Indianapolis Collected: D.C. Stephenson’s revenge

Written by on August 22, 2015 in Indianapolis Collected - 8 Comments
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On July 4, 1923, an aspiring Republican politician from the east side of Indianapolis stood before an estimated crowd of 10,000 people at Malfalfa Park in Kokomo and delivered an impassioned speech that touched on themes that still resonate with voters today.

Complete transparency in government.  A balanced federal budget, with no deficit spending. Curbs on inflation, to help protect middle class families. And public financing for political campaigns to ensure that “[n]o selfish interest, either political or predatory, could buy or pay for a representative of the people.”

Despite the sweltering heat, the pressing crowd, and the uncomfortable weight of their long white robes, the audience roared with approval as they listened in rapt attention to the inaugural speech from David Curtis Stephenson, the new Grand Dragon of the Ku Klux Klan.

On that sunny day in Kokomo, D.C. Stephenson was well on his way to becoming the most powerful man in Indiana. And even four years later, after he was convicted of murder and sentenced to life in prison, Stephenson was still able to flex his political muscle thanks to a secret cache of damning documents that would lead to the arrest of the governor, the mayor and a host of other Klan cronies.

Headlines

Most Hoosiers are familiar with the horrific events that led to Stephenson’s conviction for the murder of Madge Oberholtzer. This tragic and sordid tale has been the subject of numerous articles and even a 1989 TV miniseries that starred Mel Harris as Oberholtzer, John Heard as Stephenson, and Lloyd Bridges as Stephenson’s lawyer.

Stephenson reportedly met Oberholtzer at the 1925 inaugural celebration for his friend and political ally, Gov. Ed Jackson.  They became confidantes, with Oberholtzer serving in an unofficial capacity as his aide during the 1925 legislative session.  So the 28-year-old woman was not concerned when Stephenson’s secretary summoned her late in the evening on March 15 and asked her to meet with Stephenson.

Over the next few hours, Oberholtzer would be forced to drink alcohol, dragged into a train at Union Station, and then shoved into a lower berth where she was bitten, pummeled and raped by the man who called himself “The Law” in Indiana.

The next morning, Oberholtzer attempted suicide by ingesting mercury bichloride. Two days later, one of Stephenson’s lieutenants dumped a barely conscious Oberholtzer at her parent’s house, claiming that the bruised and battered woman had been in a car accident. But Oberholtzer lived long enough to tell the entire story of her rape and abduction to an attorney, who would later turn the transcript over to law enforcement.

Madge Badge

Shown above, Madge Oberholtzer and a badge that was given to “honored guests” at Jackson’s 1925 inauguration. Badge from the collection of Ed Feigenbaum.

Although Madge Oberholtzer’s official cause of death was mercury poisoning, medical experts later testified that she likely died from an infection resulting from the bites inflicted by Stephenson.  Combined with Oberholtzer’s deathbed statement, this was enough to convince a jury that Stephenson was guilty. On November 14, 1925 — seven months to the day after Oberholtzer’s death – the former Grand Dragon of the KKK was sentenced to life imprisonment.

But the story of Stephenson’s meteoric rise and fall did not end when the prison doors in Michigan City clanged shut behind the former Grand Dragon.  In fact, the most interesting chapter of Stephenson’s story– at least from a political perspective — was still waiting to be written.

Stephenson

David Curtis Stephenson

The son of a Texas sharecropper, Stephenson’s political success in Indiana was directly linked to his influence within the Ku Klux Klan.  As M. William Lutholtz noted in his 1993 biography of Stephenson, the former Grand Dragon saw the Klan’s massive popularity and burgeoning membership as a means to line his pockets and further his ruthless political ambitions.  According to Lutholtz, Stephenson could just as easily have co-opted the Elks or the Rotarians as a vehicle if either organization had the strength or size of the Klan.  But at the height of its popularity in the mid-1920s, the Klan was a mainstream organization in Indiana with a quarter of a million members  — more than 30% of the state’s white male population.

Unlike the southern Klan organizations that focused on prejudice against African-Americans, the Indiana Klan organization primarily recruited its members by fostering fears of ethnic groups and religions, especially Catholicism.  But Stephenson’s basic creed was greed, which often put him at odds with the true Klan believers.

Jackson

Jackson campaign items. From the collection of David Yount.

This split was readily apparent during the 1925 legislative session. A few months earlier, a spat with national KKK leadership had led Stephenson to declare that the Indiana Klan was seceding from the national organization. However, the national Klan remained strong in Indiana, and in 1925 spearheaded an aggressive legislative agenda that included proposals to ban parochial schools and establish a state commission to censor movies.

Stephenson’s legislative agenda was less controversial but far more mercenary.  Among other things, he pushed lawmakers to enact a bill that would require nutrition education in public schools.  The mandatory textbook for this new course would be “One Hundred Years of Health,” which Stephenson was planning to write and publish through a printing company which he had established.  Stephenson also had legislators introduce bills to reform utilities and prohibit manufacturers from polluting streams,which he then offered to kill if special interest groups would pay him enough money.

But Stephenson’s biggest and most politically-charged proposal would have stripped the State Highway Commission of its powers and made the members directly accountable to Governor Ed Jackson, who would then appoint Stephenson’s friends to the commission where they could split the lucrative highway contracts among themselves.

Remy

William H. Remy was in his early 30s when he successfully prosecuted the most powerful man in Indiana for the murder of Madge Oberholtzer. Remy is pictured above, center.

Despite his public call for an end to political contributions, Stephenson had privately spent tens of thousands of dollars to help elect Ed Jackson to the governor’s office. He was counting on Jackson to appoint him to the United States Senate to replace ailing Sen. Sam Ralston, who by all appearances had one foot in the grave.  But by the time Ralston finally died in October 1925, Stephenson was standing trial for the murder of Madge Oberholzer.

Still, Stephenson expected some sort of return for his substantial investment in Jackson.  After his conviction, he waited patiently for the governor to grant him a pardon.  But by the fall of 1926, his patience was wearing thin. Neither prison food nor prison conditions suited the former Grand Dragon, who despite his humble beginnings had become accustomed to a life of luxury. So he decided to put some pressure on Jackson by threatening to expose the governor’s role in Stephenson’s web of corruption.

Prison officials tried to block Stephenson’s whistle-blowing by putting him in solitary confinement and banning visits from newspapermen.  But Stephenson enlisted the help of a long-time aide to smuggle three letters out of the prison and deliver them to Thomas Adams, the editor of the Vincennes Commercial.

Among other things, Stephenson’s letters asserted that he had entered into written contracts with a high-ranking state official and the mayors of three cities in which they granted him exclusive control over key appointments in exchange for campaign contributions. Stephenson subsequently released a photograph of a letter signed by Indianapolis Mayor John Duvall.  In the letter, Duvall promised to make certain appointments in return for Stephenson’s political support.

Duvall said the letter was a forgery and filed a $1 million libel suit against The Indianapolis Times, which had published the letter and was doggedly reporting on every aspect of Stephenson’s allegations. Marion County Prosecutor William Remy, who had successfully prosecuted Stephenson for murder, convened a grand jury to investigate corruption within city government. Governor Jackson offered to pay for the costs of the investigation out of his contingency fund.  However, the investigation stalled when Stephenson inexplicably clammed up.

Duvall letter

Duvall campaign buttons. From the collection of David Yount.

The grand jury was dismissed in December 1926 after it failed to return any indictments.  A second grand jury was convened in the spring with similar disappointing results. But then in July 1927 – four years after his triumphant speech in Kokomo — Stephenson was finally ready to turn over the remainder of the incriminating documents, which had been carefully preserved in black boxes by his former secretary.

As Stephenson said in a statement released to the Times:

I am ready to go through with what I started. I purchased the Marion County and state officials involved in this investigation in an open market. I paid an excessive price for them. Afterward they railroaded me to prison and convicted me of a crime of which I was not guilty….Now I am going to turn them over to the state of Indiana for awhile.

Stephenson’s attorney handed over more than 30 cancelled checks to a newly convened grand jury, including a $2,500 cancelled check to Ed Jackson which Stephenson said was partial payment toward a $10,000 commitment had made to the governor’s campaign.  Jackson maintained, however, that Stephenson gave him the check when he purchased a horse, although witnesses later testified that the horse – ironically named Senator — was worth no more than $300 and had subsequently choked to death on a corn cob.

But the most damning piece of evidence was an admission by Stephenson that he had partnered in 1923 with then-Secretary of State Ed Jackson in an unsuccessful effort to bribe Governor Warren McCray.

McCray

McCray campaign broadside. From the collection of David Yount.

In December 1923, McCray was under investigation for financial fraud after he diverted state funds in an effort to save his failing business.  Marion County Prosecutor William Evans, who was also McCray’s son-in-law, decided to resign from office rather than assist in the prosecution.

As McCray would later tell the grand jury in 1927, Jackson offered McCray $10,000 for attorney fees and a guarantee that no jury would convict him if McCray would appoint James McDonald to succeed Evans.  McCray flatly refused, saying that although he was on the precipice of losing his fortune, his office and his liberty, he would not bow to Jackson’s demand and lose his self-respect.

McCray was later convicted and sent to federal prison, but not before he had the opportunity to appoint William Remy as prosecutor.

Grand jury

Several civic and business leaders served on the grand jury that indicted Duvall and Jackson, including John J. Madden, president of the Madden Manufacturing Company, W.O Theile, president of the L.C. Theile Company, and Harry J. Wangelin, president of a Ford dealership.

On September 9, 1927, the grand jury convened by Remy returned indictments against Governor Ed Jackson and Indianapolis Mayor John Duvall for public corruption.  In the indictment, the members of the grand jury specifically credited The Indianapolis Times for uncovering the widespread Klan corruption.

Duvall, who was already facing trial on another corruption charge, eventually resigned from office and served 30 days in jail.   Jackson was acquitted because the statute of limitations had run, but spent the remainder of his term in the governor’s office in a state of disgrace. The Times won a Pulitzer Prize for its work on the Klan stories.

Sentences

Jackson returned to the practice of law when he left the governor’s office in 1929.  He subsequently retired to a large farm in Orange County. When he died in 1954 following a series of strokes, the former governor had been bedridden and paralyzed for a number of years.

Stephenson was paroled in 1950, but then was arrested in Minneapolis a few months later for failure to make periodic reports.  After another brief incarceration, Stephenson settled in Seymour with his third wife.  Stephenson subsequently moved to Missouri, where he sold distributorships for a type-repair machine that he had invented while in prison.  

Then in 1961, Stephenson vanished after he was convicted of assaulting a 16-year-old girl.

The whereabouts of the former “most powerful man in Indiana” were unknown until 1978, when the late Gordon Englehart, a Statehouse reporter for the Louisville Courier-Journal, tracked down records that showed Stephenson, a WW I veteran, had relocated to Jonesboro, Tennessee to seek treatment at a VA hospital.  Stephenson later went to work for the local newspaper as a writer and printer.

Stephenson died of a heart attack in 1966. His fourth wife, a widow whom he had met and married in Jonesboro, later told the Courier-Journal that she knew nothing of his background, only that he was a wonderful person and she loved him very much.

Malfalfa Park

An undated fundraising piece for the bankrupt Malfalfa Park Association. From the collection of David Yount.

The organization that owned Malfalfa Park in Kokomo later went bankrupt. The land that was once the site of the largest rally in Klan history was subsequently donated to the YMCA for use as a camp. I spent two wonderful summers in college working as a counselor at YMCA Camp Tycony. It’s still in operation today.

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About the Author

Libby Cierzniak is a partner at Faegre, Baker & Daniels, LLP, practicing primarily in the area of government affairs. A native of Kokomo, she became fascinated with historic preservation and Indianapolis history in the 1990s while working in the newly renovated Statehouse. She's an avid collector of "old Indianapolis"--books, photographs, advertising and other items--and loves to research and share information with others about the city's rich and colorful history. Libby, her husband and their two chronically misbehaving dogs live in an 1894 home in the Old Northside, where she serves on the board of the neighborhood association.

8 Comments on "Indianapolis Collected: D.C. Stephenson’s revenge"

  1. D M Shea August 22, 2015 at 4:43 pm · Reply

    Great well-researched piece Libby but let me interject a few facts, and some burning questions about that section dealing with poor pure Madge being forced onto the train. First, to borrow a lyric from Cabaret, about State House-savy Madge…”she wasn’t exactly a blushing flower…” and while no one said she “rented by the hour” it was fairly well established that in the period women were more out and about she was out and about too. There is no way based on the progression of that trip that she was”forced”–somewhere in the transcript or news coverage I read long ago to brush up before I interviewed DC(in the ’50’s) there was a “hat” purchase–no well dressed lady would go on a trip without a hat and DC or Earl gave her money to go buy a hat before the train left–???? Does that tally with your research?

    So one could suppose that while free to pick a hat (or later to to go to a drug store unaccompanied) a kidnapped Madge could have called Help Help, summoned police–but it doesn’t fit with the later sanitized version of how she happened to be on the train as a prisoner.

    When I covered the courts there was a longtime well known lawyer –I remember his name but won’t use it because her family was not just respectable, it was Irvington respectable and the jurist was somehow related. But in my years at the Times when people involved with the Pulitzer winning story doled out the real story it was pretty well established that while she certainly was a victim, Madge and especially her family suffered public scrutiny and understandably tried to “mitigate” in an era when your daughter had to be a “nice girl.” But in trying to “nice-I-fy” her it created some fancy tap dancing about how she happened to be making an overnight trip etc. When I interviewed DC at length in the Noblesville jail in the 50’s he was personable and forthcoming in very many ways–wish I had kept a clip just like I didn’t keep my interview with First Lady E. Roosevelt. What a klutz–me not her! But I have to say he was circumspect and would not discuss whether like Dorcas Madge was “willing.”

    I will re-read your piece because it is amazing–as are you. Would you like to pursue a story that the first formal “wedding” in this settlement was around Pogue’s Run—complete with invittions, a lovely woman pianist who just happened to be an African-American wedding a “white” groom? It was told to me by a learned local historian, now dead. And also, will you let me buy lunch and go with me to IHS to read the clips of the most amazing columnist you will read–actually an architect named Anton Scherer only an accidental journalist. You will be stunned.

    • Libby Cierzniak August 22, 2015 at 6:12 pm · Reply

      Excellent points, Donna. As Lutholtz chronicles in his book, there were a number of legitimate questions raised about the veracity of Madge’s story. Perhaps I should have not have stated the facts that were established at trial as facts in my article.

  2. Duffy Sauers August 23, 2015 at 11:20 am · Reply

    D.C. Stephenson was a Democrat and ran as a Democrat for Congress, he only became a Republican as a part of the Klans attempt to dominate Indiana Politics, which was dominated by the Republican Party at the time. It was a purely a political move, and basically failed. The Klan was always considered one of the strong arm groups for the Democrat Party.

    • Libby Cierzniak August 23, 2015 at 1:34 pm · Reply

      Like I said in the article, Stephenson’s only creed was greed. Early on, he leaned toward Socialism, but when he was living in Evansville, he aligned himself with the Democrats who controlled the city. Later, it became more advantageous to be a Republican.

  3. C.Ottinger September 1, 2015 at 3:38 pm · Reply

    I have to take some issue with D. M. Shea’s comments about Madge Oberholtzer. There are more than a few oral histories and formal testimonies to support that Madge was of good character and did not willingly go with Stephenson to Hammond. (Mrs. Hilton U. Brown, Lena Pavey Morrow, Jean Brown Waggoner, Lois Leaman, Marjorie Montgomery, and Bernice Glass. ) Not to mention that Thomas Carr Howe, former president of Butler, also defended her. Other evidence to her character has been found in the Pi Beta Phi Butler chapter archives, but unfortunately, only members are privy to that information…me being one of them. And the Irvington attorney who was alluded to was Asa Smith since he is the one who was distantly related to a jurist, although he really didn’t know him personally. Smith acknowledged that the defense did not attack Madge’s character because there was nothing to attack. And the comments about her being a messager for Stephenson was never completely proved and was considered rumor instigated by one of Stephenson’s men. No one at the State House ever corroborated that story. It just befuddles me why Donna Shea feels it is so necessary to shed a bad light on Madge. Regardless of how “out and about” she was….being an independent, working woman who bought her own car and taught herself to drive it in an era when few women were this progressive….she certainly did not ask for the suffering she endured or to have her reputation sullied..then or now.

  4. Charlotte Ottinger September 1, 2015 at 10:16 pm · Reply

    Donna – a few other points. Madge had just returned home from a date around 10pm the night Stephenson (actually his male secretary) called for Madge. He left a message with her mother. Madge said she would return his call in the morning but her mother thought it was important enough to return the call that night. (Her mother expressed great remorse for encouraging her to meet with him that night, even though Madge hesitated.) Stephenson left the impression that he needed to see her regarding her job, which was rumored to be on the list to possibly be eliminated. That is why she went to his house. She did not purchase a hat before boarding the train. She bought the hat while in Hammond, in order to hide the abuse marks on her face and also as an excuse to go to the drugstore to get the poison. She was NOT unaccompanied but was escorted by one of Stephenson’s men. I believe it was “Shorty”, Stephenson’s driver, so she did not have any opportunity to escape. Additionally, why would Madge be so forthcoming on her deathbed, sharing all the graphic details of her abuse, in an era when such details would have brought more embarrassment and scrutiny on her family, except that she truly had nothing to hide and wanted to expose the truth? The recent article in the Smithsonian also had several errors in regards to Madge’s side of the story. It appears that many of these reporters need to go back to the primary sources at the State Library, Irvington Historical Society, Irvington Library, and newspapers from the period. I’m guessing most of you have no idea where the original draft of her deathbed statement is even located, nor have you even read it.

  5. W.V. Melton September 3, 2015 at 6:13 pm · Reply

    The post by D.M. Shea reads as if he/she were smitten by Stephenson during the interview he had given to D.M. Shea in the 1950’s. D.C. Stephenson is/was a con-artist. Of course he would be “personable.” As for “forthcoming,”Stephenson has no credibility. To give the convicted derelict the benefit of a doubt and to describe him as “forthcoming” is inane at best.

  6. Charlotte Ottinger September 5, 2015 at 9:03 pm · Reply

    W.V. Melton – I agree completely. It actually sounded like she was name-dropping. If one were to review newspaper articles from the period, they would find it ridiculous to even question Madge’s character. Several women’s groups from Indianapolis, Bloomington and other cities made public resolutions attesting to her good character. They also collected funds to help with the prosecution. For Shea not to acknowledge this (or maybe she didn’t do her research back in the 1950s) shows that she may have been taken in by the same manipulating charm that he had used on others during the 1920s.

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