D.C. Stephenson Trial: 1925

Stephenson was less successful, however, in the in-fighting with his boss, Hiram W. Evans, Imperial Wizard and director of the Klan. After Stephenson's friend Ed Jackson was elected governor in 1924, along with a majority of the state's House of Representatives—all nominated and supported by the Klan—Stephenson repeatedly declared, "I am the law in Indiana." Imperial Wizard Evans decided to subject the Klan's Indiana leader to the K.K.K.'s own program. In addition to its persecution of blacks, Catholics, and Jews, the Klan preached virtue. It regularly tarred and feathered whoremongers and habitual drunkards. Now Evans let out word of Stephenson's hypocrisy: The Grand Dragon was a secret lecher and a drunkard. The Evansville Klavern tried him in secret for his many "immoralities" in several cities and "on trains and boats," found him guilty, and banished him from the Klan.

In January 1925, at a banquet honoring governor-elect Jackson, Stephenson met 28-year-old Madge Oberholtzer, manager of a public-welfare program in the state's Department of Public Instruction, who lived at home in Indianapolis with her parents. They danced together. Soon Stephenson was making dates and calling for her in his chauffeured car. He was, Oberholtzer found, always the perfect gentleman.

On Sunday, March 15, 1925, Oberholtzer came home about 10:00 P.M. from a day with young friends. Stephenson had left an urgent message. When she called back, he said he was leaving for Chicago but needed to see her first and would send an escort to get her. Thinking that Stephenson wanted to discuss some aspect of her work and expecting to return shortly, Oberholtzer left home without her purse or hat.

With a stranger later identified as Earl Gentry, she departed for Stephenson's house. In the morning, her parents, who had gone to bed soon after she went out, realized she had not come home. Distressed, they talked with a lawyer and stopped by Stephenson's house in search for her. Then came a telegram: "We are driving through to Chicago. Will be home on night train. Madge." Mrs. Oberholtzer met the train, but her daughter did not appear.