The mayor of Oilton in northeast Oklahoma is charged with felony counts of embezzlement and making or receiving kickbacks.
The Oklahoma State Bureau of Investigation said Friday that 62-year-old Patrick Leon Kennedy was arrested after questioning by OSBI agents at his home in Oilton, about 30 miles west of Tulsa.
Court records don't list an attorney for Kennedy and he didn't immediately respond to a message seeking comment.
The OSBI says Kennedy used two Oilton Public Works Authority employees to spend $8,000 in an Oklahoma Water Resources Authority loan in which Kennedy received about $5,000 in kickbacks and the two employees shared the remainder of the money.
The OSBI says the workers won't be charged because Kennedy coerced them to participate based on his control over their jobs.