Guilty Laura?
The plot thickened when Laura lurked in the background as Sandra Mills found Leo's corpse in an abandoned well. After Julia and Eden Castillo informed Laura of the discovery, she became determined to clear Michael and almost told Ethan "something." That "something" would wait a while as she realized that Ethan still needed to prove that the bullet in Leo had come from Michael's gun. Since that wasn't the case, the murder investigation continued. Cruz started to suspect Laura of killing Leo.

Michael became convinced that Ethan was the real killer. With the Ashers at a Capwell party, Michael broke into their house and almost got to the gun in the desk drawer. He was interrupted by Ethan and Laura. The next day, Michael was determined to have the gun tested and asked Laura to take her husband out for dinner so he could break in again. The plan failed when Ethan and Laura got into an argument during dinner. By the time Michael got to the Asher house, he found the place ransacked! Among the missing items was Ethan's gun. Cruz investigated the crime and since Ethan and Laura had returned home seperately, he realized that one of them could have taken the gun. Michael, of course, believed that Ethan had deliberately picked the fight with Laura in order to stage the robbery and take the gun. He searched Ethan's office and boat with Laura's reluctant help, but the gun was nowhere to be found. After Michael left the boat, however, Laura opened the emergency kit where the weapon was hidden! Her dishonest side was revealed when she lied to Michael that she was at a teacher's conference and instead spent time with Ethan on the boat. When Jeff Nugent implicated Michael in Leo's murder, a desperate Laura headed for the boat and Michael followed her. Finding her with the gun, he assumed that she was protecting her husband. In the subsequent struggle for the weapon, Laura fell and hit her head on the corner of a cabinet. Just then, Ethan, Cruz and Julia arrived to see Michael standing over her limp body with the gun in his hand! Needless to say, Michael was in big trouble.

Laura's confession
At the hospital, Laura was unconscious and needed surgery. She was operated on by Michael's father, Dr. Arthur Donnelly. As she recovered, Laura confessed to Ethan and then Michael that she was Leo Mitchell's killer! It had been an act of self-defense in order to save Michael's life. Feeling betrayed by her lies, Michael didn't want anything to do with Laura anymore. Ethan convinced Cruz to drop the case against Laura, but felt betrayed himself when Laura confessed to her affair with Michael. She made things worse by visiting Michael at his old chapel to get his forgiveness. Instead, Michael called her husband and Ethan came to pick her up. Ethan was understandably angry and for weeks there was tension in the marriage. For his part, Michael decided to turn his old chapel into a community center. Since Laura was the chairwoman for the charity committee, she was asked to take on Michael's project. Their paths crossed again for this reason, which wasn't what Michael wanted. A picture of them made the newspaper, but Ethan decided to support Laura in her decision to work with Michael after she lost her job at school.

Around this time, Laura developed a drinking problem. During a party for Michael's project, she got drunk and bumped into Gina Timmons in the ladies room. As it turned out, Laura and Gina had gone to high school together in Atlantic City! They renewed their friendship, and Gina helped Ethan get a drunk Laura home. Meanwhile, Ethan didn't want to run for reelection as DA because of his mistakes in the Leo Mitchell case. A guilt-ridden Laura suggested a divorce for the sake of his career, but he didn't want that. The two genuinely tried to make their marriage work. But although they finally made love again after a big fight, he still had a hard time dealing with the fact that she had slept with Michael. Gina sensed there were problems in Laura's marriage, but Laura avoided the subject. At the opening of the community center, she pressured Ethan to run for election. Uncomfortable working with the woman Laura had become, Michael announced to everyone that she would be stepping down to work on Ethan's campaign. Gina, however, pledged fifty-thousand dollars to the center as an incentive for Laura to stay on! As a result, Laura told Gina about her past with Michael. Meanwhile, when Michael started dating Greta MacAdams, Laura was jealous. She tried to cause trouble by getting Gina's brother, Mack Blake, and Greta together, but the plan failed.

No love for Laura
Gina became more involved with Ethan and Laura's lives as she helped with Ethan's campaign. Not wanting the campaign to be destroyed, Laura pleaded with Cruz to keep the Leo Mitchell incident a secret and he agreed. Unfortunately for Laura, Ethan had fallen for Gina by the time Laura was ready to start a family with him. When she caught the two in a compromising position, she was upset and got into a minor car accident. Afterwards, Ethan assured Laura that his commitment was to her. He was drawn to Gina, however, when her son Brandon was kidnapped by Santana Andrade. As Ethan and Gina went to Lake Arrowhead to find the boy, Laura envisioned them having an affair and followed. Then, trying to play the hero, she found Santana on a tip from the police. Brandon was rescued, but the troubles were far from over as Ethan admitted to Laura that he was attracted to Gina. Laura warned Gina to stay away from Ethan, which resulted in a brawl and the end of their friendship. Ethan was so disgusted by Laura's behavior that he suggested a divorce for the first time.

Much to Laura's chagrin, Ethan hired Gina's mother, Phyllis Blake, as his secretary. Phyllis overheard Ethan and Laura discussing Leo Mitchell and did some investigation of her own. When a witness in the Mitchell case came to Ethan's office, Laura feared that she was being set up for blackmail. Before long, this fear became a reality. Phyllis anonymously gave her a doctored headline, revealing Laura as Leo's murderer! Laura told Ethan about the letter and although he didn't believe that Gina and Phyllis were behind it, the crisis caused him to give more attention to Laura. Determined to fight for Ethan, Gina lured him away on Christmas Eve for a rendezvous. But Laura refused to lose Ethan. She made her own blackmail letter and pretended to be frightened, causing Ethan to stay with her. The "blackmailer" demanded ten thousand dollars. This almost backfired when Ethan, refusing to pay more money, held a press conference to announce the truth about Leo Mitchell's killing. Laura stopped him by claiming that the killing wasn't in self-defense.

Ethan planned to leave Laura as soon as the blackmail business was over. She tried to make him jealous by playing up to Mack Blake, but Ethan couldn't have cared less. Alone with Mack, Laura intimated that she was pregnant but planning to have an abortion. When Ethan caught wind of this, he rushed to the hospital and stopped her. Meanwhile, Laura continued blackmailing herself and retrieved whatever money Ethan was forced to leave for the "blackmailer." One of those times, she caught Gina snooping around. In an attempt to frame her, Laura planted the blackmail money in Gina's basement and Gina's earring at one of the drop-off sites. She also put marked bills in Gina's purse, but this only caused her brother Mack to be arrested. Upon receiving a new blackmail letter, Ethan decided to release Mack.

Gina suggested to Ethan that Laura was blackmailing herself. He set up a trap for his wife and watched as she retrieved the blackmail money. She was then caught trying to stash the money at Gina's house. Following a talk with Mack, Laura faced Ethan at his office. When he lashed out at her, she broke down and screamed that she couldn't lose the baby, too. However, when Ethan ordered a secret pregnancy test to be done on Laura, she found out and changed the results to read positive! As a result, Ethan decided to stay committed to Laura. To get pregnant for real, Laura played up to Michael and tried to seduce him. When he rejected her, she visited a fertility clinic to be artificially inseminated. Mack found out and urged Laura to tell Ethan the truth. She did, and he left her on the spot. Desperate, Laura tried to commit suicide by overdosing on sleeping pills. Mack found her in time.

Planning Ethan's murder
After Laura caused a scene with Gina at a party, Ethan heard about it and talked to her psychiatrist on the phone, saying she was getting worse. Laura overheard, but her attempt to escape was thwarted by Ethan. He and Dr. Kranzler pressured her to be committed for three days and she eventually gave in, but only because it would give her the opportunity to murder Ethan without anyone suspecting her! One night, wrongly believing that Ethan was still seeing Gina, Laura sneaked out of the sanitarium and set Gina's house on fire. But since Ethan was still alive, Laura didn't waste time to try again. On the night of her second attempt, it was a rainy and she was disguised as a nurse. Not finding Ethan at home, Laura went to his office and stared through the window as a figure entered the room. She fired the gun, but the victim was Sasha Schmidt, not Ethan! Laura recovered from this shock soon enough to drive Sasha's corpse over to Julia's house, even though she was briefly stopped by a cop on the way there. She propped the corpse in Julia's bed with a giant stuffed bunny. When Julia found the body, she and her husband Mason Capwell hid it in their freezer to avoid being suspected of the murder. Laura's stay in the sanitarium was prolonged.

Laura's asylum roommate was a crazy woman named Annie, who claimed to have killed her husband. Laura drugged Annie whenever she sneaked out of the sanitarium, but it didn't take Annie long to become suspicious. She advised Laura not to shoot her husband because a gun would be too easily traced. Taking this advice, Laura instead tampered with the brakes on Ethan's car. Although he got into a terrible accident, he was in a coma and not dead. Furthermore, Laura's attempt to kill him at the hospital by injecting something in his IV was interrupted by an unsuspecting Gina. As Ethan's room was put under guard, Laura was questioned by Michael. She took this opportunity to poison his mind against Gina, indirectly blaming her for Ethan's brakes. Turning her attention to other matters, Laura spied on Mason and Julia as they moved Sasha's corpse to an empty tomb and contemplated the question of who killed her. Trying to cover herself, Laura went back to Ethan's office to find a coat button she had lost on the night of the murder. Mason caught her and got suspicious enough to pay a visit to the sanitarium. Then, Laura was as puzzled as Mason and Julia were when Sasha's body turned up missing!

As Ethan recovered at home, Laura poisoned his tea with oleander. He felt the tea tasted funny, however, and it was thrown away. Meanwhile, Laura was surprised when Annie received a visit at the sanitarium from her husband and realized that she had lied about killing him. She used this knowledge to her advantage, making a deal with Annie to kill each other's husbands so that neither of them would be suspected. As Annie did the dirty work, Laura double-crossed her by writing in Annie's diary about how she was planning to kill Ethan. In addition, Laura sewed the incriminating buttons from her raincoat onto Annie's. She instructed Annie to throw a radio in Ethan's bath, but the presence of his nurse Shannon Pressman thwarted Annie's attempt at electrocution. Laura eventually decided to get to Ethan by having Annie poison his brandy.

Although Shannon drank the poisoned brandy instead of Ethan, he found her in time and she survived. Mason and Julia, who had figured out that Laura was the killer, told Ethan about their suspicions. In order to lure Laura into a trap, Mason made her furious by telling her that Ethan was filing for divorce. Laura made a deal with Annie to blow up Ethan's house, but Annie was caught trying to do so. During a confrontation with Ethan, Mason and Julia at the Lair, Laura was fooled when Sasha's sister, Sydney Schmidt, pretended to be Sasha. Laura almost gave herself away by making a comment about Sasha being dead. She then tried to pin the crime on Annie by using the fake evidence (i.e. the diary) against her. A few days later, Cruz and Michael got a reluctant Laura to participate in a police lineup. It was then that the cop from the night of Sasha's murder identified her. Cruz placed Laura under arrest.

Departure
As Laura was transferred to prison, she was abducted by Annie and they went on the run together in disguise. They resorted to robbing a truck stop and video store on their way to Mexico and kidnapped Bunny Tagliatti. He was held hostage and lost his memory for a while, but was eventually able to alert Ethan. When Laura threatened Bunny with a knife, Annie interceded. Ethan and the police caught up with the trio, and Laura was arrested. A few days later, Ethan visited Laura in jail with divorce papers and said goodbye