I found what looks like the incident you refer to, in Vol 25, pp676-677 of the ORN. The reference to Ohio, Illinois and Indiana suggests that this was part of the Northwest Conspiracy--an effort by the South to split the North--it was widely believed that the Western states were not really interested in the war and that by inflaming public sentiment it might be possible to get the western states to secceed. The North could not fight without the west and the war would end with 3 new nations (North, South and west) where there had been one. Agents from the South infiltrated the western states and helped found organizations like the Knights of the Golden Circle, and planned operations like freeing rebel p.o.w.s in northern camps, and I guess this gunboat plot. In the end there was much less support in the west for a 3-nation solution and the KGC and like groups turned out to be mostly hot air.

This plot fits the pattern; the plan seems to have been to get members of the KGC to enlist in the Navy, then turn all at once and take their boats. I don't recognize the particular initials, assuming they are even real. There are a couple of books on the Northwest Conspiracy as I recall.