Ex-Aide Accused by Cosby : Court: The comedian’s attorneys tell a judge his former business manager squandered and stole more than $8.5 million over the last decade.

A multimillion-dollar legal war involving charges of embezzlement, fraud and cocaine abuse shaped up in a Los Angeles federal court hearing Thursday, pitting Bill and Camille Cosby against their former business manager, who recently filed for bankruptcy protection after serving for eight years as chief financial officer to the comedian Forbes magazine once dubbed “the richest man in show business.”

Mary Waller was earning $1 million a year when fired in July. The Cosbys subsequently accused her of drug-induced mental instability, fraud, misappropriation and embezzlement of more than $8.5 million over the last decade, according to court filings.

Besides running much of the entertainer’s vast business holdings, Waller was responsible for “maintaining the Cosbys’ intense privacy regarding their financial affairs, such that the Cosbys dictated to Waller that their financial affairs be kept totally private, even with respect to their attorneys and accountants except on a need-to-know basis,” according to her attorney, Richard Pachulski.

Instead, according to a declaration Cosby himself filed in December, Waller misspent millions of his and his wife’s dollars. Cosby maintained in his declaration that from a fund he had established to refurbish a Manhattan brownstone, Waller, 46, used money to buy herself a $44,551 Range Rover automobile, $28,610 in “fine jewels” from Christie’s auction house and $8,234 in antique doors for her Greenwich, Conn., mansion, among other items.

From a second account called “petty cash,” she spent $140,650 between February and November of 1988, according to Cosby’s declaration, paying out sums for such “business-related” expenses as a $300 tip to the pilot of Cosby’s private airplane.

“Non-business-related” expenses, for manicures, veterinarian bills, lingerie, dog toys and other items totaled $17,340.61, according to Cosby. Those expenditures included as little as 81 cents for the wrapping of Waller’s Christmas presents and as much as $8,200 for her Christmas shopping spree.

A half-dozen attorneys representing the Cosbys and Waller argued for two hours before federal bankruptcy Judge Arthur Greenwald on Thursday, debating whether the Cosbys’ allegations of fraud and drug abuse warranted an early trial in order to prevent Waller from further eroding her estimated $10 million in assets.

The Cosbys’ attorney, Eugene Galernter, maintained that Waller recently dyed and cut her hair in order to frustrate a court-ordered chemical test to determine whether she has been a recent user of controlled substances. Such testing of hair is a court-approved method of determining cocaine use.

Through attorneys, the Cosbys have moved for a “protective order” to seal financial data and information relating to psychological tests in the bankruptcy matter.

Greenwald ordered all the lawyers back to court Tuesday. At that time he is expected to set a date for trial on whether Waller is capable of managing her own assets while she reorganizes after filing for protection under Chapter 11 of the U.S. Bankruptcy Code, or whether her estate should be placed under a bankruptcy trustee.

The Cosbys and Waller were not present Thursday.