This story sounds like the plot of a bad B movie from Hollywood.
Absaroka was a proposed state comprising parts of Montana, South Dakota and Wyoming. The movement began in 1935 as a protest against the states for failing to provide funds from New Deal legislation to ranchers and farmers in the rural parts of the states. The name Absaroka means "children of the large beaked bird" which is the Hidatic name of the crow people.
The movement was led by A.R. Swickard, a street commissioner from Wyoming. He held many public hearings and actually received quite a bit of media attention. In 1939 he named himself as governor of the state. Also in 1939 a Miss Absaroka was crowned and coins and license plates were minted. On May 12 Swickard met with the governor of Wyoming to discuss the formation of the new state. Swickard confirmed that they were not looking to secede by force. The boundaries of the state changed many times but at one point it contained 10 counties in Wyoming, 4 counties in Montana and 12 counties in South Dakota. The area would have contained Mount Rushmore, the Black Hills, Devils Tower, the Bighorn and Teton mountains and Yellowstone National Park.
With the media attention the governments of Wyoming, Montana and South Dakota changed the way they distributed New Deal funds. This eventually led to the movement dying out before the start of World War II. While there is some debate as to the seriousness of the movement family members of several of the members state that they were indeed serious about the cause.
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