Mae is introduced, she is a sultry female who frequents the speakeasy, and as a result becomes the subject of the Narrator's affections. The Narrator will explain that Giovanni forbade him from pursuing these affections as it would compromise him as a valuable employee. This leads the narrator to explain that Giovanni had become greedy and cruel, and was becoming obsessed with his foothold on the bootlegging rackets of Chicago, which ultimately lead to his downfall. His arrest is not shown, but the narrator explains that he killed several prohibition agents in his arrest, was declared insane, sent to an asylum and lobotomized. He is shown in a straight jacket in a padded cell, he looks at the camera and emits a disturbing scream. The next shot shows Friel smiling as he observes his mugshot board, Giovanni is crossed out.
The Narrator is shown looking dejected in the speakeasy, he explains that without Giovanni's sadistic stranglehold, the bootlegging rackets are now dominated by a man called Sal, who is not shown at this time. On the plus side, the narrator explains that he and Mae are now an item, and the ownership of the speakeasy has passed on to Paddy, business is down, but still going steady.
7 years pass, the gang violence has escalated, but the speakeasy is still going strong. The protagonist is now wearing a sharp suit, and admits that due to Giovanni's absence and his relationship with Mae, he has become arrogant and complacent, just as Giovanni said he would. he is then shown talking to Frank, who warns him that Friel is getting dangerously close to their operations, he pompously ignores these claims, and returns to the speakeasy to find Paddy being arrested by Friel and a policeman. The narrator is not arrested, but Friel stares him down with a look that tells him he's next. Paddy is then shown being executed in the electric chair, while Friel and a policeman look on.
The Narrator now owns the speakeasy, he, Dave and Mae are struggling to keep the business afloat, until they are approached by Vincenzo, an associate of the now legendary Sal, who informs them that Sal wishes to meet the narrator. Sal is introduced, he is basically Al Capone, and is shown sat at his desk in a decadently furnished office. He offers the narrator a large sum of money for his services and the acquisition of the speakeasy. In a foolish move, the narrator rejects the offer, his misplaced bravado convincing him that he can manage without Sal's influence. This, obviously, angers Sal, and signals the beginning of the end of the narrator's career as a bootlegger.