Malcolm lived in a rough section of New York, and was in possession of an unlicensed weapon he intended to protect his home with. When the police found out, his mother covered for him and ended up going to jail. Malcolm became deeply ashamed afterwards and lost his home and the sufficient income to continue going to school for any longer. He and his younger sister Tracie would go to separate schools on opposite sides of town.
Planning to bail their mother out of jail, Malcolm and Tracie steal a bag of drug money from a drug deal gone wrong between a gang of Armenians and the local street gang the Brotherhood. The latter gang begins hunting them. The two buy a better set of clothes and a phone, planning on meeting with a lawyer as well.
The two are ambushed by Brotherhood members in a parking garage, but are saved by John Reese and Erica Lennox, the former undercover in the NYPD and the latter working in the DEA. The two are taken to a safe house, where a skeptical Malcolm proves difficult to reason with - he eventually gives in to Reese's requests but asks that he promise to keep Tracie safe.
After Lennox plants a phone on Tracie to throw the cops off a lead relating to Brotherhood leader Dominic, the gang closes in on them. While hiding, Malcolm divulges his secret about the gun to Reese, and Reese, while bluntly acknowledging the boy's faults, assures him that he can fix himself. Amid a gunfight, Malcolm disappears, choosing to instead make a deal with Brotherhood member Link, offering to work as a potentially sacrificial member of the gang, or anything it takes to protect Tracie. Link lets him in the car while considering it, but Reese stops them on the road and exchanges Malcolm's freedom for the drug money (which is in fact a bag full of newspapers that Malcolm and Tracie were carrying to mislead followers).
Later, following the completion of the case, Reese informs a thrilled Malcolm that he has arranged with a social worker a new home for the siblings plus a high-end lawyer. Dominic, meanwhile, plans to have the Brotherhood spring the kids' mother from prison to induce a sense of gratitude within the kids and possible loyalty towards the gang, feeling they could be useful.