Forty-nine condemned homes on a Manitoba First Nation hit by flooding in 2011 may have been sold off and moved, said Selkirk-Interlake MP James Bezan Thursday.

"These are very serious allegations," said Bezan in a statement. The federal government had previously paid nearly $2 million to have the condemned homes on Lake St. Martin First Nation destroyed.

On Wednesday, CTV News reported one resident returned earlier in April to find his home had been ripped from its foundation.

He said he later learned it had been sold and shipped to a community nearly 300 kilometres away from Lake St. Martin, with his belongings still inside the house.

“There were 133 condemned homes, approximately 80 homes that have been demolished, leaving possibly 49 homes sold,” said Bezan.

“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,” he said.

Bezan said an investigation has been launched.

“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,” he said.

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

CTV News has learned most of the $2 million from the federal government had already been paid out.

"Certainly sounds like there may be something untoward happening,” said Colin Craig from the Canadian Taxpayers Federation.

The federation said both the federal government and the chief of Lake St. Martin First Nation need to be held accountable.

"The feds need to explain how they came up with the figure of $2 million - what due diligence they did - and the band needs to explain how on earth they're selling people's homes while their belongings are still in it and what's happening with that money,” said Craig.

Flood evacuee Alex Marsden and his wife were forced out of their Lake St. Martin home by the flooding three years ago.

He questions the apparent sales of the condemned homes.

"Where is all that money going?” he asked.

Manitoba's top chief says people should not rush to judgment until all the facts come out.

"If a unit is still viable and there is a market out there for it and the community has to make sound business decisions - I think we have to give the benefit of the doubt at times to the decision makers,” said Derek Nepinak, grand chief of the Assembly of Manitoba Chiefs.

Lake St. Martin Chief Adrian Sinclair insists he hasn’t done anything wrong and that he has the legal right to sell damaged homes for money – funds he said are being used to clean up the community.

- with a report from Jeff Keele