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Former Tucson City Councilman Brent Davis has been indicted on suspicion of stealing funds from the sale of a fraternity house to the University of Arizona.

Davis, who served two terms on the council through the late '70s and '80s, denied the allegation, saying it stems from a "spitting contest" among old fraternity members who don't like one another.

Davis has been charged with one count of "theft by control and/or conversion" for his alleged mishandling of funds from the sale of the former Tau Kappa Epsilon Fraternity house to the University in 1999 for $1.17 million.

Over the last 30 years, Davis has held numerous roles with the fraternity's Alumni Housing Association, and he handled the sale of the building.

After the sale, he said he placed the funds in several accounts in the name of the fraternity's local chapter because he wanted the money available should a new fraternity chapter arise.

But there was also concern the national fraternity would want to seize those funds, so Davis said he placed $105,000 in an account tied to his business, Group Management Inc., in case the local chapter needed to hire legal counsel.

He did this, he said, with full disclosure and reported it at annual meetings of the fraternity. He said the funds were left alone.

"There was a clear paper trail," he said. "It was known to the fraternity because I reported it at two different meetings in 2003 and 2004."

In 2004, though, Davis said two other fraternity alumni asked to be signatories on all accounts, and he added them to every account except the one on his company's books.

The two men eventually became members of the alumni association's board, and they voted to have him removed as treasurer. Since then, demands were made for the $105,000 to be returned, and eventually sometime last year Tucson police began investigating allegations of embezzlement, Davis said.

Davis has since paid the association $119,000, which included additional fees, plus an additional $97,000 in interest.

At that point, Davis said he and his attorney thought the issue was over, so they were surprised when a criminal charge was filed against them.

"We thought it was a civil issue, and they had been paid back," Davis said.

His attorney, Jeffrey Rogers, said of the charge, "We've been befuddled by it from the very beginning."

The two said they made themselves available for the grand jury proceedings on Tuesday, but after waiting several hours to testify, Davis said they were told they would not be heard.

"It was pretty disappointing," Davis said, who will arraigned on Wednesday.

Davis has been a prominent figure in the community, serving on the Tucson city council in the 1980s.

In a notice being sent to his clients, he writes, "Several members of the then-reconstituted Alumni Housing Association Board and I had significant disagreements about protecting that money for a future Chapter's efforts to reestablish itself on campus" and because the board had intended to protect the money from being seized, he refused to release it.