Back on Serenity, Mal rushes down to the cargo hold to change his orders. He orders Jayne to pull the goods back out. They bicker. Awkward Western slang is tossed about. Mal reveals that they've been pulled into an Alliance ship and are about to be boarded. Simon slowly starts to wig out, but politely, of course. He reminds them all that if the Alliance gets hold of River, they'll take her back to the Academy and he'll never see her again. Mal ignores him and orders the others to put the salvage in plain sight, like they aren't hiding anything or engaging in illegal activity or whatever. Then Mal orders Simon to fetch River. Simon's horrified, thinking that Mal's going to give them up to the Alliance. He asks if they had been planning to use him and River as bargaining chips all along. In the background, Jayne says, "I knew it!" Mal is insistent that Simon bring River down, but doesn't explain his plan or tell Simon not to worry, because why bother communicating when you can scare people and create dramatic tension? Even Book agrees with Mal and tells Simon to fetch his sister. How would Book even know what Mal was planning?
So the Alliance troops arrive and storm the cargo bay. The crew of Serenity stand around harmlessly behind the recovered cargo. Simon and River are nowhere to be seen. Mal snarks about the Alliance thinking they're all dangerous criminals or something. Matt arrives and tosses out officious questions. Is this everybody? Mal says that everybody is there, except for the wounded guy they rescued from the cargo ship. Matt sends troops back to the sick bay. Then he asks Mal whether he rescued this cargo as well. Mal has no answer.
Cut down to the sick bay. Two soldiers open the door, but there doesn't appear to be anybody in there. Then they hear a man laughing over in the corner. One turns and looks at him, horrified, but we don't see Peter.
Back in the cargo bay, Matt warns Mal that he could lose his ship for stealing Alliance goods in an illegal salvage operation. He adds that a penalty for such theft would pale in comparison to the penalty he'd face for harboring fugitives. He asks if Simon and River are on board. Mal plays dumb. Matt tries to play good cop, suggesting that nobody would blame Mal if a couple of stowaways had found their way on board without his knowledge. Mal doesn't fall for it. A soldier comes up and whispers something into Matt's ear. Matt tells the crew that they'll continue the interrogation in a more "official capacity." Guards start dragging the crew out of the cargo bay into the Alliance ship as Matt orders every inch of the ship searched. He calls Serenity a junker, which pisses Kaylee off. She calls Matt a "purple belly." Whuh? Their uniforms are gray. Let me guess -- the Alliance wore purple during the war or something. While the crew is being forced off, Alliance doctors unload Peter on a stretcher. We don't get a close enough look to see what has happened to him yet.