Peter Fleming, owner of the ARK Corporation, appeals to the government of Palm City to let him take over control of the police and deal with a master criminal, Chess. Fleming in reality is Chess, and frames former cop, Vince Faraday, as Chess. Vince is seemingly killed, but in reality is taken in by the Carnival of Crime. Its owner, the enigmatic Max Malini, offers to train him to pose as The Cape, a comic book hero that Vince's son idolizes, so that Vince can clear his name and reunite with his wife and son.
As The Cape, Vince takes on Fleming directly, but is poisoned and brought to the verge of death. When Malini forbids him to use the cape, Vince strikes out on his own to take on Fleming and his newest hired killer, Cain. Meanwhile, Dana considers whether to keep the Faraday name while applying for a new job.
Gregor Molotov, Max's protege, escapes from a Russian prison and comes to Palm City to reclaim the cape and assume the role of Kozmo the Unkillable. He claims to have reformed, but Vince and Max aren't convinced. Meanwhile, Orwell is forced to take refuge with Vince, and Dana learns of a witness who can clear her "dead" husband's name.
Vince tries to turn Scales against Fleming by telling him the latter's secret identity. Scales goes to confront Fleming during a charity gala aboard a train, and demands his fair share of the smuggling proceeds. Meanwhile, Vince boards the train but discovers that the Carnival of Crime plans to steal the charity donations.
Fleming exploits the talents of a young savant able to calculate probabilities to make a new predictive handheld computer system, and kills her father. Now, the girl seeks revenge, and Vince realizes that he has to keep Fleming alive to clear his own name.
Fleming hires a pair of assassins, Goggles and Hicks, to eliminate The Cape. The assassins launch a carefully-engineered plan to track Vince, learn everything about him, and then eliminate him. Meanwhile, Vince tries to enjoy a day off from crime fighting, Dana discovers that she can't trust her friends, and Trip makes a new friend.
Rollo's girlfriend turns up under mysterious circumstances, drugged into a hypnotic state by a villain known as The Lich. While Vince, Max, and Rollo try to track down The Lich, Orwell and Portman work together to find a missing heir and help him inherit the land that Fleming needs to obtain from the city and use to build his criminal empire. And Dana inadvertently takes Travis' hand, setting off a wave of recriminations when she wonders if she's remaining faithful to Vince's memory.
When Preston Holloway is taken into custody by ARK, Vince must turn to Dana for help getting in to see the prisoner and finding out the location of Conrad Chandler. Meanwhile, Conrad prepares to embrace his dark destiny as The Lich... by marrying a drugged Orwell, trapped in a hallucinatory dreamstate.
Fleming and Scales divide Palm City between them, and Scales plans to take over Trolley Park by taking out Max. He brings in an elusive assassin, Razer, and Vince takes the man's place to destroy Scales' operation from within. Meanwhile, Samuel attempts to negotiate a truce between Fleming and his alter-ego, Chess, and Orwell suffers from depression in the aftermath of her treatment at the hands of The Lich.
To cover his operations, Fleming frames Marty Voyt and forces him to remain silent or lose his family. When Dana takes on Marty's case, Vince must defend his wife and former friend from ARK troopers intent on eliminating them both.