Ex-HUD official pleads guilty to lesser charges


WASHINGTON -- The long-running investigation into fraud and corruption in the Reagan administration's Department of Housing and Urban Development brought down its highest former official yesterday when Thomas T. Demery, once the department's No. 3 executive, pleaded guilty to reduced charges.

Mr. Demery, 43, a former assistant secretary for housing, pleaded guilty to accepting a gratuity and obstructing justice. U.S. District Judge Thomas Penfield Jackson said that he would impose a sentence at a later date.

Mr. Demery, whose trial was scheduled to start early next month, had been indicted on charges of lying to Congress and XTC accepting a $100,000 loan from a developer whom he helped get federal housing subsidies in the 1980s.

He was accused of steering $15 million worth of HUD loan subsidies to the Michigan developer who had given him a $100,000 second mortgage on extremely favorable terms. The second mortgage was never publicly recorded, the indictment said.

Mr. Demery, an HUD official from 1986 to 1989, also was accused of making false statements on loan applications to conceal the arrangement. He faces a maximum sentence of seven years in prison and fines of $500,000.

Independent counsel Arlin M. Adams, who has been investigating the HUD scandal for more than three years, called Mr. Demery's plea "a major step forward." He said that Mr. Demery's activities at HUD "go to the heart of the matter we have been charged to investigate."

In coming weeks, Mr. Adams is expected to call Mr. Demery before a federal grand jury in Washington that is looking into allegations that former HUD Secretary Samuel R. Pierce Jr. lied to Congress about his knowledge of corruption within his department. The jury also is investigating charges that former Republican Sen. Edward Brooke of Massachusetts influenced subsidies for his clients' housing projects.

Both Mr. Pierce and Mr. Brooke have denied wrongdoing. Mr. Pierce's attorneys, Paul Perito and Robert Plotkin, said: "There is absolutely no evidence that Sam Pierce ever profited personally from his official position."

With Mr. Demery's guilty plea, Mr. Adams so far has obtained 10 convictions and secured more than $2 million in criminal fines.

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