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Former Housing Official Indicted

June 9, 1992

WASHINGTON (AP) _ A former assistant housing secretary was indicted Tuesday on charges of conspiracy and misusing his office as part of the influence-peddling scandal at the Department of Housing and Urban Development.

Thomas T. Demery, who worked at HUD from 1986 to 1989, was accused of steering housing subsidies to a company represented by a co-defendant, Phillip McCafferty.

Demery had sold another company to McCafferty before being confirmed to the HUD job, and McCafferty paid him in installments throughout Demery’s tenure at the federal agency, the indictment said.

Demery, of Alexandria, Va., was charged by a federal grand jury with one count of conspiracy and four counts of using his office to further personal financial interests. All are felonies.

McCafferty, of Orchard Lake, Mich., was charged with one count of conspiracy and four felony counts of aiding and abetting Demery’s alleged acts.

Demery joins former top HUD officials Deborah Gore Dean and Lance Wilson as defendants in special counsel Arlin Adams’ investigation of alleged fraud and mismanagement at the agency during the Reagan administration.

Dean and Wilson, executive assistants to former Housing Secretary Samuel Pierce, were charged earlier this year. Pierce has not been charged in the continuing investigation.

Demery’s attorney, John P. Hume, said in a statement, ″Mr. Demery did not knowingly or intentionally take official action on any matters affecting his personal financial interest.″

Demery disclosed the sale of his Birmingham, Mich.-based real estate company, Income Property Services, Inc., to McCafferty during the HUD confirmation process in 1986, Hume said. He added that under prosecutors’ description of events, the alleged conspiracy would have to have been devised before Demery knew he was being nominated for a HUD job.

McCafferty’s lawyer, David F. DuMochel, said from Detroit, ″He hasn’t done anything wrong... His dealings with Mr. Demery were all above board, they were all of record - nothing hidden or in any way improper.″

McCafferty represented another company, the PM Group, headquartered in Brighton, Mich., that sought HUD subsidies for four multifamily housing projects in Michigan and Illinois, the indictment said.

Demery directed HUD subsidies to those projects, the indictment said, at times intervening in areas of his agency where he had no authority.

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