Bell is on the phone with Gregson. He's got the address of a Brooklyn loft owned by Mr. Holmes.
Moran says he doesn't fear death. But he's feeling a righteous anger toward Moriarty. Holmes is turned away, but clearly breaking down as Moran digs at him: "I never touched a hair on her head!" Holmes brings a blade to Moran's head. Moran has a clear plan, since Moriarty told him Holmes loves puzzles: "You kill me now, you'll be killing the best clue you ever had." Holmes steps away. Moran calls him an honorable man. Holmes tells a story about how individuals vary, but the aggregate can be predicted. It ends with, "I am not an average man." Then he stabs Moran in the stomach. Stab!
Gregson and the SWAT team enter. There's a small pool of blood on the floor. Gregson's phone rings: "Yeah. Are you kidding me?" It seems that Holmes just walked into the station with Moran.
In the interrogation room, Moran tells Gregson that Holmes didn't abduct him. He claims that he lured Holmes in and led him to the loft owned by Holmes's father. He admits that he got stabbed, but by some miracle Holmes missed every organ. Nobody's buying any of this.
Holmes is sitting in Gregson's office. Watson walks in and tells him he's missing "quite a story back there." She thinks a wound in a struggle would have more damage. She knows (as a surgeon!) that it takes a lot of skill to stab someone without doing any damage. Holmes says Moran is playing along with him because Holmes is the best chance Moran has of getting revenge on his mysterious employer. He admits that Moran did not kill Irene. Also: "I'm sorry that I lied to you, Watson. The last few days have been quite... vexing. Even now I'm not certain if I've done the right thing in allowing him to live. Strange, really -- I'm rarely conflicted about the decisions I make. That's the beauty of deductive reasoning, I suppose. Makes a science out of almost everything. Not this." This is a great speech. Jonny Lee Miller has played Holmes very distant so far this season, so when he shows emotion, it's surprising.