Staffordshire Moorlands councillor Joe Porter has been suspended by the Conservative Party, which has referred the matter to the police.
Cllr Porter, who represents Brown Edge and Endon on Staffordshire Moorlands District Council, is now sitting as a non-aligned member.
A Conservative Party spokesperson said: "The Conservative Party takes all allegations of wrongdoing seriously, as part of our ongoing investigation into this matter a referral has been made to the police. Mr Porter remains suspended from the Conservative Party at this time, and it would not be right to comment on an ongoing investigation."
When Six Towns Daily asked Staffordshire Police about Cllr Porter, the force said: "A 30-year-old man, from the Leek area, was arrested on suspicion of theft and fraud by abuse of position on Wednesday 30 September. He has been released on bail as our enquiries continue." Police did not name the man.
Cllr Porter has been a district councillor since 2019 and was re-elected as a Conservative in May 2023. He has previously served as a cabinet member and as chairman of the Staffordshire Moorlands Conservative Association. His profile has since been removed from the local Conservatives' website, and his Facebook, X and Instagram accounts are no longer available.
Being arrested does not mean a person is guilty of any offence. No one has been charged.
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