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Stanley Yelnats IV (Shia LaBeouf) is a kind-hearted teenager born to an unfortunate family that has supposedly been cursed for centuries. The luckiest of the Yelnats ancestors, Stanley Yelnats I, lost his fortune when the outlaw Katherine "Kissin' Kate" Barlow stole his money chest. The Yelnats blame their ancestor, the Latvian Elya Yelnats, who was cursed after breaking a promise to fortune teller Madame Zeroni (Eartha Kitt) to carry her up a mountain to a fortifying river.

One day, Stanley is falsely arrested and convicted for stealing a pair of sneakers that Clyde "Sweetfeet" Livingston (Rick Fox), a famous baseball player, had donated to charity. Stanley chooses to attend Camp Green Lake, a juvenile detention camp, instead of being imprisoned for his crime. He arrives to find that the "camp" is a dried-up lake run by Warden Walker (Sigourney Weaver), her assistant Mr. Sir (Jon Voight), and camp counselor Dr. Pendanski (Tim Blake Nelson). Each day, the detainees must dig a five-foot round hole in the desert to "build character", despite the dangers of scorpions, rattlesnakes, and yellow-spotted lizards, which can kill with a single bite. The inmates are known by their nicknames, and include Zero, Armpit, Zigzag, Squid, X-Ray, and Magnet. Stanley is slowly accepted into the group, especially after allowing X-Ray to take credit for his discovery of a gold tube (believed to be a lipstick tube), with the initials "KB" (believed to mean "Kate Barlow"), and is given the nickname of "Caveman". He soon befriends Hector "Zero" Zeroni and teaches him to read.

In a parallel flashback story, it is revealed that the location of Camp Green Lake was once a thriving town a century earlier, and the lake was once the largest lake in Texas. Miss Katherine Barlow (Patricia Arquette), a local school teacher, rejects rich landowner Trout Walker (Scott Plank) in favor of local onion seller Sam (Dulé Hill), a black man. When Sam kisses Katherine, the townspeople burn the school because he is black and she is white. Sam attempts to escape on his boat, but Trout shoots Sam. In retaliation, Katherine kills the local sheriff for not stopping Trout from killing Sam, and kissing his face, leaving a lipstick mark, thereby beginning her career as an outlaw named "Kissin' Kate" who infamously kisses every person she kills.

After Pendanski insults Hector, Hector retaliates by hitting Pendanski in the face with his shovel and runs away. Feeling that no one knows or cares about Zero, the Warden orders that his file be erased from the computer. Stanley sets out to find Hector (driving Mr. Sir's water truck into a hole in the process) and eventually finds him taking shelter under the remains of Sam's boat, the 'Mary Lou' (named after his donkey). Out of desperation, Stanley and Hector spot a rock formation called "God's Thumb" in the distance, and walk towards it, remembering that Stanley Yelnats I had survived the desert by seeking refuge on the mountain after Kate Barlow robbed him. Meanwhile, the Warden decides to presume Hector dead by deleting his files. Zero faints from lack of water leaving Stanley having to carry him up the mountain where they find Sam's field of onions and water, helping them regain strength for several days. Unknowingly, Stanley breaks the family curse because Hector is a descendant of Madame Zeroni. When he carries Hector to the top of the mountain, he sings to him and lets him drink from the stream that runs uphill, fulfilling the promise made by Elya Yelnats centuries earlier.

Moments later, after Hector has woken up, he reveals he is the reason why Stanley was sent to Camp Green Lake. He reveals that since he is homeless, he had been at the homeless shelter and walked off with the donated shoes, not knowing they were famous. After being pursued by the police, he took off the shoes and tossed them over the bridge where they fall on Stanley's head and implicate him. Zero then explains that he was arrested the next day after stealing shoes from a Payless store. Stanley then believes the fact that they met is destiny.

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Holes is a 2003 adventure comedy-drama film based on the 1998 novel of the same title by Louis Sachar (who also wrote the screenplay) with Shia LaBeouf as the lead role of Stanley Yelnats IV and also starring Sigourney Weaver, Jon Voight, Tim Blake Nelson, Eartha Kitt, Patricia Arquette, Dulé Hill, Rick Fox, and Henry Winkler as Stanley Yelnats III.