He was born in Houston, Texas, moved with his family to Maysville, Oklahoma, where he worked as a printer's apprentice and was active in the Socialist Party. In 1920 he moved to Evansville, Indiana, where he became a salesman and joined the Democratic Party before becoming Grand Dragon of the Indiana Ku Klux Klan in 1922. The position led to the acquisition of great wealth, which he used to support political candidates, notably that of Ed Jackson when he ran (successfully) for governor in 1924.
Publicly a Prohibitionist and a defender of "Protestant womanhood", his spectacular trial and conviction for the abduction and rape of Madge Oberholtzer, who ran a state program to combat illiteracy, led to the downfall of the "Second Wave" of Klan activity.
Stephenson died in Jonesboro, Tennessee.