Chuck and Georgina are taking a taxi back to the city when Serena calls and tells him that Gabriel left town with the money.
Serena goes home to tell her mother, but before she can come clean, Lily presents her with a bracelet for her getting into college and generally being a good girl lately.
So Serena doesn't tell Lily about the money being gone because she wants to keep the bracelet and Lily takes a phone call. So instead she calls Blair for help.
Blair uses the call to run away from the conversation with Nate about moving in together. Nate insists on coming along to Serena's.
Rufus is on the street in Brooklyn singing because he is so excited that he will propose to Lily soon. But he needs to ask permission from the man of the house, Eric.
Serena tells Blair and Nate that she has a plan to get the money back from Gabriel. Chuck and Georgina show up and he tells her to stay in the living room while he goes and takes over the plan-making.
G says she actually just wants to apologize to Blair. Chuck tells the gang to call the police, but Serena says no way, then Lily will find out, and telling your mom the truth is never a good idea.
It's a better idea to tell Gabriel she is pregnant so he will have lunch with you, and then at lunch she can make him give it back. Or so S says.
That's the plan they go with, in any case.
Dan walks in because he wanted to convince Serena to come to brunch. He ends up overhearing everything, and says he needs to tell his dad that Gabriel stole his tuition money.
Serena tells Dan not to say anything, because she and Blair have a plan.
Georgina walks in and everyone is confused and yelling until Gabriel calls, having apparently bought into Serena's ruse. Except not. They meet for lunch, and she admits she's not pregnant. She wants to give Gabriel an opportunity to give the money back without involving the cops.
She summons Chuck to threaten Gabriel some more, and now he says he doesn't have the money. Poppy Lifton does. Gabriel says he was just an innocent moron running a Ponzi scheme, and it was Poppy behind everything.
Her all-business partner Gabriel was the face for her latest scam, but then his feelings for Serena got in the way, so then other things happened and Poppy has the money. Basically. We think.
He tries to patch it up with Serena, but she doesn't fall for it.
The gang decides they should entrap Poppy and try to catch her stealing even more money using Georgina, because she's the only strange face among them.
Georgina says she will not be involved in such a horrible scheme, but Blair guilts her into participating based on her past misdeeds.
Lily is getting the rundown of all Gabriel's investors from her accountant, and Serena walks in. Lily tells Serena she is disappointed that she didn't come to her - Dan did. Plus, she doesn't want Serena's name involved in a scandal. Lily tells Serena to let it go. Lily also says she's going to just pay the people back herself to avoid embarrassment, except for Rufus, who she will handle differently.
Once Blair has convinced Georgina to do it, Serena calls and says the plan is on hold, because Lily said so. She then finds Poppy and Lily having tea in the living room.
Poor Poppy just popped by to see how everyone else was doing after losing the money, and to tell them she's going to Miami to lick her wounds.
Her playing the victim is the last straw for S, who tells her mother it's not right to let her off the hook. Lily again insists that is how they handle it.
Eric gives Rufus his blessing to propose to Lily, as long as he's prepared that he's going to be #5, and that the bar for proposals is also set high.
Dan gets a call from someone who says Rufus' investment dividends will be coming soon. He's confused, as he thought the money was all gone.
Serena is pissed. The plan is back on.
Blair introduces Georgina, in character and dressed the part, as a naive new socialite in the city from Canada, to Poppy to get lunch and make contacts.
D calls Serena and asks about dividends, and they fight about how he told Lily about all the Ponzi Scheme going on. She's unhappy that he went and told Lily behind her back.
Rufus and Jenny show up at Lily's house when she's not there to prep for the big proposal with all of Lily's favorite things. Lily shows up and Jenny distracts her with Twilight talk while Rufus sets up.
Dan then calls Lily and asks about dividends, and she tells him Rufus' money is ... in a mutual fund (a lie) so Rufus will never know about the bad investment.
Except Rufus is in the next room finding the list of Gabriel's investors in a folder basically outlining who Lily paid back and that only R will be receiving dividends of $5,000 a month.
As the gang walks into the Russian Tea Room to watch their genius scheme play out, Nate stops Chuck and confronts him about always being around Blair.
Nate tells him he needs to man up and tell Blair he loves her or cut her loose, because Nate also loves her and wants her.
Poppy shows up for her meeting with Georgina, who has a recorder on her.
Once she gets Poppy talking money, she will text Chuck right away, and then they can arrest Poppy.The gang waits at the bar for the text.
While they wait, Blair confronts Chuck.
She tells him that she can't answer Nate about moving in together until he answers her. She thinks he wants to make her miserable, but he insists he wants her to be happy.
She tells him to look down deep and tell her if what he feels for her is real, or if it's just a game. He says ... it was all a game, and cuts her loose.
Blair rushes off to hide her tears, and Serena asks Chuck why he did that. He says because he loves her.
Meanwhile, Georgina lauds Poppy's philanthropic efforts bringing WiFi to the children of Africa, and Poppy says she can get in on it ... if she can make a payment today.
Poppy will only accept cash, unfortch, so Georgina hands Poppy an envelope full of money that she happens to be carrying, and lets her go.
Poppy leaves the restaurant, but instead, the police are outside to arrest Serena. Blair and Nate watch helplessly as Serena gets cuffed and Poppy slips out the door with the envelope.
Blair storms over to G and blames her for getting Serena arrested. Blair knows that G is still totally evil. Georgina is now doubly pissed because she gave away her group's Bible money to help with this scheme.
Lily finds Rufus in her dining room, and he deduced everything. They fight about Lily trying to help him with all her money (again), and the police call Lily to tell her they arrested Serena.
Lily had her arrested for stealing that bracelet to keep her from getting into trouble with whatever that crazy scheme was. She had no choice.
So Rufus and Lily are deeply entrenched in this fight, he tells her she sounds exactly like her mother and then walks out. No proposal.
Chuck catches up to Blair and Nate at the police station and goes in to try to help Serena. Blair tells Nate that he doesn't need to worry about Chuck anymore, but they agree they shouldn't move in together because it was too fast. But Blair does ask Nate to ask her to prom instead.
Georgina calls Blair and says she's going to take care of Poppy.
Rufus walks home and asks his children to return the ring they bought for him to use to propose to Lily.
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