Kilpatrick brings new meaning to 'virtual' giving

Testimony in the Kilpatrick public corruption trial focused on the former mayor's income, and prosecutors say some of that income was never reported to the IRS.

There are a few people you never want to see testify for the government -- your priest, your mistress and, if you're facing tax charges, your accountant.

With his pastor in Texas and his mistress in Atlanta, that left only the former mayor's accountant whose office is right down the street from the federal courthouse.

Gregory Terrell was accountant to the Kilpatricks, kept the Kilpatrick campaign's books and was treasurer of the non-profit Kilpatrick Civic Fund.

Prosecutors say Kilpatrick deposited $531,000 in cash over and above his mayoral salary from 2002 to 2008.

That dough is one reason he's now on trial for filing false tax returns and income tax evasion in addition to racketeering, extortion and bribery charges.

Prosecutor Mark Chutkow quizzed Terrell about a small, but potentially damaging tax deduction Kilpatrick claimed.

The former mayor said he gave $5,000 to his alma mater Florida A&M University.  But the feds believe the money really came from the nonprofit Kilpatrick Civic Fund.

CHUTKOW: If Kwame Kilpatrick told you the $5,000 was paid by the civic fund and not by him personally, would you have used that money to deduct from his personal income?

TERRELL: No.

CHUTKOW: Why not?

TERRELL: I would have told him he shouldn't take the deduction because he didn't actually make the donation.

Kilpatrick attorney Jim Thomas provided an alternative explanation for why Kilpatrick would not have declared all that cash on his income taxes, including thousands of dollars in alleged bribes paid by one-time Kilpatrick aide Derrick Miller.

THOMAS:  If he did not receive any cash from Derrick Miller, there would be no need to tell you he had taxable income for the purposes of his tax returns.  Would you agree?

TERRELL: Correct.

The feds moved on from Kwame Kilpatrick's taxes to his father's work as a lobbyist.

The feds tried scoring points by playing recorded phone conversations in which Bernard Kilpatrick threatened a Detroit business with retaliation for hiring a suburban company instead of one of his clients.

But defense attorney John Shea says he didn't hear any laws being broken.  He said what he heard was merely "a person who had a client saying that he thought his client was being wronged when it came to certain rules that the city requires be followed on publicly funded jobs and exploring options for dealing with that."

John Shea might not see anything wrong with the elder Kilpatrick's actions, but prosecutors say it's another example of strong arming contractors.