Local 4 is inside the courtroom for the federal corruption trial of former Detroit Mayor Kwame Kilpatrick, Kilpatrick's dad Bernard Kilpatrick and his childhood friend Bobby Ferguson. Each day we bring you information from inside federal court as it happens.
Brutal start to the morning. The line into the courthouse was 45 minutes long in mind-numbing cold. My toes are still thawing out.
9:07AM Seems the defendants didn't have to wait in the outrageous line because everyone is in court and ready to go.
US Attorney Jennifer Blackwell continues her questioning of IRS agent Rowena Schuch.
Total cash deposits into Bernard Kilpatrick's personal accounts between 2002 and 2008: $605,055.
Looking at the tax year 2007. Total reported income as $70,529 on Kilpatrick's tax returns. Schuch's calculations show that the total deposits for 2007 into Kilpatrick's combined accounts is $606,225.52.
With additional currency expenditures, the total is $607,160.03. With basic deductions, the total corrected income for Kilpatrick in 2007 is $395,413.25. The difference between that amount and the reported $70,529 is $324,884.25: understatement of the income.
So taxes owing are $104,424.23 for 2007. Total taxes owed for 2004, 2005 and 2005 is $182,796.58.
9:18AM John Shea, Bernard Kilpatrick's lawyer, cross-examines the IRS agent.
Shea goes back to the tax year 2004. Says that Schuch used bank deposit method to determine amounts in Kilpatrick's accounts.
Shea says that method does not go through compensation history for tax year and identify each income item. It just looks at all deposits without identifying whether any specific item is item. Then backing out individual items that investigator determines are non-taxable. Shea asks the witness if that is correct.
Schuch says that Kilpatrick had 7 accounts: 5 personal and 2 business. I'm counting 9 accounts on the overhead, not sure why they are saying 7.
Looking at total deposits for 2004 and 2007. Shea itemizing what Schuch deducts in her calculations, including loans.
Shea mentioning $5,000 that Schuch found yesterday had been a repaid loan to Kilpatrick in 2004.
Talking about Karl Kado and his payments to Kilpatrick. Shea saying Kado was inconsistent in what he said he paid Bernard and where he said he paid him.
Schuch says Kado was consistent in saying he paid Kilpatrick $100,000 in 2005.
Shea says Kado's testimony at trial was variable in terms of payments. Witness says Kado said he made payments in excess of $200,000 to Kilpatrick.
Shea says that Schuch determined some of this money that Kado said he gave to Kilpatrick was income. Shea calling into question the reliability of Kado's representation of sums of money he gave Kilpatrick.
Shea says to rely on Kado is unreliable. Schuch disagrees and says that Kado was not the only one paying Kilpatrick.
Looking at 2004 IRS total deposits figure of $882,074.70. Shea says that there could be other non-taxable items that Schuch and the IRS did not capture.
The witness stands by her calculations. Witness does admit that Kilpatrick had transactions with others that she did not interview.
Shea seems to be losing patience with Schuch. Just a little.
Shea says that Schuch is just assuming all these cash payments are income when they could very well be loan repayments like the $5,000 she found overnight.
Shea says Schuch does not know know if Kilpatrick had substantial amounts of cash on him in December 2003 that he could have deposited that would have been non-taxable.
9:40AM Shea says witness just doing the best she can but cannot be certain of her calculations.