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Michael's big money troubles

BY JOHN RILEY | STAFF CORRESPONDENT

May 4, 2005

SANTA MARIA, Calif. - Michael Jackson faced an escalating cash-flow crunch and was spending millions more than he was making when a 2003 documentary confronted him with a public relations crisis over his relationships with young boys, a forensic accountant testified at the pop star's molestation trial here yesterday.

The testimony was offered to bolster prosecution claims that money worries were Jackson's motive for conspiring to hold hostage a 13-year-old cancer survivor who appeared in the documentary and his family until they agreed to assist in rebutting the film. Jackson is also accused of molesting the boy.

Trial testimony has described Jackson as fond of lavish spending sprees. Accountant Duross O'Bryan said Jackson had failed to heed financial advisers' warnings about overspending since 1999 and faced bills of $10.5 million with cash on hand of only $38,000 in February 2003.

"The evidence shows he was spending $20 million to $30 million more a year than he was making," said O'Bryan, who was hired by the prosecution.

In other developments yesterday, prosecutors sought to take the edge off earlier testimony by Jackson's ex-wife Debbie Rowe, who told jurors that Jackson was a "good father" to the couple's two children. A year earlier, a detective testified, Rowe "referred to Michael as a sociopath" and had called him a "bad" parent during a police interview.

O'Bryan said that in 1999, Jackson had income of $11.5 million from royalties on two music catalogs, one of his own songs, and the other jointly owned with Sony, which includes Beatles songs.

That same year, O'Bryan said, Jackson spent $31 million, including $5 million on legal and professional expenses, $5 million on security and Neverland Ranch expenses, $7.5 million in personal expenses, and $2.5 million in other costs. He also paid $11 million in interest on $150 million in loans secured by the music catalogs.

In the intervening years, O'Bryan said, instead of restraining his spending, Jackson increased his debt to support it. By 2003, he said, Jackson owed $224 million, and the overspending had placed the two catalogs - Jackson's biggest income-producing assets - at risk.

During cross-examination, Jackson lawyer Tom Mesereau said the singer contested the idea that money was a motive for a crime and peppered the expert with questions suggesting that Jackson easily could have solved his cash flow problems by signing up for music tours or selling stakes in the catalogs.

But O'Bryan said royalties from Jackson's personal catalog had dipped more than 30 percent between 1999 and 2003, and it was worth only $70 million - less than the debt it was securing and tax liabilities. The Sony-ATV catalog, he said, was worth $1 billion, but Jackson's share would only be $200 million - less than the debt and taxes.

The testimony did not please Jackson sympathizers. "What does any of this have to do with child molestation?" muttered his mother, Katharine, from her seat during a break.