Court hears singer was in debt, faced cash crisis

Michael Jackson owed more than $230 million and was spending his way deeper into debt at the time he is accused of molesting a 13-year-old boy at his Neverland estate, a forensic accountant hired by prosecutors said.

Mr Jackson faced a financial crisis that caused panic in his camp in early 2003 just after a damaging TV documentary showed him cuddling with his accuser and defending his practice of sharing his bed with children, prosecutors said.

The testimony by accountant John Duross O'Bryan was the most direct look at what prosecutors claim are the dire finances of the 46-year-old entertainer, who borrowed heavily against his ownership stake in a catalogue of Beatles' hits.

"Mr Jackson's financial condition was deteriorating up to (February of 2003)," Mr O'Bryan said. "Expenditures were exceeding income, liabilities were increasing and there was a liquidity crisis."

Prosecutors are trying to convince jurors that Mr Jackson's deteriorating finances gave him a motive for imprisoning his accuser's family and pressing them to tape an interview that praised him in a bid to salvage his public image. Mr Jackson, who has pleaded not guilty, faces more than 20 years in prison if convicted of all 10 charges against him.

Mr O'Bryan, who pored over Mr Jackson's financial records, said the entertainer was more than $230 million in debt in February 2003. At the time, he said, Jackson was spending $20 million to $30 million more than he was bringing in per year.

His lavish lifestyle was made possible in part by a $200 million loan from Bank of America secured by Mr Jackson's stake in a valuable music catalogue that included Beatles songs. Mr Jackson owns the music in a joint venture with Japan's Sony Corp. known as Sony/ATV.

A second $70-million loan from Bank of America was secured by Mr Jackson's stake in his own music catalogue, Mr O'Bryan said. A balance sheet at end-June 2002 showed Mr Jackson with a negative net worth of $285 million, Mr O'Bryan said.

Even before that, Mr Jackson's accountants had been cautioning that his spending habits were endangering his hold on one of his most valuable assets, his stake in the Sony catalogue.

A memo in 2000 showed Mr Jackson had income of $11.5 million in the prior year but that was swamped by more than $20 million in expenses, including $5 million for legal costs and other services, $5 million to run Neverland and $7.5 million of personal spending, Mr O'Bryan said.

On cross-examination, lead defence lawyer Tom Mesereau suggested Mr Jackson could easily have solved his "liquidity crisis" by selling his stake in the Beatles' catalogue.

Prosecutors called their last witness, Rudy Provencio, who worked with Mr Jackson on a charity record. He spent about 20 minutes on the witness stand but court ended for the day before he could get to the heart of his testimony.

Prosecutors were expected to rest their case against the 46-year-old entertainer after Mr Provencio completes his testimony.

Earlier, Santa Barbara County Sheriff's Department Sgt Steve Robel testified about a taped interview in March in 2004 with Mr Jackson's ex-wife Debbie Rowe. Ms Rowe, who praised Mr Jackson in court last week, had called him a "sociopath" in the interview with police, Sgt Robel said.

Ms Rowe was married to Mr Jackson from 1997 to 1999 but never lived with him. She is the mother of his two oldest children, Prince Michael and Paris.