R. Kelly trial: Co-defendant and former business manager Derrel McDavid takes the stand

R. Kelly's former business manager, Derrel McDavid, took the stand in his own defense Wednesday. He is facing four federal charges – two for receiving child pornography, one for conspiracy to receive child pornography, and one for conspiracy to obstruct justice.

McDavid is accused of conspiring with Kelly and former Kelly assistant Milton "June" brown to cover up incriminating sex tapes that allegedly show the singer sexually abusing girls ahead of his 2008 child pornography trial in Cook County, which resulted in Kelly's acquittal.

Hired as Kelly's accountant in the 1990s, McDavid described first meeting Kelly early in the singer's career. When Kelly asked him on the day he was hired if he'd heard his music, McDavid said he hadn't, and he told the jury Kelly seemed disappointed.

McDavid described Kelly as a shy, introverted, and humble kid when he first met him.

"He was just trying to get into the music business and make it," McDavid testified.

As Kelly rose to music superstardom, McDavid said his work for the singer also grew, saying Kelly went from not having much money to having nearly $1 million after his first album went platinum.

McDavid said he first realized Kelly could be a superstar during a trip with his wife and sons in Georgia, when his wife was playing country music on the radio, and a song from Kelly's first album, "12 Play" came on the same station. McDavid said he glanced over to his wife and said, "looks like he made it."

Describing Kelly as a "self-contained" artist, McDavid testified Kelly was one of the most prolific song writers at the time, and could write lyrics, create the music, put the melodies together, play the instruments, and produce the music.

Ultimately, McDavid became Kelly's business manager, handling all of his financial and business dealings, including writing checks, paying bills, buying his cars, and handling the insurance. McDavid testified Kelly didn't want to be involved in the expenses at all, and expected him to handle everything.

Asked how his own duties changed as Kelly's career took off, McDavid said, "More money, more problems."

McDavid said Kelly's tours were the most expensive part of his career, and it was his job to keep them profitable for Kelly, leading to fights over tour costs, telling the jury Kelly "always wanted everything."

Meantime, their business relation evolved into a friendship, with McDavid telling the jury at one point he considered Kelly his son.

McDavid said while Kelly was shy around women when they first met, he later embraced the attention he got from women as he became a superstar, and began to act like most superstars, demanding he get everything he wanted.

McDavid recalled Kelly eventually started flying women to see him, and putting them up in hotels. He also testified all of those women were adults, when asked if he was referring to teenage girls.

McDavid also described the friction that grew between Kelly and his previous manager, Barry Hankerson, as Kelly grew more and more successful. McDavid testified the more successful Kelly got, the more time and attention he needed, and at the same time Hankerson grew more controlling, to point he would show up to the studio with bodyguards as a method of intimidation.

As that friction grew between Kelly and Hankerson, McDavid testified Hankerson's role with Kelly decreased, and his own increased.

McDavid recounted an incident in 1999 at a chicken shack in Los Angeles, when he said Hankerson walked in with a bodyguard and flipped over a lunch table, sparking a fight with Kelly, and causing their relationship to deteriorate further.

McDavid testified he believes there was another incident at a concert in Philadelphia, and that's when Kelly told him to call his lawyer, Gerry Margolis, to fire Hankerson.

Turning to the first lawsuit Kelly ever faced, McDavid recounted finding out about Tiffany Hawkins filing a paternity suit against him in 1997.

McDavid testified he found out about the claim through Margolis, and that, during a conference call with Kelly and Margolis, Kelly told them "hell no," and that he'd take a paternity test to prove he wasn't the father.

McDavid testified the paternity suit was later dropped, but Hawkins then filed a lawsuit accusing Kelly of having sex with her when she was a minor. McDavid said he didn't believe anything she said, because she hadn't gone to the police.

"I would think that if you were going to claim someone had sex with you when you were a minor, you would go to the police," he testified.

McDavid said he told Margolis he believed Hawkins sued Kelly to get money from him, and Margolis told him that kind of thing was common and almost the "cost of doing business" as a celebrity.

While Margolis told him he believed Kelly would be "vindicated," but they would still pay a settlement McDavid testified he found the decision confusing. But he said Margolis explained that even a false rumor of that kind getting out could hurt Kelly, and it wasn't worth a public fight.

McDavid also recalled attending a deposition of Hawkins amid that lawsuit, claiming after seven hours Margolis proved she was lying, because he caught her in more lies than McDavid could count. He said it was clear Hawkins was "somebody just trying to get paid."

McDavid testified Hawkins' attorney, Susan Loggans, asked Margolis what she could get, first demanding $10 million, but agreeing to a $250,000 settlement. Compared to what Kelly was making at the time, McDavid said that settlement was relatively insignificant.

McDavid told the jury the Hawkins lawsuit affected how he saw those kinds of cases, and Margolis told him that's how it goes when a star gets successful.

After that case, McDavid testified Loggans later filed a string of "cookie cutter" lawsuits against Kelly on behalf of other women, making similar claims as Hawkins' lawsuit, telling the jury he doubted they were true because of how similar they were.

McDavid recalled Loggans putting up billboards and TV commercials asking women "if you want to sue R. Kelly, call me." He testified those efforts discredited Loggans in his eyes.

McDavid attorney Beau Brindley also brought up other occasions in which he claimed women were coached to say they had sexual contact with Kelly before she turned 18 so as to win a settlement.

McDavid said this led him to conclude that anyone who came forward with an allegation against Kelly without going to police was lying.

McDavid testified that in December 2000, he got a phone call from Kelly saying he was being harassed about an alleged improper relationship with his 14-year-old goddaughter "Jane." McDavid testified this was the first he had ever heard about claims of such a relationship and asked Kelly if there was anything to the allegations. He said Kelly quickly dismissed the idea, saying: "Are you out of your f***ing mind? This is my goddaughter. Of course there's no truth to this."

Brindley then produced other reports in which Jane denied the allegations herself – even when pressed by police. McDavid said these reports reinforced his belief that the allegations were not true.

He also said if the allegations of improper conduct between Kelly and Jane were true, he was sure police would have come to Kelly and his team – and they did not.

McDavid also spoke directly to earlier testimony from Charles Freeman -- addressing it as false. He referred to Freeman referred as a criminal who tried to extort Kelly.

Freeman had testified that he had been sent to retrieve the sex tape that showed Kelly, and had agreed to do it for $1 million.

When asked why he did not report Freeman to police for blackmail and extortion with regard to claims about the sex tape, McDavid said Margolis did not want news of the tape to get out because it could ruin Kelly's career.

McDavid said he did not agree with the plan to pay Freeman for the tape and would rather have gone to the police. But McDavid said Margolis and private investigator Jack Palladino said he was out of his league and needed to go along.

McDavid testified that he was afraid Freeman would keep coming back over and over again for money, and then Freeman did so. He said Freeman wanted a contract and got one, but he said Kelly's team never agreed to pay Freeman $1 million.

McDavid said Freeman later gave Palladino a tape, which Palladino told McDavid was of very bad quality such that they couldn't tell who the woman appearing in it was.

McDavid said Kelly was really angry and "pissed off" about the accusations of a sex tape with Jane as he asserted they were not true, and was not scared or fearful about it. By contrast, Kelly said there could be sex tapes of him and a grown woman.

McDavid said he called Margolis about the rumor, and Margolis said Kelly should meet with Jane's parents and make them aware of the rumor of the sex tape so they would not be "sideswiped by the media." McDavid also testified for the first time that Margolis told him he should hire a criminal lawyer.

McDavid said he set up a meeting between Kelly and Jane and her parents – which McDavid said he himself did not attend. McDavid said after the meeting, Kelly was calm and had a sense of relief, and McDavid said at that point, he still had no reason not to believe Kelly.

Martha Johansen, a former administrative assistant for private investigator Jack Palladino, who died in 2021, took the stand at Kelly's trial Wednesday morning.

Testifying via video conference from Nevada, Johansen confirmed Palladino was hired by Kelly's team in the early 2000s as he was under investigation for sexual misconduct claims.

Johansen testified she reviewed Palladino's files on Kelly, including several that mentioned McDavid's name.

She said one billing invoice referenced an extortion attempt by Charles Freeman, who previously testified at trial that Kelly's team hired him to recover incriminating sex tapes.

During cross-examination, prosecutors noted she wasn't there for meetings and calls regarding the Kelly case, and her knowledge of the Kelly case was based purely on billing statements and reports, so she can't independently confirm what happened in meetings between Palladino, Kelly's team, and Freeman. 

Wednesday's first witness was Homeland Security special agent Amalia Molina, who previously testified for the prosecution last week.

Molina told Kelly's attorney, Jennifer Bonjean, that she was assigned to the Kelly case in March 2019, and picked up grand jury material from Kelly's 2008 child pornography trial, which resulted in his acquittal.

The material she picked up included Chicago Police reports, and material from the Cook County State's Attorney's office.

Molina said she didn't see any documents indicating a Kelly accuser named Tracy had been interviewed by the Cook County State's Attorney's office, or a statement related to Tracy having a threesome with Kelly and his 14-year-old goddaughter "Jane."

However, during cross-examination, prosecutors noted Molina could not confirm if the entire Kelly case file from 2008 was in the box, and could not definitively confirm if Cook County prosecutors interviewed Tracy before 2019.

Tracy already has testified at trial that, while an intern for a record company, she was sexually abused by Kelly when she was a girl, and that she had threesomes with Kelly and his 14-year-old goddaughter.