Walter Townsend is discovered to be a double-agent: the U.S. government has leaked false information to him to give to the enemy which will cause them embarassment if believed. However, Townsend's contact Simpson has discovered the information is false and reported to his superiors Townsend is a defector. Simpson's superiors know of his jealousy toward Townsend and send their best intelligence officer, Stefan Miklos, to discover the truth of the matter. The IMF must make Miklos believe the information is true and Simpson the liar. Rollin-as-Miklos gets Simpson out and then takes Simpson's place. The IMF sets a series of clues to make Miklos belief that Townsend truly is a traitor and preparing to defect, including tickets and a passport. However, Miklos spots a planted ""clue"" that convinces him the IMF are doing exactly what they are doing: framing Townsend! He identifies them and then receives the information from Rollin-as-Simpson and Jim when he's spotted Jim as one of the IMF opera

An undercover agent, Hays, assigned to gather evidence against Syndicate head John Lawton, is blinded in an explosion. Lawton's lieutenant Deetrich and his business advisor Matula are rivals - Matula is actually an IMF undercover plant - so the IMF must keep him from being exposed and make sure he takes Lawton's place. Lawton believes Hays is working with someone in his organization. Jim, surgically blinded, takes Hays' place. Lawton has his henchman Brown watch Jim and then offer him money to reveal the leak. Deetrich pays Jim to fingeer Matula but in the final showdown Matula plays Lawton an IMF-supplied tape of Deetrich and Jim planning to implicate him. Deetrich and Brown are killed in the subsequent shootout and Lawton and Matula leave, telling Barney (infiltrated in as a mobster) to take care of Jim.

Nicholas Varsi, an enemy assassin, has been captured but claims to be a defector who will reveal his mission to a government agency, the FIS...when he is guaranteed safe asylum. But the FIS may have been infiltrated by a deep-cover operative and Varsi may be selling fake information, so the IMF must verify if he really wants to defector. Jim and Willy break Varsi out and Jim claims to be an agent for Varsi's former government and demands to know why he is defecting. Varsi says nothing and shoots FIS agent Andrea (actually a guest IMF agent) with an empty gun. They let him and Andrea go - he'll turn Andrea back to the FIS if he's a true defector, but instead Varsi goes to a hotel to meet with his former superior, Colonel Kremmer, and the IMF must figure things out before Varsi and Andrea are both killed.