Cllr Vijay Shah, Wembley Central ward, was arrested at his home in Clayton Avenue, Wembley, on March 8 by officers from Hertfordshire Police.
A Hertfordshire Police spokeswoman said: "A 44-year-old man from Wembley has been arrested on suspicion of fraud by abuse of position.
"He was arrested on March 8 by officers from Hertfordshire Police. He has been bailed by Police until 10 of September, to return to Watford Police Station."
The Times understands that Mr Shah was suspended by the Liberal Democrat party on Saturday May 11 by party leader Paul Lorber.
For full story see this week's Times
UPDATE OCT 22 08
A Brent Councillor has been charged with fraud after a seven month police investigation.
Councillor Vijay Shah was arrsted in March this year in relation to his role as an accountant at EJ Masters delivery company, in Kings Langley, Herfordshire.
He was charged with fraud by Hertfordshire Police on Monday, and has been bailed to appear at West Herts Magistrates Court on November 7.
Mr Shah, of Clayton Avenue, Wembley, sits as an independent councillor after being thrown out of the Liberal Democrat Party shortly after his arrest.
SourceUPDATE 13 May
A former Liberal Democrat councillor has been jailed for 12 months for stealing £55,000 from the company in Hertfordshire that employed him.
Vijay Shah, of Clayton Avenue, Wembley, pleaded guilty to 11 counts of fraud at delivery company EJ Masters.
Shah, 45, continued to sit as an Independent for Wembley Central on Brent Council after his arrest, St Albans Crown Court was told.
His deception was uncovered when he lost his job over another matter.
Shah gave a false reference to a woman from India who had applied for a job, the court heard.
A new accountant was hired and Shah's fraud was discovered.
Sophisticated fraud
Sentencing him, Judge Simon Carr said: "Responsibility comes with public office.
"Those who take public office have incurred a responsibility to ensure they are above reproach. You singularly failed to do this."
SOURCE
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