While fixing a flat tire on his car, Jane offers his insights on the murder of a 19 year-old girl over the phone to Lisbon. She was bound and murdered somewhere else and dumped in a park picnic area with pebbles over her eyes and no sign of sexual assault. Cho is present as well and confirms Lisbon's instincts that this was the work of a serial killer based on the precision of the body decorations, instincts Jane is telling Lisbon to trust.
The Fresno files on the killer present an alarming eight suspects, who Lisbon, upon Jane's insistence to trust her intuition, narrows down to one Richard Haibach, a man suspected of at least ogling teenage girls. Taking Van Pelt with her, Lisbon visits Haibach in her home, but is told off by a rude and impatient Haibach, who declines her entry and expresses frustration at his "harassment" by the police.
Jane, meanwhile, watches reporter Karen Cross interview Wainwright and blogger James Panzer about the San Joaquin killer. Panzer is suspiciously avid in his interest in the case, claiming it started because the first victim, Molly Mayer, lived in his neighborhood. He runs a website about the murders and the police investigation and is considered an “authority” on the subject. Both are very viable suspects.
Lisbon starts with hers by sending Cho out to canvas the area around the most recent murder. She doesn't believe Haibach’s alibi that he was “home alone” the night before. Cho finds someone who saw Haibach at a nearby bodega an hour before the murder. It’s enough for a search warrant.
Lisbon and Van Pelt visit Haibach's house with the warrant; while Lisbon stares down Haibach and makes him deeply uncomfortable, Van Pelt finds a room with a blinking red light; hung up are pictures of scantily dressed young women. Haibach is arrested and taken in to the precinct for questioning.
However, the girls in the pictures do not match any of the victims; Haibach's attorney arrives and demands that his client be released, otherwise he'll file a lawsuit. Lisbon is forced to let Haibach walk free.
Meanwhile, Jane’s been getting into Panzer’s head. He asks his take on Haibach and Panzer’s positive he isn’t the killer – he doesn’t have the intelligence. Jane tells Panzer the key is often the first victim and asks Panzer to take him to meet Molly’s family. As Panzer talks to Jane on the phone, a stone wall with a dark smudge can be seen behind him. After he hangs up, it can be seen that the smudge is actually a painting of some owls on the wall.
At the Mayor house, it’s obvious that whatever other involvement he may have, Panzer is clearly feeding on the family’s grief. Jane gets reluctant permission to look at Molly’s room and finds a DVD of a dance practice. She’s hauntingly beautiful, dancing to Louis Armstrong’s “What a Wonderful World”. Jane leaves her father to his memories and asks Panzer to show him his files. It turns out Panzer has an entire room full of files on the case. Poking around while Panzer gets him a drink, Jane discovers an iPod with “What a Wonderful World” on it. Panzer looks shaken to find it playing when he comes back into the room. He takes that opportunity to tell Panzer he thinks that the killer isn’t the “purist” Panzer claims, but a “deeply damaged man” just killing for the attention. Panzer adamantly defends the killer as a “brilliant man, running circles around the police”. A man to be “feared, not pitied”.
Unfortunately, whether Jane’s right or wrong about Panzer, the added attention of the CBI being on the case, along with the interest of the FBI, has caused the San Joaquin killer to escalate. There’s been another victim, this time there’s nothing on the eyes though. Because there are no eyes. Jane seems to feel guilty for just egging him on and announces that he thinks Panzer’s the killer to the whole team, along with Wainwright. He pledges to catch him by the morning, before the FBI steps in. The plan is to take away what he craves most, the admiration of the media.
The San Joaquin killer was created for “hubris”, the creation of a mythology of the brilliant killer the cops can’t catch. They need to arrest someone he would find pathetic and unworthy to force a reaction. Jane leaks to Cross that they have a suspect and will arrest him by morning. He swears her to secrecy, knowing it’s meaningless, and confides that it’s one of the existing suspects. Then he goes to Panzer with the story. They’re arresting Haibach. He’s faked several alibis and they’ve found evidence against him. They’ll be announcing it to the press in the morning. Jane’s last passing comment on the way out of Panzer's bathroom is that the killer is just a simple, mundane pervert. Then they wait. Sure enough, Panzer goes out carrying a medical bag. They follow him to what appears to be an abandoned warehouse, only to find him under the spotlights of Karen Cross. She claims to have gotten an anonymous call telling her where the actual murder scene was and she called Panzer to have him go over it with her on camera, as the expert on the case of course. At least that’s what Panzer claims. Either way, they can’t arrest him. As Jane talks to Panzer, the painting of the owls that was seen earlier is on the wall behind him again, meaning that Panzer's claim that he had never been to the warehouse before is a lie.
Alas, the FBI is taking over the case, it’ll all be started from scratch yet again and the San Joaquin killer will get to continue his work. Jane’s frustrated that they don’t take his conviction that Panzer is the killer seriously and complains to Lisbon. She just tells him “our hands are tied”. Jane’s only response, “maybe yours are.” He takes Cross up on her invitation to be on his show, as the expert on serial killers in general that he is. His appearance is a clear surprise to Panzer, who thought he had the spotlight. Jane throws him off-guard initially by agreeing that there are “too many cooks in the kitchen” now that the FBI is involved, but then starts working on him, getting into his head, with his further comments that the San Joaquin killer is actually “attached to the case” and Patrick Jane“hiding in plain sight”, but that he’s become “so wrapped up in his own mythology”, that it’s only a matter of time until he makes a mistake. He’s successful at goading Panzer into a reaction. After telling Jane during the commercial break that “You’re not going to ruin this for me,” he starts defending the San Joaquin killer on the air as “growing more bold and confident” and “too good to be caught”. Jane digs deeper, commenting that Red John thought the same thing. Panzer concludes by calling Red John a common sociopath, not as good as the San Joaquin killer, an amateur by comparison.
Panzer’s found the next morning, dead underneath of Red John’s identifying smiley face. Now he's dead, it will never be verified to 100 %, that Panzer was the San Joaquin killer.