The Gnome is actually Gil Littlefoot.
What Gil wanted to do for years is frame Queen Amanda for the Gnome attacks so he can get her money.
Gil hid his tiny legs to fit in his Gnome costume. He used his gloves that has jellyfish goo in it to paralyze the people in pirate costume. Gil than planted Amanda's earing on a paralyzed victim so people would know Amanda would be the Gnome.
That way Gil can allow pirates in the Medevial Fair Amanda was taller than Gil.
Sheriff takes Gil to jail and calls him "Littlefooty".
Mr. E sends a message to Velma where it saids "Don't panic, this has happened before." Velma opens the box and sees Professor Pericles circled.
The next villains are the Humungonauts.