The second season of Zorro opens with Don Diego and Bernardo visiting Monterey, California. They have been sent there by a group of Los Angeles investors to look over an import business. The visitors have barely arrived in town when two men burst into their room and demand the investors' money. Diego claims he doesn't have it and the men leave when the innkeeper investigates the disturbance. All they take is Diego's watch, but he suspects something more serious is wrong.
Diego sets to work by visiting Señor Verdugo, owner of the business that's for sale. The merchant appears to be legitimate, but Diego tells him that several potential investors have been robbed on their way to Monterey so he must check before recommending the investment. He implies that the men who broke into his room are linked to Verdugo, thus angering the older man. Verdugo refutes his accusations by introducing Diego to Romero Serrano, a courier who has arrived safely from Santa Cruz. Diego also meets Anna Maria, Verdugo's daughter, who openly dislikes him for questioning her father's integrity.
Later, Romero and Anna Maria see Bernardo carefully carrying a saddle bag into the inn, which makes them think Diego has brought the money after all. They accuse Diego and demand that he open the bag, but he refuses, for it contains his Zorro costume. Bernardo manages to confuse them, and switches the contents with some of Diego's clothes.
Two men in the hotel lobby attract Bernardo's attention and he sees that one of them has Diego's watch. The servant tries to follow them but is taken prisoner, to be held hostage until Diego turns over the money. That night, Diego rides as Zorro and rescues his friend, barely escaping a shot fired by an unknown assailant. He returns the fire and wounds him, but the man escapes.
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