1. Sherry Freebery was the Chief Administrative Officer of New Castle County from 1997 to 2004.
2. The New Castle County Code required Ms. Freebery, as Chief Administrative Officer, to file an annual Statement of Financial Interests and she timely filed such Statements for 2001 and 2002.
3. New Castle County Code Section 2.03.107 requires the filer to make a reasonable effort to discover and disclose direct or indirect interests in real estate.
4. Paragraph (A) of the 2001 and 2002 Statements of Financial Interests required disclosure of the address of real estate in which a filer had a direct or indirect interest.
5. Ms. Freebery provided only the addresses of her residences and condominium.
6. New Castle County Code Section 2.03.102, Definitions, defined the phrase Indirect interest in real estate as follows:1
(B) Any interest a County employee or official has in real estate, in which the person is not the record holder, including, but not limited to:
. . .
3. Real estate upon which the County official or employee holds a mortgage;
4. Real estate used as collateral to secure a loan owed to the County official or employee;
5. Real estate in which the County official or employee has an equitable interest; of
. . .
7. Footnote 2 of the 2001 and 2002 Statements of Financial Interests defined Indirect interest in real estate as:
[A]ny interest you have in real estate in which you are not the record holder, including, but not limited to, real estate . . . (c) you hold a mortgage; (d) used as collateral to secure a loan owed to you; (e) you have an equitable interest; . . .
8. On May 1, 2001, Joseph Farnan, general partner of a Delaware Corporation, "Route 22 Associates, LLC", signed a promissory note in favor of Ms. Freebery for $600,000.00 at a stated interest rate.
9. The Note made reference to a mortgage as security for the loan. It stated:
[A] mortgage, ('the Security Interest'), dated the same date as this Note, covering property known as Shoppes of Longneck, Millsboro, Sussex County, Delaware protects the Lender from possible losses which might result if Borrower does not keep the promises which Borrower made in this Note. That Security Interest describes how and under what conditions Borrower may be required to make immediately payment in full of all amounts Borrower owes under this Note. Some of those conditions are described as follows:
A. Transfer of the Property or a Beneficial Interest to Borrower. If the Property or any interest in it is sold or transferred without Lender's prior written consent, Lender may, at its option, require immediate payment in full of all sums secured by this instrument.
10. The Note was satisfied by full payment in May 2002.
11. The mortgage recited in the note was never recorded by the Sussex County Recorder of Deeds.
12. The courts of Delaware have ruled that a document which demonstrates the intention of the parties to create a security interest in real estate is an equitable mortgage, as long as it contains a minimal description of the property, the amount of the loan and interest rate, and repayment obligation.
13. The Note reflects the parties' intention for real estate to serve as collateral for the loan and meets the conditions to establish an equitable mortgage.
14. On September 16, 2004, the Commission sent an inquiry to Ms. Freebery regarding the accuracy of her 2001 and 2002 Statements of Financial Interests in relation to disclosable real estate interests.
15. Ms. Freebery responded by letter dated October 4, 2004, that "there was no disclosable interest in real estate that was not properly filed" and that her "reports are accurate."
16. Despite direct inquiry from the Commission, Ms. Freebery did not attempt to ascertain whether the language in the note about the "mortgage" against the Shoppes of Longneck represented a direct or indirect interest in real estate.
17. Ms. Freebery violated the financial disclosure requirement recited in New Castle County Code Section 203.107(B)(3), (4) or (5) by failing to disclose the mortgage which served as collateral for the loan to Joseph Farnan.
18. The sanction for this violation of a provision of New Castle County Code Division 2.03.100 is a letter of reprimand to be placed in Ms. Freebery's New Castle County personnel file.
The allegation that Ms. Freebery violated the financial disclosure requirements of the New Castle County Ethics Code by failing to provide 2001 and 2002 Statements of Financial Interests based on the best of her knowledge, information and belief is substantiated. The penalty imposed for that violation is a letter of reprimand.
BY AND FOR THE NEW CASTLE COUNTY ETHICS COMMISSION THIS 9th DAY OF JANUARY 2008.
John McMahon, Chairperson