The gang is in Wisconsin near Lake Michigan visiting Fred's Uncle Karl. What they don't count on is being terrorized by The Creepy Creeper of the Demon Lighthouse. Uncle Karl tells them of the legend of the Dauntless...a ship that was sunk with a priceless treasure aboard. The ghost of the Lighthouse Keeper has returned and is looking for the treasure. Joining the gang in solving this mystery is Verona Dempsey, a girl as brilliant at solving mysteries as Velma.