Where there's smoke, there's fire, in Kelly's opinion... at least where Valerie is concerned. Kelly begins to distrust Valerie when she smells Valerie smoking pot, but cannot convince anyone that the manipulative Valerie is bad news. Brandon refuses to believe Kelly, while Donna doesn't seem to care. Meanwhile, Steve organizes a two-night party at the Peach Pit, Valerie begins to suspect the truth about Dylan's financial situation when she sees him pocketing money from the til at the Peach Pit. Also, Andrea heads out for a night on the town and spies Jesse flirting on the job. While working on a video project with David and Clare, Donna meets a musician and carpenter named Ray Pruit. Kelly finds Valerie and Dylan fooling around in the Peach Pit's backroom and quickly tells Steve about it, but when they both confront Valerie, she spins it around by saying that Kelly misread what she saw, claiming that Dylan was making a pass at her. Steve believes Valerie, but Kelly doesn't. Kelly then angrily tells Brandon about what went down and that Valerie is fooling everyone about who she really is. Brandon remains skeptic and advises Kelly to give Valerie the benefit of the doubt. At the end, the suspicious Valerie gets Dylan drunk at his house, where he finally confesses to her that he is broke.