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NOTE: This spoiler was sent in by theHolmboy who says... "This was an excellent movie (story and performances) and a spoiler, even a long one like this one, won't do it justice."
The movie starts out in an adolescent work camp (Camp Green Lake) where they dig holes every day "to build character" and I'll drop the main spoiler up front. The warden is looking for buried treasure and is using these kids to do the digging. A kid named Barfbag intentionally gets bit by a rattlesnake, presumably to get away from the camp. (Later in the movie they mention he was in the hospital) It then phases to the main character, Stanley Yelnats, on a bus riding to Camp Green Lake, and he thinking back about the events that got him there.
Stanley is walking down the street when some shoes fall on him. He takes them and starts running and the police catch him. The shoes belonged to a famous baseball player nicknamed Sweetfeet, and they had been donated for auction for a homeless shelter. The police come to Stanley's house and find that Stanley is a fan of Sweetfeet which ultimately doesn't bode well in court, especially since Stanley represents himself and we find out he is Stanley Yelnats, the fourth. While the police are at their house, we meet Stanley's parents and paternal grandfather and we find that his father is a failed inventor and the grandfather keeps speaking of the family curse on the Yelnats men.
His father is trying to invent something that will stop foot odor in shoes and has all kinds of old, nasty shoes around the apartment and the landlord is complaining of the smell to the police that came. The court finds Stanley guilty and offers him the option of going to Camp Green Lake instead of a youth correctional facility. He agrees, saying he has never been to camp before.
Stanley gets to camp and meets Mr. Sir, the apparent commander of the camp. Stanley is then introduced to the group of boys he will be working and housed with. They all have nicknames and don't like being called by their real names. We meet Dr. Pendansky, who comes across at first like a touchy-feely type camp counselor and he insists on calling the boys by their given names, except one boy who they all call Zero and who rarely talks.
He also tells Stanley that Mr. Sir is not the Warden of the camp, just a supervisor. Mr. Sir also tells Stanley that there are no fences or barriers on the camp because it has the only water for 100 miles, hence anyone who runs away will die in the desert.
The boys ask Stanley why he is there and he tells them the shoe story and that they were Sweetfeet's shoes. Zero asks him if the shoes had red x's on the back, which they did, and this becomes more significant later in the story.
Now we enter our first flashback, about Stanley's great-great grandfather Elya Yelnats (a young, handsome guy) who lived somewhere in Europe. He wanted to marry the local "cute but dumb blonde" Myra Menke but found out in order to be considered by her father, he had to give the father a large pig, just like a big, ugly guy named Igor had already offered,.
Back to the present: Stanley starts digging holes. They have to dig one hole per day, 5 foot wide by 5 foot deep, which is measured by the shovel length. Their group is unofficially led by a kid named X-Ray and he begins to assert his "authority" over Stanley by taking his shovel, which was slightly smaller than the rest, hence smaller holes.
It now goes back to the story of Elya Yelnats. He visits the local "gypsy lady" named Madam Zeroni. She gives him a small pig and tells him that he must carry the pig up the mountain every day and sing a certain song to it while it drinks and it will get large quickly. But Madam Zeroni then tells him that after he does this, he must carry Madam Zeroni up the mountain and sing to her while she drinks. If he doesn't do this, she will curse him and his children.
Back to the present: Stanley gets major blisters on his hands from digging. We also find out that Zero is a fast digger, even though he is the smallest in the group.
Now it finishes the Elya Yelnats story: The pig gets large very quickly and he takes it to Myra's father, who determines that the two pigs are identical and it is up to Myra to choose. She does not make the obvious choice of choosing Elya. Instead, she tells Elya and Igor to choose a number between one and ten. This ticks Elya off and he tells Myra that he is not interested anymore and offers the pig as a wedding present. He then goes and gets on a boat for America, forgetting to take Madam Zeroni up the hill. Stanley remembers his grandfather telling him the story and it explains why their family was cursed by Madam Zeroni.
Back again to the present: At some point in here, Dr. Pendansky tells Stanley that if he finds anything interesting while digging, to bring it to him and if it is good, he gets the rest of the day off. Soon thereafter, Stanley finds a fossil but that didn't interest Pendasky. X-Ray then tells Stanley that if he finds anything interesting, to give it to X-Ray since he has been there longer and Stanley is new. Later, back in camp, Mr. Sir pulls a gun on Stanley but then we find out that there is a Yellow Spotted lizard behind him and Mr. Sir shoots it. One bite from a yellow spotted lizard means instant death. Stanley is writing home and basically lying to his mother, telling her about all the fun things he is not really doing. Also somewhere in here, we find out that it never rains over Green Lake.
Now we enter the second flashback story, which explains some of the history of Green Lake. There actually used to be a lake where the boys are digging. There is a nice looking black fellow named Sam. He sells onions and talks about their healing powers and mentions that by eating onions, you can ward off the Yellow-spotted Lizards (important later). Sam mentions that he uses a rowboat to get to his onions across the lake (also important later). Mary Lou, the local schoolteacher, is introduced. She likes Sam and trades her bottled peaches for his onions. The local rich guy, Trout Walker, is also introduced with his cronies and it is obvious Mary Lou doesn't like him.
Back to the present: Stanley gets in a tussle with one of the other students and seems to fight fairly clumsily, so his group start saying he is like a Neanderthal and they give him the name "Caveman". Towards the end of a day of digging, Stanley finds a brass object that looks like a large bullet with the initials "KB" on it. Stanley gives the case to X-Ray but tells him to not show it to Dr. Pendansky until tomorrow so he can get the whole day off. Stanley had dug up a large, odd-looking stone in the same hole where the object was found, which the camera focuses on. It later proves to be a marker for Stanley to find the hole again. So the next day, they are in a different location than the day before. X-Ray shows the object to Dr. Pendasky who is immediately excited and calls the Warden and describes it. The Warden drives down to the site, sees the object and gives X-Ray the day off. The Warden is a woman (Sigourney Weaver).
Back to the second flashback story: Sam starts fixing things on the schoolhouse for Mary Lou in exchange for the bottled peaches and their romance is blooming.
Back to the present: The Warden has them do a major excavation and the boys all figure out that they are really looking for something. Nothing is found, however, because the spot where X-Ray claimed to have found the object was not by where it was really found.
Back to the second flashback story yet again: Sam & Mary fall in love and Trout Walker is riding by the school one night and sees them kissing. Mary Lou finds out that there is posse going out to kill Sam and she runs to the sheriff, who is drunk. He then reminds her that it is against the law for black man to kiss a white woman, then he asks her for a kiss, which she refuses. Trout goes out on his mini steamboat and shoots Sam in his rowboat and Mary Lou witnesses it. She comes back the next day to the sheriff and asks him if he still wants a kiss and when he says yes, she shoots and kills him, then kisses him on the cheek leaving a lipstick imprint. She now becomes an outlaw named Kissing Kate Barlow and anyone she kills, she kisses. It tells of her robbing banks, trains, etc.
Back to the present: Magnet, one of the other kids in the group, steals some sunflower seeds out of Mr. Sir's truck. After Mr. Sir leaves, they start passing the bag around and then they see Mr. Sir's truck turning around and they throw the bag at Stanley, and it falls into his hole, causing seeds to go all over. He tries to hide them, but Mr. Sir finds them and takes him back to the Warden.
Mr. Sir tells the Warden that he doesn't think Stanley did it but Stanley covers and says he did take them. While in the Warden's house, Stanley sees pictures on the wall of Kissing Kate and her exploits. He already knew about Kissing Kate because his grandfather, Stanley Yelnats, the first was robbed by Kissing Kate and her gang while on a stagecoach. She left him alive but he was out in the middle of nowhere. He climbed up to what was called "God's Thumb" and they later found him there, delirious but alive, because he found water. He had a trunk with his name on it with some AT&T Stocks in it and would have been rich if Kate hadn't stole them, hence the beginning of the curse.
Somewhere in here, it concludes the story of Kissing Kate: It shows her propped up against Sam's boat when Trout and his wife, now poor because the lake dried up, holding a gun on her and demanding that she shows them where her treasure is. She tells them that his children and his children's children will dig for a hundred years and never find the treasure. Then a Yellow spotted lizard comes out from under the boat, which she controls almost like a pet. Kate helps it bite her on the arm and she dies. The Warden then explains that her father had her out there digging all the time, even on Christmas.
Zero starts to help Stanley dig and eventually they make a deal that if Zero helps Stanley dig, Stanley will help Zero learn to read. Somewhere in the story, we also find that Zero's real name is Hector Zeroni. They are talking and figure out that the object they found was really Kissing Kate's lipstick container. Stanley gets in a fight with Zigzag, another one of the kids in the group. Zigzag is beating Stanley and Hector jumps on Zigzag's back and holds him around the neck until he almost passes out. Dr. Pendansky starts belittling Hector and so Hector clocks him in the face with a shovel, then runs away with the shovel in hand into the desert. To avoid an investigation, the Warden has Dr. Pendasky erase Hector's records since he was a ward of the state and then they go on to talk about how nobody cares about Hector, then Stanley makes it known that he was there and he says that he cares about Hector. Within a few days, Stanley steals Mr. Sir's truck and drives it into a hole (accidentally) and then runs away into the desert. He walks for a while and finds Hector under an overturned boat, now a shelter. Hector had been living on something he called Sploosh, which was in bottles, was brown and kind of tasted like peaches. The boat was Sam's boat and the Sploosh was Mary Lou's bottled peaches after much aging.
The Warden is now concerned because Stanley is gone and he does have family who cares, so they decide to not report him missing for a few weeks until he is dead for sure and there is nothing to find. Stanley sees what looks like a thumbs-up at the top of a mountain within view and they decide that it could be God's Thumb and they start heading towards it. After a difficult climb, they reach the top and find water and onions. Hector confesses to Stanley that he was the one that stole the shoes and threw them off the overpass, hitting Stanley. During their time together, Hector also told Stanley about how his mother has homeless and how she would leave him in various places while she went to work, but one day she didn't return. Hector says if he could, he would hire investigators to find her or find out what happened to her. Stanley realizes it was fate that it happened. While Hector is drinking the water, Stanley starts singing the song he had been taught by his parents and grandfather, the same song Elya Yelnats was supposed to sing for Madam Zeroni. The curse is lifted and Stanley tells Hector that he is feeling lucky. At the same time, it shows Stanley's dad accidentally letting onions fall in with peaches and they discover that it works in fighting foot odor. Shortly thereafter, a lawyer shows up to Camp Green Lake looking for Stanley because he was innocent, but the Warden tell her she needs a court order, as a stall. She says she'll be back.
After regaining their strength with water and onions, Stanley and Hector decide that the treasure is buried where the lipstick case was. They sneak down there at night, find the spot marked with the odd looking stone and dig until they find the treasure. Just as they uncover it, the Warden, Mr. Sir and Pendansky arrive on the scene. They are going to say that Stanley stole the trunk from her house and ran out here. Just then, a whole bunch of spotted lizards start crawling all over Stanley and Hector, but they are not biting them, thanks to all the onions "onboard." They wait for a while and the lawyer shows up again, this time with Marshals. Once they are on the scene, Hector and Stanley walk out the hole unharmed with the treasure chest. The Warden starts to tell the Marshals the story about how Stanley stole it. Hector interrupts and asks if Stanley's last name is Yelnats. Stanley says yes and Hector points out the that chest has Stanley Yelnats engraved on it. This is ironic, since Dr. Pendansky was always belittling Hector because he couldn't read. So the lawyer starts to leave with Stanley and the chest, but Stanley takes the firm stand that he won't go without Hector. The lawyer concedes and asks for Hector's record, which was destroyed. Since he has no record, they can't hold him there. Then one of the Marshals recognizes Mr. Sir and puts him under arrest, since he is on parole and violated it by carrying a gun. Then it comes out that Mr. Sir's first name is Marion and Dr. Pendansky isn't really a Doctor. Meanwhile, the Warden is begging Stanley to let her see what is in the trunk, but he refuses.
The scene now moved to Stanley's house with Hector there as well. Before the trunk is opened, Stanley says whatever is in there is half Hector's. They open it to find lots of typical treasure items (gold stuff, jewels, etc) but more importantly, all of Stanley Yelnats the First's AT&T stocks, now worth millions. The scene moves again to a bus arriving and Hector's mom gets out with the private investigators and they have a warm reunion. The last scene is at Stanley's mansion, where it tells that the boys from camp were released to counselors and they are all there for a pool party. They are all called in to see a commercial where Sweetfeet is endorsing a new foot odor spray called "Sploosh" and Sweetfeet is there with them.
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