It is the morning after the day before a gargantuan win on the horses for Holmes and Watson and the celebrations have gone on through the night. They are dreadfully hung-over but Watson's friend, Archie, is so ill that he destroys the day's paper with a technicolour yawn, which is a shame because it reported a mystery in Croydon that Holmes is keen to investigate. Inspector Lestrade is on the case. He shows Holmes a parcel sent to demure middle-aged spinster, Miss Cushing that contains two human ears cut off with a rusty knife! Despite her apparent anonymity the great detective soon works out that Miss Cushing has a chequered past and her immediate family must be involved in this grim affair. Holmes tracks down the villain and solves the mystery in the basement of Scotland Yard where Colonel Sebastian Moran, one of Professor Moriarty's most dangerous henchmen, occupies one of the cells and is introduced to Doctor Watson for the first time. Chuffed and satisfied, on their way back to Baker Street Holmes and Watson drop in on their bookmaker to collect their winnings, but they are in for a nasty surprise.