Need some suggestions

[Otaku-sempai]

Given the 3 years between this adventure and the conversation between Balin, Gandalf and Bilbo in The Hobbit, I am thinking that perhaps this is the original master from TH who is in the throws of his corruption discussed. This might just be final straw that leads to him fleeing with his gold.

Oh, I expect the old Master would have been dead for at least a couple of years before this, though it doesn't need to be that way in your own campaign!

It might also be that there was a subordinate to the old Master who temporarily replaced him before the new Master was elected, much as Frodo Baggins after the War of the Ring became the interim Mayor of the Shire until the next Free Fair.

[Stormcrow]

Or maybe this is a redemption story, and the new Master will learn the error of his ways and become the good Master spoken of in The Hobbit, thanks to the players.

[Glorelendil]

Or maybe this is a redemption story, and the new Master will learn the error of his ways and become the good Master spoken of in The Hobbit, thanks to the players.

Oh, that's good. The chink that cracks the case could be the Master's festering guilt.

I do still think a link to the Enemy would be good. Why did the Master slip toward the Shadow?

[HunterGreen]

Or maybe this is a redemption story, and the new Master will learn the error of his ways and become the good Master spoken of in The Hobbit, thanks to the players.

Oooooooh. I like that. I love stories like that, where the heroes end up part of the story we know, but without anyone who wrote the Red Book of Westmarch realizing or happening to mention it.

[Obadiah]

I thought people might appreciate an update on where this all ended up going.

The party were approached by the Master of the Lake who had his wife in attendance at the meeting but excused all other attendants from the meeting. He asked them to help locate a person for him - an outlaw who is taking refuge in The Waste. This outlaw is wanted to murder of 3 men.

The reality is that this outlaw is the brother of the wife of the master of the lake and he became aware that she had been meeting with some mysterious person (I believe I am going to make this Hakon from the Erebor supplement). She had turned her husband against her brother to stop him opposing her - as a result 3 hired thugs were sent to deal with him. The wife hired the men in the name of her husband, but when the men were found dead, she and others pinned it on her brother. He was forced to flee into the wilderness and live as an outlaw.

The party take on the job, but due to high insight roles they noticed that the husband was constantly referring to his wife in terms of decisions, and so they immediately suspected that things may not be as they seemed.

They travelled to Dale and then used the ferry to cross the river before heading into the wilderness east of Erebor. They find their way into The Waste and meet Erna (Erebor supplement). She tells them the region to find the outlaws.

The characters are captured by the outlaws and lead to their hideout blindfolded and then spend a long time in discussions with the leader of the bandits (the brother). He tells his side of the story and they believe him, but then they need to decide what to do. They decide that they want to out the Master and/or his wife as the ones who are corrupt. But they have no way to prove anything. They need someone of influence to vouch for the bandit leader to prove his worth. They are told by the bandit lord that an old friend of his from his days working on the docks in Laketown left the town after the Dragon attacked. He is living with the Woodmen in Mirkwood and he is a childhood friend of Bard, now King of Dale.

As we stand today, the characters are travelling back to Dale with the friend who they found in a village in Mirkwood in the hope of gaining an audience with Bard to tell the tale.

As you can see I have incorporated a number of the ideas you gave...so thank you for your help.