Drug dealer Montoya Santana (Edward James Olmos) sits in his prison cell and ponders a letter from Julie, a woman he met on the "outside." She writes that Montoya is two persons: a child and a killer. Montoya agrees, and believes his problems started before he was born. In 1943, Montoya's father, Pedro, was beaten and his mother, Esperanza, was raped by U.S. sailors during the "Zoot Suit Riots" in Los Angeles, California. In 1959, Montoya is abused by his father and joins a gang. One night, he and two gang members, JD and Mundo, sneak into a mausoleum and tattoo their hands with an ink pen to prove solidarity. On their way home, they travel through a rival gang's territory and are chased to a closed diner. Breaking inside, JD is shot by the owner and loses his leg. Montoya and Mundo are sent to a reform school, where Montoya is raped by an older boy. When the assailant cuts Montoya's lip, warning him to remain silent, Montoya wrestles the knife from his hand and plunges it into his neck, killing him. As a result of the killing, Montoya is sentenced to an extended stay in reform school, and when he turns eighteen he is transferred to prison. However, he revels in the respect the other boys give him for killing his attacker. A year later, JD is sentenced to the school. Although JD is not Mexican, Montoya claims he is his "brother." A few years later, Montoya, JD and Mundo all serve time in Folsom Prison, where they operate an empire that includes extortion, gambling, drugs, and prostitution. One day, an African American prisoner steals some drugs as they are being passed along the cells via a gym sock. When Montoya orders Mundo to kill him, the prisoner is burned alive, and a race riot ensues. Montoya is tossed into solitary confinement, and other members of his gang are sent to different prisons. Montoya contacts the gang's lawyer, and orders him to subpoena the gang to discuss a crisis. At the meeting, Montoya explains that a new Mexican prison gang is threatening to overtake their operation, and orders one of his men, "Pie Face," to kill the rival gang leader, "El Chucko." When Pie Face balks because of his friendship with El Chucko, Montoya feigns sympathy, but arranges for Pie Face to be stabbed to death. Later, Montoya, Little Puppet, and other gang members kill El Chucko and a couple of his henchmen. Days later, JD is released from prison, hours before Montoya learns of his mother's death. When Montoya is released and returns to East Los Angeles, he is disappointed to find that the Italian Mafia still controls the neighborhood. Montoya moves in with his father, Pedro, and brother, Paulito. During a block party, Montoya meets Julie, their next-door neighbor, who asks him to dance. He accidentally steps on her feet and apologizes, stating that since he was incarcerated he missed out on learning to dance. Julie's young son, Mico, breaks them up, whining that he is tired. The next day, Montoya visits Mafia boss Don Antonio Scagnelli, and informs him that the Mexican mob is taking over East Los Angeles. Although Montoya threatens Scagnelli's son, who is serving time in Folsom, Scagnelli refuses to be intimidated. That night, Montoya takes Julie out on the first date of his life. They go to the beach, and she teaches Montoya how to drive a car. They make love until Montoya, who has never been with a woman, tries to sodomize her, and she runs away. At the same time, Montoya's gang members rape and murder Scagnelli's son in Folsom Prison. Later, Julie finds her brother dead with a needle in his arm. Montoya learns that over forty overdoses occurred in the barrio in one night, all caused by Scagnelli, who sold uncut heroin in East Los Angeles to avenge his son's death. Realizing Paulito is in danger, Montoya rushes home and chokes his father to make him say where his brother is. Paulito arrives and breaks them up. Montoya checks his brother's arms for needle marks. Finding him "clean," Montoya leaves without an explanation. The next day, Pedro finds Montoya at his mother's grave and tells him about the rape during the Zoot Suit Riots. He says he tried to love his son, but always suspected that he was a child of one of the rapists. Later, Montoya's drug house is attacked by an African American gang that kills the workers by making them inhale heroin. From his prison contacts, Montoya learns that Scagnelli has hired the "Black Guerillas," a gang out of Compton. JD talks Montoya into hiring the "Aryan Brotherhood," a group of neo-Nazis, to kill the Guerillas. The Brotherhood storms a crowded nightclub, screaming racial epithets, and shoots a man in the groin. A few days later, Little Puppet is released from jail and has a church wedding. Montoya sees Julie, but is too frightened to talk to her, and tells JD that the Compton attack made matters worse. JD accuses Montoya of showing weakness. Little Puppet gets drunk and Montoya and Julie walk him home. Julie tells Montoya that she loves the little boy inside him, but hates the criminal he shows to the world. A police car appears, and the cops find drugs in Little Puppet's jacket. Thinking the jacket belongs to Montoya, they arrest him for drug possession and send him back to prison. There, members of the gang want Puppet to kill his younger brother, Little Puppet, as revenge, but Montoya assures him that the young man is safe. However, JD comes to visit and insists that Little Puppet must die for the gang to retain respect. Montoya reminds him that when they went to reform school they thought they had to keep their self-respect by doing horrible things, but in fact, they gave away their self-respect. As JD leaves, he spots Mundo and nods. Mundo tells Puppet that since he brought Little Puppet into the gang, it is now his job to "take him out." Mundo hints that if Puppet does not follow orders, his family will be killed. When Puppet is released, Little Puppet picks him up. On the way home, Puppet asks his brother to pull off the road and strangles him with a piece of rope. Meanwhile, Montoya writes to Julie explaining his newfound realization that his perception of "normal" is distorted. He is trying to change back to the person he was before his life of crime. Before sending the letter, he encloses a St. Dismas medal, the patron saint of the imprisoned, which his mother gave him for protection. Julie later gives it to Paulito, claiming Montoya sent it to him. Later that same day, Mundo and the gang stab Montoya to death as he leaves his cell. Unaware of his brother's death, Paulito recruits several boys to join the gang, and they open fire on a family walking on the sidewalk.
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