Once outside Sach and Edgar go in search of a phone and call Cynthia for reinforcements.
After finding the boys in the next room, Sach leads them into the trick room, where Margo's henchmen capture all but Sach. Sach escapes with the help of Edgar's special trick: Edgar draws a chalk door on a wall and magically opens a real door into the next room. In the séance room, Margo flips a hidden switch to start the record player but when the ghost voice on the album skips, one of Margo's henchmen is sent to check the room. While the boys case the house for evidence of Margo's hoax, Edgar leads Sach directly to the trick room, filled with costumes, accessories and a record player to create the ghostly presences. Sach soon discovers that only he can see and hear Edgar, when the boys return and call Sach insane because he is talking out loud to no one. As the rest of the boys look for another entrance, Edgar visits Sach and mysteriously opens a locked door for him. Later at Margo's, Louie reluctantly enters alone to meet with the medium. Back at the soda parlor Slip gives Louie the $100, telling him Uncle Jake returned the loan and requested that Louie go to see Margo. While being interrogated by Slip, Zola reveals that she works for Margo, and Slip then forces her to set up an appointment with Margo for Louie to contact Uncle Jake. However, the boys break in and expose the hoax. Parelli, the inconsolable mother visits Zola, who calls up the ghost of her son. Later, after Slip has given the $100 to Mrs.
During the séance one of the boys appears in disguise as Uncle Jake and borrows $100. Slip, determined to reveal the deception, convinces Louie to hold a séance and bring back the ghost of Louie's wealthy Uncle Jake. Parelli's deceased son Frankie appear before her. Parelli, is desperate to pay a medium named Madame Zola $100 to make Mrs. Meanwhile, at the Mahoney home, Slip discovers that his mother's friend and neighbor, Mrs. On Margo's stage, a ghost appears but a press photographer shoots a flash picture, interrupting the séance and causing the audience to disband. While the audience gives its undivided attention to Margo, a three-hundred-year-old pilgrim ghost named Edgar appears to the film audience, warning them that real ghosts are only sent to Earth for important matters, like revealing Margo' s quackery. Later that evening, Sach and Whitey, still faithful to the idea of contacting spirits, attend an exclusive séance with Margo the medium. Furious about the spiritual shenanigans, Louie lectures all the Bowery Boys-Slip, Sach, Whitey, Chuck and Butch-and kicks Whitey and his equipment out. Louie then stumbles upon his pals Sach and Whitey, who are holding a séance in the backroom. When good-hearted Louie Dumbrowsky returns to his soda parlor in the Bowery after a vacation, regular Slip Mahoney and dizzy parlor cashier Cynthia welcome him.
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