'Whitey' Bulger Money the Subject of Court Wrangling

PHOTO: James Whitey Bulger TrialU.S. Marshals Service/AP Photo
James "Whitey" Bulger, one of the FBI's Ten Most Wanted fugitives, captured in Santa Monica, Calif., after 16 years on the run, June 23, 2011.

As jurors deliberated for a fourth day about the fate of accused Boston mob boss James "Whitey" Bulger, lawyers for his alleged victims and federal prosecutors sparred over $822,000 in cash found hidden behind the walls of his Santa Monica hideout.

Last week Bulger's lawyers told the court he wanted that money to be distributed to the families of Michael Donahue and Brian Halloran, men who he is accused of gunning down outside a South Boston eatery on May 11, 1982.

Those murders were sparked after crooked federal agents tipped Bulger to Halloran's cooperation agreement with the FBI. Donahue was an innocent bystander when he was shot dead.

But that goodwill gesture has been met with resistance from federal prosecutors who filed a brief saying the government and not the defendant should decide where Bulger's ill-gotten gains go.

Attorneys for the family of Debbie Davis, allegedly strangled by Bulger, and the ex-wife of Stephen "Stippo" Rakes, a potential witness against Bulger who was found murdered at the side of a rural road last month, have also filed briefs that point to the lien a federal judge put on any of Bulger's assets after he was captured in June 2011.

"There are liens on everything related to Bulger,'' Tony Cardinale, an attorney representing Rakes' ex-wife Julie Dammer, told ABC News.

Rakes' murder, prosecutors said, was not related to the Bulger trial and a business associate has been arrested and charged with spiking Rakes' coffee with a fatal dose of cyanide.

Federal prosecutor Brian Kelly told the court it would be "inappropriate" for Bulger to dictate where his cash should be distributed.

U.S. District Court Judge Denise Casper said the jury would decide whether Bulger should be forced to forfeit any monies he received from his life of crime if -- and after -- a guilty verdict is reached.

Bulger's surprise announcement buoyed the hopes of Pat Donahue, who raised three sons after her husband was killed. Donahue had successfully sued the government because of the involvement of corrupt FBI agents in her husband's death, but an appeals court reversed the ruling saying the statute of limitations had passed so she never received any compensations for the government's role in her husband's slaying.

"At this point its not about the money,'' Pat Donahue told ABC News. "It's about justice for my husband. It's about all the corruption that allowed people to be murdered with the help of the FBI. They should have to feel that."

Donahue and her sons, Michael, Tommy, and Sean, have been in court throughout the trial listening to 72 witnesses over 35 days. Waiting for the verdict has been "the most stressful part of the trial,'' she said.