The episode with Neal asking James why he never told him he was his father. Neal is visibly baffled at this thought. James says he never killed a cop and is actually innocent. James also tells him that his supervising officer caught him about to take some money and didn't report him on the condition he, do some work for the Flynn family and he had no option but to agree. James was tipping them off to potential busts and taking off the Flynn family's competition. At this point Peter comes in and James is forced to admit he lied to Ellen, making her think she was speaking with Sam.
He said he was planning to tell her the truth but never got the chance. Peter tells him it was Flynn's son who killed Ellen and attacked him. The plan is to take Flynn down. Flynn on the other hand is now counterfeiting whiskey, a return to the family's first significant business, as it turns out. He is handling this business himself because of history. The Flynn's current product is terrible. Neal gets Peter to allow him to forge a whiskey and take Flynn down. Peter's plan is to arrest him for distribution, which Neal doesn't seem to like. Neal's plan is to forge a particularly rare type of whisky called Shackleton. He and Mozzie borrow a bottle from June to ensure they have something on which to base the flavoring and then get to work.
After quite a bit of tasting and experimenting Neal and Mozzie in the end are happy with their forgery. Neal talks about not wanting to let his father back in life. The plan is to keep their whiskey the wrong color so Flynn knows it is a forgery. Neal adds that he's going to make sure Flynn goes down for murder and will take the necessary steps to ensure it. Later, Peter tells a hung over Neal he's gotten him a booth at a micro distillery event Elizabeth has connections with, so Neal can pull off his con convincingly. Peter is going to talk to James further, but Neal doesn't want to take part in that conversation. Jones gets to the distillery event just ahead of Flynn. Neal's whisky manages to fool Flynn, but he doesn't show interest in connecting with him.
To try and "dirty" Neal up Elizabeth walks over and accuses him of having a fake distillery license. Flynn now seems interested and immediately asks for a business card, which in other words means her plan works. Elizabeth then tells Peter they should host the next meeting with James. But Neal still passes on an invite and doesn’t at all seem interested in meeting James. Neal later tells Mozzie about ducking the meeting with James. Mozzie on his part thinks Neal shouldn't throw away the chance to get to know his father and insists that Neal meet his father. Neal after some contemplation ultimately does show up for the dinner with James at Peter's place. James tells a story of trying to get out of his arrangement with Flynn.
Flynn shows him the gun he used to kill a cop which he kept in a whiskey box, but says he'll let James out if he does one more job for him. He's set up for a meeting with his supervisor, but when he arrives he's shot by his back-up weapon which Flynn stole. Neal says he wants evidence before he'll believe his story. Flynn calls Neal and says he has a job for him. Flynn later meets up with Neal and tells him a little about his family's legacy. Flynn tells him he wants him to make copies of the whiskey his family used to sell, but just "for a hobby". Neal spots the whiskey box that contained the gun Flynn Sr. showed him. Neal agrees to the job, which includes hand-blowing the glass for the bottles. Mozzie is brought in as Neal's glass-blowing partner.
Mozzie hasn't done that kind of work in decades and initially has some trouble executing what is being asked of him. Eventually though, both manage to get their forgeries figured out. When Flynn Jr. goes out Neal walks to his office to check out the whiskey box, to confirm his doubts. Flynn returns to grab something and catches Neal in the act. Neal tries covering up by pretending he's just interested in the rare whiskey and Flynn seems to believe his lie and gives him a sip. Neal then tells him he can have the forgeries ready in a day. Peter is upset with Neal for breaking into Flynn's office, as that wasn’t a part of the plan. Neal thinks the weapon in the box means James was telling the truth and it’s just that he wanted to confirm what James was saying.
Peter thinks that Flynn will reach out the Conroys, the family his father used bootleg with during prohibition. Peter has plan which should allow him to pose as a rep for the Conroys. James later tells Peter all about the Conroys in order to help solidify his alibi. Neal tells James he saw the gun in Flynn's office, so he basically believes what he told him. James then tells Neal that he thinks Neal should stick to Peter's plan. Neal asks why James would confess to a murder he didn't commit. The scene flashes back and Ellen is shown telling James the Flynns are actually working for criminal elements higher up in the police. She wanted him to help fight the dirty cops. But James got a phone call threatening the life of Neal's mother and Ellen and decided to take the fall to keep everybody safe.
Back in the present, Neal suggests that if they can figure out who was pulling the strings back then James may be able to stop running. Peter in the meantime meets with Flynn. He tells Peter they've recorded Neal and Mozzie's process, which means they can replicate the process, which in other words means he doesn’t need Peter and Mozzie’s services anymore. Flynn's as a result plans to kill them both. Flynn wants to do business and Peter cues back-up. He then grabs the gun out of the box and manages to subdue Flynn. Later, Flynn's gun is matched to Ellen's murder thus proving his involvement, but he's killed by a prison guard during transport, which indicates there are higher powers at work. Diana looks into who had access to his transfer information, so they can clue in on who might be the person pulling the strings.
Peter on his part thinks this means James isn't safe. Neal tells James that Mozzie has a safehouse for him outside the city and feels James should retire there, till the time things get sorted out and the real puppeteer is found. He also says he wants him to be part of his life, seemingly beginning to trust him. James says "thank you", visibly glad that his son is beginning to trust him. James hugs Neal before leaving to get a ride with Peter. Neal is clearly emotional at having to part ways with his father once again. The episode ends at this point.