Prominent criminal attorney Amos Strickland (Nicholas Joy) checks into the Lost Caverns Resort Hotel. His murdered body is later discovered by the bellboy, Freddie Phillips (Lou Costello), who is implicated in the crime. Casey Edwards (Bud Abbott), the house detective, tries to clear Freddie, but Inspector Wellman (James Flavin) and Sgt. Stone (Mikel Conrad) keep him in custody at his hotel room 'on the state'. Strickland's secretary Gregory Millford and seven of Strickland's former clients happen to be at the resort, and they are all suspects. These former clients are Swami Talpur (Boris Karloff), Angela Gordon (Lenore Aubert), Mrs. Hargreave (Victoria Horne), T. Hanley Brooks (Roland Winters), Lawrence Crandall (Harry Hayden), Mrs. Grimsby (Claire DuBrey) and Mike Relia (Vincent Renno). The bodies of Relia and the secretary Gregory Millford are found in Freddie's closet, and he and Casey try to move them and hide them. The former clients gather for a meeting and decide that they must conceal their pasts and that Freddie must take the blame for the three murders. They trick Freddie into signing a confession, and then want him dead. Angela tries to seduce him, but the police stop her when they fear she's poisoned the champagne, then the Swami attempts to hypnotize him into committing suicide but his stupidity saves him. Freddie and the two police officers, in an attempt to draw out the real killer, inform everyone that Freddie is in possession of a blood-stained handkerchief found at the murder scene. Soon afterwards, several attempts to kill Freddie are made, including gunshots at the window of his booby-trapped room, and locking him in a steam cabinet. Eventually Freddie hears a voice that calls him to bring the handkerchief to the Lost Cavern. There he meets up with a masked figure who offers to save him from the hole he has just fallen into in exchange for the handkerchief. Freddie makes the mistake of telling the mysterious figure that he left it in his room. He is left in the hole, but is eventually rescued by the two police officers. Back at the hotel, everyone has gathered together and Sgt. Stone returns with some muddy shoes that belong to Melton (Alan Mowbray), the hotel manager, which proves that he was the one in the caverns with Freddie. His motive for the murder was that he, Relia and Millford, Strickland's secretary, were blackmailing the owner, Mr. Crandell. What the blackmail was for is never explained. When Strickland found out he came to investigate, so Melton killed him. Millford then sent down the former clients to use as decoys for the police, but Melton killed Relia and Millford to cover it all up. He attempts to escape through a window, but is caught by a booby trap previously set by Freddie.
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