The federal mortgage fraud trial of a former Philadelphia official began Monday, with her attorneys contending she never intended to repay a $2.3 million loan from a du Pont heiress that is at the center of the case, media reports said.

Former New Castle County Chief Administrative Officer Sherry Freebery was indicted in May 2004 on charges of racketeering, wire fraud and mail fraud, reports said. Senior U.S. District Judge John P. Fullam separated the two mortgage fraud counts from the main case in July at her request, according to reports.

Freebery is facing two mortgage fraud charges, and if convicted she faces up to 10 years in prison, accounts said.

Federal prosecutors have documents showing Freebery received more than $2 million in loans from du Pont heiress Lisa Dean Moseley in 2001, accounts said.

Later that year, in May and December, Freebery allegedly applied for two mortgages from Wells Fargo bank on homes in Dewey Beach and Hockessin for a combined $1.1 million, reports said.

But she did not list the money she was loaned by Moseley on signed mortgage papers, meaning she got better terms than she deserved, prosecutors said, according to media accounts.

In addition, prosecutors said Freebery, a former New Castle County chief administrative officer, claimed some of the loaned money as a cash asset, media accounts said.

Opening arguments began in U.S. District Court in Philadelphia on Monday, according to Associated Press, with her attorneys saying she never intended to repay the $2.3 million to Heiress Lisa Dean Moseley, who intended it as a gift.

Freebery defense attorney Elizabeth Taylor said that Freebery understood that Lisa Dean Moseley intended the money to be a gift, but simply structured it as a loan on the advice of her tax attorney, AP reported.

“You’re going to learn about a friendship, and you’re going to learn that Sherry Freebery believed and knew that Lisa Dean Moseley was never going to ask her to pay that money back,” Taylor told a jury of six men and six women, according to media reports.

Government prosecutors contend that Freebery committed fraud by not disclosing the loan from Moseley on loan applications Freebery made with Wells Fargo Home Mortgage Inc. in 2001, AP reported.

“Wells Fargo, if they had known about the loan from Lisa Dean Moseley, wouldn’t have made the mortgage loans, any of them, to Sherry Freebery,” said Assistant U.S. Attorney Ferris Wharton, according to reports.

Wharton submitted into evidence three checks for more than $321,000 Freebery wrote in 2002 and 2003 to cover interest payments on loans made by Moseley to Freebery and her son, Patrick Duffy, media accounts said.


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