R. Kelly’s former business manager says early claims against singer were ‘a money grab’

CHICAGO — R. Kelly’s former business manager took the witness stand Wednesday in the disgraced R&B superstar’s federal child pornography trial, testifying that he believed the early accusations of sexual impropriety lodged against the singer were nothing more than “a money grab.”

Derrel McDavid — one of Kelly’s two co-defendants in the trial — told jurors that he was hired as Kelly’s accountant shortly after meeting him in the early 1990s. As Kelly’s status grew, so, too, did his ego.

“I knew ‘Robert,’ McDavid said. “Over time, ‘R. Kelly’ existed.”

“In regards to ‘Robert,’ initially, as we got to know each other, he was always joking around just like one of the guys, like you’d have a friend,” McDavid continued. “As he got to superstardom, he started to act like most superstars. He had to have what he wanted, it had to be the way he wanted.”

Kelly’s debut solo album sold more than a million copies and the singer — who grew up in poverty, according his lawyer — suddenly had access to hundreds of thousands of dollars. It was then, McDavid said, that Kelly’s relationships with women changed.

“He was flying a lot of women in and out of town, putting a lot of women in hotels,” McDavid said. “There were just a lot of women.”

McDavid — a CPA who had several other clients in the entertainment industry — said Kelly only associated with adults, not underage girls.

“I was familiar with how a lot of superstars behaved,” McDavid said. “His behavior was no different than any other superstar.”

McDavid said he was heavily involved in hiring others in Kelly’s orbit: attorneys, agents, insurance brokers and other professionals. In 1994, McDavid hired Gerald Margolis, a Los Angeles-based entertainment lawyer who counted Robin Williams and Mick Jagger among his clients.

Three years later, an attorney for a woman in Chicago, Tiffany Hawkins, informed Margolis of her intention to file a lawsuit alleging Kelly impregnated Hawkins. Kelly denied the claims when confronted by McDavid and Margolis, volunteering to take a paternity test. Soon after, McDavid said, Hawkins’ allegations changed. Instead of being pregnant, she claimed Kelly and her engaged in sex acts while Hawkins was under the age of consent.

Though Hawkins initially called for a $10 million award, she later settled for $250,000 after a grueling, 7-hour-long deposition by Margolis, McDavid testified.

“After seven hours, Jerry [Margolis] proved that she was a liar,” McDavid said. “He caught her in so many lies [that] I couldn’t count. So what it proved to me is that this is all just somebody trying to get paid.”

Margolis told McDavid that settling lawsuits based on bogus claims was “the cost of doing business,” McDavid said.

“This young lady in 1997 told so many different stories and so many different lies, it was obvious something was wrong and, most importantly, Jerry Margolis said, ‘This is the way it goes’ and he proved that to me.”

The Hawkins lawsuit would be the first lawsuit against Kelly to be settled out of court. As Kelly’s business manager, McDavid was keenly aware of the singer’s finances.

“In comparison to what Mr. Kelly was making at the time, these payments were relatively insignificant,” McDavid said.

During the second week of the trial, jurors heard testimony from Charles Freeman, who said McDavid and Kelly hired him to recover a VHS tape that showed Kelly engaging in sex acts with an underage girl.

On Wednesday, though, McDavid said Freeman’s testimony was false. It was Freeman, McDavid said, who contacted Kelly in 2001 and told him that he had a sex tape of Kelly with a woman. Freeman said he planned to sell the tape to a media outlet unless Kelly paid him.

“I wouldn’t hire him to shine my shoes,” McDavid said of Freeman.

McDavid is the only of the three defendants to testify in his own defense, and his testimony is expected to continue through Thursday.

Earlier Wednesday, U.S. District Judge Harry Leinenweber quashed a subpoena to testify sent to journalist Jim DeRogatis. DeRogatis’ reporting in the Chicago Sun-Times in the early 2000s ultimately led to criminal charges against Kelly in Cook County in 2002.

A federal grand jury in Chicago indicted Kelly on 13 counts in July 2019, accusing him of producing and receiving child pornography, while also enticing minors to engage in illegal sexual activity. Earlier this year, Kelly was sentenced to 30 years in prison by a federal judge in Brooklyn after he was found guilty of racketeering.

McDavid and Milton “June” Brown, a former assistant to Kelly, are charged with one count of conspiracy to receive child pornography. McDavid also faces two counts of receiving child pornography and one count of conspiracy to obstruct justice related to Kelly’s 2008 child pornography trial in Cook County.

Prosecutors allege Kelly and those in his inner circle paid out hundreds of thousands of dollars over the years in an effort to track down video tapes that Kelly made that allegedly show him engaging in sexual activity with underage victims.