A Department of Housing and Urban Development official with ties to President Reagan and Vice President Bush is under investigation for "receiving financial compensation for steering HUD properties to favored developers," National Public Radio reported yesterday.
Citing unidentified sources, NPR's Alan Berlow said HUD inspector general Charles L. Dempsey "is examining the possibility" of criminal violations by Michael Karem, 34, deputy assistant secretary for multifamily housing programs.
On Oct. 16, while Karem was on special assignment in South America coordinating Bush's visit to Rio de Janeiro, Dempsey's aides seized his case files and appointment calendars, Berlow said.
Karem, a former Louisville, Ky., lawyer, was executive director of the Kentucky Reagan for President Committee, an advance man for the Reagan-Bush campaign, counsel to the HUD transition team and an aide to the inauguration committee.
NPR said Karem refused to comment. He did not return a Washington Post reporter's telephone calls.
Dempsey neither confirmed nor denied that Karem is under investigation, saying only that he is making "a complete review of the administration and operations" of HUD's disposition of multifamily properties that the agency holds or owns because of mortgage defaults or foreclosures.
Dempsey said he has assigned three auditors and investigators to the review, which originated with "several confidential complaints of allegations and possible wrongdoings. I discussed these with the federal housing commissioner Philip Winn, Karem's boss . As a result, he gave me a letter requesting a complete review . . . . " Winn could not be reached.
"As of last week," NPR reported, "Karem was relieved of his authority to sign off on HUD business. But he remains in his post."