On a stormy night, the Hardy boys receive a visit from Captain Early who tells them the story of Red Rogers, the ‘Jolly Roger’, and Whalebone Island, where he is said to haunt. The next day, the boys receive a map in the mail showing a red 'X' on Whalebone Island. They assume this is a treasure map so they, along with their friend Chet Morton, go to meet their father and explore the island. As they approach, they see the abandoned lighthouse flashing a warning to them in Morse code. On the island, they find their father who tells them about a solid gold bust of an Egyptian Pharaoh which was owned by Mr. Zufar. While it was being shipped to America aboard a freighter named "Katawa", the ship sank and Mr. Zufar is making an insurance claim for one million dollars. However, the insurance company has received a tip that the head was not on the ship when it sank and Mr. Zufar is trying to defraud them.