The federal government is suspending payments for the demolition of homes on a condemned, flood-ravaged Manitoba First Nations reserve, after CTV News reported that dozens of buildings were moved off the land and sold.

The Department of Aboriginal Affairs and Northern Development awarded a nearly $2-million contract to the Lake St. Martin First Nation to demolish homes that were contaminated in flooding in 2011. More than 130 houses were slated for demolition and many residents have been living in hotels ever since.

It's estimated that 49 homes on the reserve were actually lifted from their foundations, moved to new locations and sold for about $20,000 each. Some of the homes still contained the belongings of the previous inhabitants.

On Thursday, Conservative MP James Bezan issued a statement saying that funds that had yet to be disbursed as part of the demolition contract will be frozen pending further investigation.

“These are very serious allegations. The $2 million from the Aboriginal Affairs and Northern Development (AANDC) contract with Lake St. Martin First Nation was to demolish the homes because they were contaminated, not to resell them,” Bezan’s statement read.

“Since the $2 million has not yet been fully transferred to the band, AANDC officials are taking the immediate step of suspending any further transfers under the contract until the allegations are investigated.

“We will forward any evidence of criminal wrongdoing to the appropriate policing authority.”

In addition to the nearly $2-million demolition contract, the cost of housing and feeding displaced residents for the past three years has hit more than $86 million.

After the 2011 flood, resident Noel Beardy says he returned to the reserve regularly to check on his home. In February, his house was gone.

“Still all my stuff, everything in there,” Beardy said. “All my contents, even my clothes -- everything.”

Beardy’s home was transported on a flatbed to a beach community 300 kilometres away. The home is now being renovated to be sold as a cottage.

“That buyer told me he bought it from the Lake St. Martin chief,” Beardy said. “He admitted he bought it from Lake St. Martin chief, but he wouldn’t tell us how much and who pocketed the money.”

A buyer of one of the homes emailed a statement to CTV News voicing concerns about the purchase.

"I was concerned about the legality of buying some of these buildings, but I was assured that the council had been told by government officials that they were dispose of them in any way they chose," the statement read.

When reached by CTV News on Wednesday and asked if some homes from the reserve were sold, Lake St. Martin Chief Adrian Sinclair replied: “Condemned homes, yes.”

“Condemned homes were sold?” CTV’s Jill Macyshon asked.

“No they weren’t sold. They were given away,” Sinclair said.

Sinclair said he “didn’t make nothing” when asked how much money he made from selling the homes.

In a follow-up statement to CTV, Sinclair said he has the legal authority to sell damaged houses and that the money was used to clean up the reserve.

About 84 homes were demolished, he said, but would not say exactly how many were sold.

With a report from CTV’s Winnipeg Bureau Chief Jill Macyshon