BLOG: Ex-mayor's dad dodged $184k in taxes, IRS agent testifies

DETROIT (WXYZ) - Follow along with day 47 of the Kwame Kilpatrick corruption trial as 7 Action News Investigator Ross Jones blogs from federal court:

1:00--The end: The feds seem content leaving jurors with that as the final piece of testimony. We'll be back tomorrow at 9AM.  Thanks for joining us!

12:48--Taxes owed: Here's today's headline, everyone: Bernard Kilpatrick owes the feds more than $184,000 in taxes that he avoided, according to IRS agent Schuch.

12:40--Inaccurate: Schuch, who's been at the IRS for ten years, says that she concluded Bernard Kilpatrick underreported his 2004 income (about $336,000) by $50,394.87. 

12:30--Same story: Give him points for consistency.  The next year in 2005, Bernard Kilpatrick lost a little over $87,000 when he headed to the gambling tables.

The following year, he lost about $42,000.  I guess, relatively speaking, that would be considered a good year.

12:29--Rough year: Now Schuch is looking at how much money Kilpatrick spent (and lost) at casinos.  In 2004, he lost $88,385 at Detroit's three downtown casinos. 

12:17--Big numbers: Bernard Kilpatrick deposited more than $2,231,000 into his bank accounts during the six years that his son was Mayor of Detroit

12:15--IRS agent up: IRS agent Rowina Schuch is up  now, testifying about her investigation into Kilpatrick's finances.

Sorry for the delay in blog posts.  Had to run outside to do a quick update for our 7 Action News at Noon Viewers.

11:35--Finally, a defense: It took a while, but John Shea is finally raising some possible explanations for the deposits made into Kilpatrick's bank accounts, which were not declared as income. He is suggesting that the money may not have been income at all, but could have been proceeds from an inheritance or even a loan. 

11:13--Cash deposits: Young said he would have questioned large cash deposits made into Bernard Kilpatrick's bank accounts, if he had known about them.

11:04--Next witness: Next up on the witness list is Alan Young himself, Jones's boss at the accounting firm that did Bernard Kilpatrick's taxes.

10:32--Break time: Stay with us folks, we're taking a short break.

10:28--Here we go: If there's one thing more exciting about filing your taxes, it's filing them electronically.  And that's exactly what's being discussed right now.  Hold on to your socks, readers, or they will surely be blown off.

Apparently, a firm requires the signature of its client to submit his or her taxes electronically, but Alan C. Young and Associates doesn't have such a signature from Bernard Kilpatrick.

10:26--Deadline looming: In 2008, Jones says Bernard Kilpatrick was running up against the filing deadline and was encouraged to turn in something to the IRS, or face stiff penalties.

10:22--Slow to respond: Shea is asking about whether or not Bernard Kilpatrick always supplied his tax information in a timely manner.  Jones says he often had to be prodded. 

10:05--Cross-exam: Bernard Kilpatrick's lawyer John Shea is now up to question Jones.

9:55--Tax bill: In 2005, Bernard Kilpatrick paid about $50,000 in taxes to the IRS.  What would have happened to that number, asked Asst. U.S. Attorney Jennifer Blackwell, had Bernard Kilpatrick disclosed cash deposits he had made, or how he profited from an employee profit-sharing plan for that year?

"It would have increased," Jones responded.

This goes to the fed's allegations that Kilpatrick evaded paying federal taxes.

9:52--2005 income: The next year, Bernard Kilpatrick reported not doing quite as well: only $220,259, virtually all of it from his company Maestro.

9:49--Cash not disclosed: Jones says she was unaware that Bernard Kilpatrick had deposited $123,700 in cash in his bank accounts.  She would have reflected this in his tax returns had he told him, she said. 

9:45--Tax return: The jury is being shown Bernard Kilpatrick's 2004 tax return.  It shows only $2,500 in wages, but says his total income was more than $336,000 for that year (at least some of it seems to have come from gambling, but it's difficult to read the tax return).

9:40--New witness: Up now is government witness Cassandra Jones, an accountant for Alan C. Young and Associates. She helped file taxes for Bernard Kilpatrick and his company Maestro Associates, a consulting firm he started shortly after his son became mayor.

9:39--Proof? Bernard Kilpatrick's lawyer John Shea asked Sauer whether he knew that the cash withdrawn went to Kilpatrick.  He said he did not. 

9:29--Payments to Cunningham: Before we broke for the holidays, we heard from Kilpatrick's one-time aide and friend Marc Andre Cunningham,who testified that he paid Bernard Kilpatrick to help secure a $30 million investment from the city's pension board, for which Cunningham would later be paid as a consultant. 

Sauer is testifying about checks paid to Cunningham, as well cash withdrawals that Sauer made while he was supposedly paying Bernard Kilpatrick.

9:22--Sauer note: IRS agent Ron Sauer is back for what must be his fifth or sixth time on the witness stand. 

9:18--Test admitted: Judge Nancy Edmunds is siding with the feds, and will allow the $90,000 cash test to be admitted as evidence.

9:15--Metal detector test: Early on in this trial, Kwame Kilpatrick's old friend Mahlon Clift testified that he carried $90,000 (stuffed in his pants) through a metal detector to take it to the former mayor.  Kilpatrick's lawyers and others argued that was impossible, because each piece of currency has small metal bands inside. 

The feds tested whether or not that was true, taking $90,000 through the metal detectors used during 2008, when Clift said he made the trip.  The feds want to introduce the results of the test, but the defense say it shouldn't be admissible. 

9:00--Welcome back: I hope everyone got what they wanted for Christmas.  It looks like the former mayor received a nice v-neck sweater, as he's wearing a snazzy blue one over his tie, and under his suit coat. 

Have a question or comment for Ross?  E-mail him at rjones@wxyz.com.  You can also follow him on Twitter @RossJones7 or like him on Facebook.

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