John and Digger are attending an art exhibit where Karen is displaying her work. The judges are dismissive of her work until John wows them with some encyclopedia art commentary. The scholarship award is bestowed on Karen and John and Digger congratulate her, unaware they're being monitored by a team of men aboard a fast-moving train. The men have Teresa/Turquoise prisoner as well.
John comes back to his apartment with Karen and finds that the place has been robbed and his private "study" has been cleaned out. The only thing left is a computer with a pre-recorded message that tells John he has activated a virus that will trigger off three pounds of C-4 that will explode immediately if he lets go of the mouse. The voice asks him "Where is it?" and tells him to stop faking the amnesia. Karen places her hand on the mouse while John runs out to cut off the power and stop the detonation sequence. He drives a truck into the power pole and knocks it down with seconds to spare. But as Karen lets go of the mouse someone grabs her and hauls her off.
John calls in the police and Avery and Frank show up, and they figure out the explosives were a fake. Avery wonders if the Phoenix organization is involved and now they're going through Karen. John determines there's a traffic camera that would have taped everyone coming onto the street and they interrogate all the drivers. One of them is deaf and they enter the interrogation room to find the man killed himself with a light tube. John checks his phone which has a computer tone at the other end and they plan to run a trace. Out in the woods, the white-shirted Phoenix men are working at a site while the Trenchcoat Man looks on. He then goes into a tent where Karen and Teresa is kept prisoner and interrogates Karen (via computer voice simulation) for the location of a staff and shows her a piece of an ancient shroud with a phoenix symbol on it.
Stella traces the call to a lawyer and when the police arrive the man makes a run for it and escapes without a trace. John conclude that he was picked up by a bus and talk with the driver to verify their theory. The driver confirms the lawyer met with a woman, they talked in sign language, and they got off near an ironworks. They go there and find dozens of men and women dead, all of who committed suicide with cyanide. They find a trace of a picture of John as well as a picture of Theresa from the ferry. Frank and Avery are forced to wonder if John's pre-amnesiac personality might have been a willing participant in everything.
Later in an alley John is approached by several homeless men who grab and restrain him then toss him into a van. He's taken to a room and handcuffed securely and then several doctors come in and take his fingerprints, blood samples, and run several tests. After they leave, a cheery man in a suit comes in and introduces himself as Sam. Sam asks for information on the Phoenix Organization and John quickly figures out he works for the government. Sam hopes that they can work together but John remains silent until Sam reveals he works for the NSA and they have been tracking the Phoenix Organization out of the Middle East. Sam shows John pictures of Yellow Teeth and the Trenchcoat Man and then tries to convince John to work with them by showing off his abilities to his superiors.
The Trenchcoat Man prepares an injection of truth serum for Karen but when he injects her she hits him and breaks free, knocking him into a lamp where his coat bursts into flame. She grabs a phone and makes a run for it, calling John, and giving him a hurried description of her surroundings. She sees a bright blue light and follows it into the woods but then the Trenchcoat Man grabs her and she drops the phone.
Desperate, John calls out for Sam and agrees to demonstrate his skills but initially plays dumb, then starts tossing off random trivia. After the superiors leave, Sam releases John who leaves, but not before answering all the questions put to him. Back at his apartment, John uses his computer to track the descriptions Karen gave him and figures her location, unaware that Phoenix has a camera planted in his apartment. Phoenix begins evacuation, taking Teresa away in a helicopter while Trenchcoat Man hauls Karen into the woods…the woods of Horseshoe Island where John woke up.
John is preparing to leave and runs into Digger, who provides a speedboat to get them to Horseshoe Island. They head for the circle of trees where John woke up and find the archaeological dig. Nearby they find Karen, dead. Later John and the others paint a building in Karen's honor using the landscape she admired at the art exhibit. Later Johns says goodbye to her and apologizes for involving her. He's interrupted by a nurse who comes by and tells him about a mysterious patient asking for John Doe. John visits the patient who is a dying Yellow Teeth. She says that Phoenix will watch him every minute of every day because they are searching for the staff, and when they find it, they'll come for John to "complete his destiny." John isn't interested but she warns he has no choice and that he'll lose. She grabs his hand and tells him, "You are the Phoenix," then dies.
And in an ancient vault in Rome filled with relics, a case sits with a Phoenix staff inside