You arrive in the town of Phandalin with Sildar Halwinter, after journeying south from the Goblin cave. Small farmhouses encircle the town. A winding road meanders up through the town and beyond, up the hill, ending at an abandoned manor.
Sildar recommends securing lodging at the Stonehill Inn. But first, you visit Barthen’s provisions to deliver the cart of goods and collect your payment. (An order for a sofa / love-seat set has been placed with a local woodworker). You also pass by the LionshieldCoster, recognizing the lion rampant logo that you saw imprinted on the goods found in the Goblin cave. It turns out the owner is offering a reward of 50 gp if you’d like to retrieve those goods.
In the mid-afternoon, you head back to the inn and purchase lodging. Rook splurges on the VIP suite with the heart-shaped tub. Jamiroquai and Z prefer to sleep in the horse barn. Everyone gathers in the downstairs tavern to enjoy a beverage and get to know the locals.
You hear rumors of a local gang — the Redbrands — who apparently cause a lot of fear in the town. The innkeeper’s wife Trilena tells you about a recent murder. Thel Dendrar, a local woodcarver, stood up to the Redbrands ten days ago when they came by the shop and harassed his wife. The ruffians murdered him in cold blood. His wife and two children have gone missing too. Freda, a weaver tells you that the Redbrands hassle most every small business for tributes, except one: the Phandalin Miner's Exchange. Apparently they don't want trouble with Halia Thornton, who runs it.
The Redbrands hang out at a dive bar on the other side of town called The Sleeping Giant. You decide to leave Sildar behind at the inn, and head towards the bar after sundown. Perissa, Jamiroquai, and Z hide under a tree across the street. You see three figures sitting on the front porch, smoking. They wear red cloaks and look gristly. As Forrest approaches, one starts taunting the dwarf. He continues to hurl insults as Forrest steps onto the porch, then swings a fist at his face. Miraculously, he misses, but the Redbrands are ready to brawl. Rook manages to pin one’s cloak to the wall with an arrow. Perissa hopes to capture one of the gang members and force him to drink from the nearby horse trough, but soon, the Redbrand group is killed. A fourth Redbrand bursts out of the bar door and sprints up the road towards the abandoned manor. You are unable to keep up with the fast-paced coward, but Z can track the smell. It’s very late and the bartender wants to close down after the violence. You decide to retire for the night and go investigate the Redbrands tomorrow.
Worried about retaliation, you decide to all share the VIP suite instead of your individual rooms. To keep Jamiroquai comfortable, you lift a hay bale into the room on a rope through the window. There’s a big mess of hay on the floor and you feel a little guilty about trashing the hotel. Anyway, you might not be staying here for too much longer. Though you’re careful to trade watches, the night passes without any trouble.
In the morning, Trilena serves you breakfast. Her son Pip tells you a rumor: "Qelline Alderleaf's son Carp said he found a secret tunnel in the woods, but Redbrands almost caught him." Sildar shares information he learned — Iarno Albrek, a fellow member of The Lord's Alliance, disappeared here months ago while exploring near Tresander Manor. Sildar would like to locate him, but is glad to have some leads. You head on your way.
You visit the Townmaster's office to ask about the Redbrands. The townmaster, a pompous old man named Harbin tries to reassure you that the Redbrands are nothing more than a harmless mercenary guild, and insists they are nonviolent. When you mention the conflict from the previous night, the mayor accuses you of bringing trouble to his town. He also offers you 100 gp to fight a troublesome band of orcs near a place called Wyvern Tor. You consider the offer but do not pursue it yet.
You head to Alderleaf’s farm, which is near the dive bar and the abandoned manor. Qelline Alderleaf invites you in for magic brownies (or regular brownies for Perissa), while her son Carp tells you that he recently found tunnel in the woods, just beneath Tresandar Manor, where he saw some "big ugly bandits" trading slaves. Carp’s directions aren’t very good, and you’re unable to find the tunnel, but this is the second clue that the Redbrands are using the manor as their criminal headquarters.
You head towards the manor and find it mostly in ruins. Part of the roof has collapsed in the front hall, but there are foot tracks in the kitchen towards the back of the building. You follow the tracks through a door to a cellar staircase. You head down into the basement and find a torchlit room full of supplies. There’s a cistern of clean water in the center, and barrels of foodstuff on either side of the room. Forrest searches the cistern and notices a rope decanting into the pool. He pulls it up and retrieves a watertight bag full of treasure. Rook investigates the barrels, and discovers apples, dried meat, and crackers. Unfortunately, the noise from his search alerts three Redbrands in an adjacent room, who run out to attack your party. You manage to fight them off, then toss them into the cistern. After more investigation, you also discover a secret door.
You push back the door and walk 50 feet down a narrow, dark hallway. It opens into a large chamber with a dirt floor. A ravine runs through the middle, ending in a tunnel. A cool breeze emerges from the tunnel. Ahead in the ravine, you see a partially eaten corpse. Two bridges cross the ravine.
Before you see him, you hear him. But not with your ears — instead, inside your mind — a whispery, shaking voice. It’s a Nothic named Norman, and he’s hungry. Rook offers him some dried meat from the cellar stores, but Norman requests human flesh, citing his new low sodium diet. You retrieve two of the soggy Redbrands from the cistern and throw them to Norman.
He seems capable of learning weird secrets about you via reading your mind, and enjoys taunting you with them. He mocks Forrest for his Bugbear affair. He reminds Perissa of her least favorite childhood nickname, and taunts Rook for committing theft as a young man. You also learn that the dead corpse is from the recent murder victim Thel Dendrar. Norman tells you that he works for a wizard named Glassstaff as cave security, but he could be convinced to look the other way for more snacks.
Perissa feels morally obliged to smite the evil creature, and so you begin a battle against a creature that's capable of both weird insight and necrotic damage. Eventually you defeat him.