss will cancel other government projects.
Alice dislikes the case but rules that the government acted negligently. She awards Valerie forty dollars - nearly twice the town's entire tax income. The council gives up salaries and postpones projects, yet still cannot see how to recover financially. Ryan refuses to seek Whit's advice because he wants to solve the problem himself.
Jill studies one of the stink devices and doubts the Bones of Wrath made it. The canister is neatly built from a cut soda bottle, and the unusual liquid requires scientific skill. The attacks also stopped as soon as Nelson's formula became available, suggesting that someone inside Kidsboro knew it would defeat them.
Another act of vandalism glues Pete's door shut. Valerie uses the failure to argue that Ryan has wasted taxes and should be replaced by her. Under pressure to defend both the town and his reputation, Ryan begins investigating his own friends.
At Nelson's house, Ryan finds discarded soda bottles whose cut tops may match the canisters. Nelson confesses that he created the smells because he felt useless while the other founders had important jobs. His attacks manufactured a need for his invention and his government position.
Nelson also glued Pete's door because he wants the threat to continue. He proposes another tax-funded security plan and asks Ryan to conceal the truth. The citizens will feel protected, the new money will rescue the government, Valerie will lose her complaint against Ryan, and Nelson can remain on the council. Knowing it is a cover-up, Ryan nevertheless asks to hear the plan.
