Sought Bush HUD Post : Ex-Reagan Aide Was Probed as He Lobbied

From Associated Press

Thomas T. Demery lobbied to be appointed secretary of housing and urban development while knowing he was under investigation for allegedly mishandling a federal housing program, records released today show.

As assistant secretary for housing at HUD for two years, "I have become greatly challenged and sensitized to the public policy questions surrounding the homeless, the availability of low-income housing, and the difficulty the elderly and first-time home buyers face in finding affordable housing," Demery said in a form letter to congressmen dated Dec. 7, 1988.

The position went to former Rep. Jack Kemp (R-N.Y.), and Demery has gone into private consulting. But Demery's conduct at HUD is being examined as part of the investigation of alleged fraud, abuse and mismanagement at the agency during the Reagan Administration.

The letter was sent to Sens. Gordon J. Humphrey (R-N.H.), Donald W. Riegle (D-Mich.), Arlen Specter (R-Pa.), Rep. Carl D. Pursell (R-Mich.) and Robert Teeter, then co-director of the office of President-elect Bush.

The letters were contained in files opened to the press today under the Freedom of Information Act.

Demery could not immediately be reached. A woman answering his telephone said Demery is on vacation.

Demery is a former Michigan real estate agent and mortgage broker who worked in Ronald Reagan's successful 1980 campaign. As assistant housing secretary, he administered several of HUD's biggest programs, including $225 million in moderate-rehabilitation funds awarded annually and the massive Federal Housing Administration's mortgage insurance program.

Influence Peddling Revealed

The rehabilitation program has been revealed to have been governed by influence peddling while the FHA lost millions of dollars annually through loan defaults and mismanagement.

In particular, HUD's inspector general was investigating in 1988 whether Demery had misused his position to induce contractors seeking HUD business to contribute to his pet charity, F.O.O.D. for Africa. The inspector general concluded that Demery may have traded on his position, but last month the Justice Department said it saw no evidence of criminal wrongdoing.

The inspector general's investigation began early in 1988, and by autumn it was apparent that Demery was among its targets.

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