The NYPD has decided to cut ties with Sherlock Holmes, because Gregson does not approve of the way he was going to torture and murder Vinnie Jones in the last episode. But that just means that Holmes doesn't have anything else to occupy his time, so he tries going online to troll conspiracy-theory forums. This, of course, results in him going to the house of the moderator (don't do this, kids!) and finding him dead. So the police have to get dragged in after all.
While investigating the scene of the crime, Holmes grabs a tortoise. And in the terrarium, there's a high-tech listening device, which means that one of this guy's unlikely conspiracy theories is probably true! Holmes decides that it's one about "The Red Team," which is the belief that a US Army team came up with a brilliant theoretical plan for attacking New York. To prove his theory, he tracks down members of the team, and they turn out to have been killed in suspicious muggings or come down with convenient cases of Alzheimer's. Well, two of them did, anyway.
The remaining members of the team are tracked down by Holmes, and none of them are willing to talk. He does meet a friendly fellow named "Billy," who will neither confirm nor deny that he's involved with any security organizations. Billy is really an officer codenamed "Yossarian," but he dies right away. Holmes has all the remaining characters moved to a hotel, which immediately backfires when one of them turns out the be trying to kill the others to keep the secret plan from getting out. And he's got a hostage!
Holmes gets himself into the hostage situation, and he breaks things up by telling the bad guy all about the secret plan. We don't see it, so don't worry. Then Gregson punches Holmes in the stomach and lets him come back to consulting with the police. Which is great news for Holmes, but it ruins the excuse that Watson was using to keep staying with him although she's no longer being paid as a Sober Companion.