The baffling case of Jacko, the gay porn king, and bags of cash

While Michael Jackson holes up in Bahrain, his legal problems are piling up in California, where two lawsuits are casting new light on his bizarre lifestyle and lavish spending habits, as well as further eroding his rapidly depleting bank balance.

Testimony has now begun in a breach-of-contract trial in Santa Monica which pits Jackson against Marc Schaffel, his former associate and financial adviser. Mr Schaffel, who produced gay porn videos before forming business links with Jackson in 2001, claims the singer owes him $3m (£1.6m) in expenses, salary and cash loans.

Another lawsuit, brought by Jackson's former manager Dieter Wiesner, seeks £45m from the embattled former King of Pop and is due to be heard later this year. Both of the lawsuits are backed up by tape recordings of rambling and sometimes incoherent telephone conversations Jackson had with the two men.

Jackson did not appear in court but jurors were shown part of a videotaped deposition in which the pop star said he was sure he had paid Mr Schaffel what he owed him because Mr Schaffel "always seemed to be happy". The singer's lawyers claim the star is famously forgetful and contend that Mr Schaffel fraudulently shuffled funds from Jackson's account to his own pocket and billed Jackson for expenses when he no longer worked for him. Jackson claims Mr Schaffel owes him money, not the other way round, and has filed a counter-claim alleging Mr Schaffel kept sculptures and paintings worth £138,000.

The trial is providing yet another look into the strange and eccentric world of Michael Jackson, where money is delivered in paper bags and price tags are never questioned. In pre-trial depositions, Mr Schaffel said the singer was constantly asking for money to support his lifestyle. He said that when Jackson wanted large amounts of money he would telephone and say "supersize them". Mr Schaffel claims he once delivered £75,000 to Jackson in a bag from a fast-food restaurant, causing Jackson to complain the money smelt of French fries. "Jackson carried no credit cards, wrote no cheques, carried no walking-around money and had people attending to his every need," Mr Schaffel says.

He claims Jackson owes him for loans and for unpaid work on a charity record and two television specials, Michael Jackson: The Footage You Were Never Meant to See and Michael Jackson's Private Home Movies, which were made to improve Jackson's reputation in the wake of child molestation allegations and to repair his image after a TV interview with Martin Bashir, in which the pop star said he shared his bed with children. Mr Schaffel, who worked with the singer from 2001-04, is described by Jackson's lawyers in court papers as "a professional swindler and pornographer".

In 2004, Jackson was charged with sexual misconduct, kidnapping and conspiracy, and Mr Schaffel and four others were named as co-conspirators but were not charged.

Witnesses at the 15-week criminal trial testified that Mr Schaffel orchestrated hotel stays and shopping sprees for the 13-year-old alleged victim and his family and planned to hide them in Brazil. Mr Schaffel did not testify at the trial and Jackson was subsequently acquitted.

Mr Schaffel also figures in the lawsuit brought against Jackson by Dieter Wiesner, who asserts that Jackson begged him to become his personal manager in 2002, when his personal finances were in crisis, only to "rudely and abruptly" fire him the following year. "True to form, Jackson never paid Wiesner for the countless hours he spent rescuing Jackson from the brink of financial disaster," the court papers state.

Mr Wiesner's lawsuit is backed by tapes of messages that Jackson left for Mr Schaffel. On one recording, Jackson descends into a bizarre rant against Jews, dubbing them "leeches" who he says conspired to leave him penniless. "They suck ... it's a conspiracy. The Jews do it on purpose," he said.

Jackson's domestic life has not been going well either. He has lost his appeal against a ruling in February that gave his ex-wife, Debbie Rowe, parental responsibilities for their two children, Prince Michael, nine, and Paris, eight.

Mr Schaffel's breach- of-contract suit continues this week.