Larry Merrin is in BAU holding where Hotch is questioning him about an incident that took place two nights ago.
Merrin says his wife Tabitha told him she heard a noise downstairs, so he went to check it out. He says he smelt burning sage, and then fell to the floor. He tells Hotch about a weird noise that he heard, and a shadow monster with talons for hands came out of the dark and dragged him down the stairs. He says he heard his wife screaming, as he struggled to get back up the stairs. Upon entering the bedroom he saw the shadow leave, and his wife was dead. He says he passed out, only to awaken to find that he was arrested.
Hotch tells him that what really happened was that he killed his wife with a kitchen knife.
Hotch tells him of two other similar murders, where the killers related stories about a shadow monster: Daniel Karras stabbed his mother to death, and Christine McNeil killed her boyfriend, each claiming to have been attacked by a shadowy monster. Neither of them remembers the murders. Hotch theorizes that someone induced a psychotic break in each of them.
Morgan and JJ conduct a cognitive interview with Karras. He tells them he smelled sage, and then collapsed. He says when he awoke he couldn't move because he was tied to the kitchen table. He tells them about the weird noise coming from a shadow creature that had talons for hands. He says the creature did sexual things to him.
He says he freed himself and then hid somewhere in the house. The next thing he knew he was standing over his mother's body.
Morgan tells him there was no evidence of a rape, and no rope burns on his arms.
Hotch and Kate interview McNeil, who is in an agitated state, and unresponsive.
Garcia tells Hotch that all three victims were adopted in 1985, from different states.
Reid finds some plastic tubing that has traces of dissociative drugs designed to induce hallucinations - Sevoflurane and Scopolamine. Kate says the first was used to make the victim hallucinate their worst fear. Morgan says the second was used to make the victims attack that fear when it's really the person next to them. They don't realize they're killing someone that they love.
A little boy named Jimmy tells his father Bill Kinderman that there's a boogey-man in his room. Bill and Jimmy check his room, and then Bill tucks him into bed.
Bill head downstairs to the kitchen, and then suddenly smells something and then he sees the monster. He ends up slitting his own throat.
JJ theorizes that the unsub tried to get him to kill his own son but his paternal instincts fought the suggestion so hard that he ended up killing himself instead.
Hotch interviews Bill's estranged wife Mary. She tells him that Bill used to cheat on her, and that he used to come home with wild stories about being seduced by a high school teacher or that he was molested by a Catholic priest at age 12. She said she told Bill the memories weren't real - he was Jewish so never went to a Catholic church or school.
Hotch theorizes all people had what is known as "recovered memories" - memories that seem real but were fiction. The team wonder if all were members of a group home prior to their adoptions....and whether they were fed false memories at a very young age.
Hotch brings some sage into the room where Christine McNeil is. When he burns it, she becomes responsive, but tells Hotch she is 4 years old. She hears the monster, who she thinks is on the other side of the door. At the same time, the lights in the building begin to flicker.
When the lights go out, Christine freaks out and claws at her face. When Hotch asks her who the monster is, who's coming, she replies "Mr. Scratch".
The team discover that the entire building's power had gone out, including the backup generator. Garcia says that before the power went out she discovered that the unsub was hacking into the witness protection files, using highly advanced encryption algorithms.
Reid looks at the hacker's code and recognizes the style as belonging to someone who had been in an advanced Harvard math class - one so advanced that graduates are employed immediately by the government as they are too dangerous to work anywhere else.
Specifically they're employed at the NSA.
Hotch contacts Tony Axelrod at the NSA and demands to know who the unsub is. Hotch tells him that he knows they didn't employ the hacker because he's mentally unstable. Axelrod hands Hotch a piece of paper with a name on it: Peter Lewis.
Garcia discovers that Lewis' parents owned the foster home and that Peter's father Neil plus one other boy in the house would enter the children's rooms, each dressed in a devil costume. While awaiting trial, Neil was killed in prison for being a pedophile.
Garcia tells Hotch that the person doing the investigation was a woman named Dr. Susannah Regan. Regan was one of the prominent member of the "Believe the Children" movement - a group that championed the absolute acceptance of children's claims of alleged child abuse within child services protective care. Cops were encouraged to believe anything the children said about the SRA and that if they didn't say anything, cops were to "twist their arms" until they said something. She published a book based on her findings, which was later debunked.
As a result of public outrage and death threats, Regan had to go into witness protection. The team theorizes that Lewis is trying to find her.
Garcia finds Regan's address and sends the info to Hotch who drives to her house. She calls him into her parlor, and then slits her own throat. Just then the unsub sprays a chemical on Hotch, who tries to shoot him. Hotch splashes water onto his face, but then the unsub doses him with the chemical spray again and he passes out.
Hotch awakens to the sound of his phone signaling a call. He sees Lewis, who tells him he can't move. Lewis talks about Regan's sessions.
The rest of the BAU arrives at the house with their guns drawn.
Reid is shot. Then Rossi is shot in the neck. Morgan shoots Lewis. Then Morgan gets shot by Lewis, who is unhurt.
Hotch wakes up, realizing that this all happened in his head. Lewis says "now I know what scares you."
Lewis tells Hotch that he can move now. He hands Hotch a knife, and tells him that Lewis is about to come through the front door, and that he needs to kill him before he kills Hotch. Hotch asks for his gun, and points it at the front door.
Rossi opens the door, and Hotch turns and shoots toward Lewis instead. Hotch tells Rossi to take his gun. He doesn't trust himself because he knows Lewis made him see things that weren't real.
Morgan and JJ come in through the back. Lewis surrenders to them, saying "I win." He later says "you have no idea what I did to him. I win."
Rossi questions Hotch about his experience. Hotch looks haunted.