Welcome to "The Falls at Arcadia," one of the nation's top-rated planned communities. Unfortunately, three couples have vanished from the neighborhood over the past seven years. Mulder and Scully go undercover and pose as new home buyers to investigate the strange disappearances.

Helpful resident Big Mike, a veterinarian, and next-door neighbors, Win and Cami Schroeder, help Mulder and Scully get squared away on move-in day. However, Win balks when Mulder wants to erect a portable basketball hoop; this definitely goes against the community's strict regulations. Win suggests that Mulder take up the issue with Homeowner president, Gene Gogolak.

When Big Mike suddenly disappears, the Shroeders simply explain to Mulder and Scully that he went away on business. Scully and Mulder pay a visit to Gogolak, who tells them that regulations forbid the basketball hoop in the front driveway. He explains that rules are rules, and though it may seem tough to get used to, theirs is a system that works. Mulder then changes the subject to Gogolak's decor. Gogolak explains that most of his antiques are Nepalese and Tibetan; he owns Pier 9 Imports and travels to the Far East often for business.

The Shroeders invite Mulder and Scully to dinner and Mulder presses the issue of Big Mike's disappearance. When Cami becomes uncomfortable with the topic and excuses herself to take the dog out, Scully accompanies her. During their walk, the dog gets loose and scrambles into a nearby storm drain. As Scully tries to fish out the lost pooch, she finds a caduceus necklace worn by Big Mike covered in what appears to be blood.

Scully has the "blood" analyzed, only to find that it is basically garbage; the neighborhood was built atop an old landfill. Mulder theorizes that the Klines are buried in the yard somewhere, and while digging a hole to find them, he dredges up a Malaysian artifact with a sticker showing that it came from Pier 9 Imports. Mulder confronts Gogolak with the theory that Gogolak, while on the trips to Far East, learned of the tulpa, or Tibetan thought-form, a creature willed into existence by one who possesses the ability. He believes Gogolak created this creature formed by garbage to keep the residents in check.

Meantime, back at home, Scully is surprised by Big Mike who is alive but mauled. He reveals that he was attacked by the creature, but managed to escape. He tells Scully that the creature is coming for her because her "husband" has broken the rules. Big Mike barricades Scully in the closet and fights off the approaching monster. The firing gunshots warn Mulder, who races home, with Gogolak in tow. Mulder stops to handcuff Gogolak to the mailbox before going inside to help Scully. Outside, Gogolak is attacked by his own creation. With his death, the tulpa dies as well, disintegrating at Mulder's feet.