updated 10/7/2008 9:06:00 PM ET 2008-10-08T01:06:00

Two close friends of Sen. Ted Stevens schemed to conceal the fact that one was paying for expensive remodeling and repairs done at the senator's cabin in Alaska, according to FBI audiotapes played Tuesday at Stevens' corruption trial.

Bill Allen and Bob Persons are heard on tape fretting in February 2006 after Stevens contacted Allen about a $1,000 plumbing bill that says, "Labor paid for by Bill."

"We need to make that disappear from (the plumber's) records," Persons says in one conversation captured by an FBI wiretap of Allen's phones. "Tell him Ted's paying for everything. I mean, that's the safest thing, Bill."

Allen, the government's star witness, and Persons, a neighbor who helped oversee the cabin makeover, agree that Allen should get a check from Stevens for the work. But they also decide that instead of cashing it, it should be photocopied and saved in case the senator was ever investigated for ethics violations.

"If it ever comes up, you say, 'Bull----. He paid me for that,'" Persons says.

Stevens, 84, is accused of lying on Senate financial disclosure forms to conceal more than $250,000 in home renovations and gifts from Allen, the former chief of an oil pipeline company. The patriarch of Alaska politics hopes to clear his name with an acquittal before voters go to the polls next month to decide whether to return him to the Senate seat he's held for 40 years.

Allen concluded his testimony on Tuesday after spending nearly four days on the witness stand detailing a relationship with Stevens that spanned two decades. Prosecutors used Allen to attack Stevens' claim that he was clueless about the extent of free work that Allen and his company, VECO Corp., did on the cabin.

Before he left the stand, Allen quoted Stevens as saying during one of their many dinners together, "I know you're putting more work in there than what you're saying."

Allen testified as part of a plea deal in a bribery investigation of Alaska legislators. On cross-examination Tuesday, he testified that in addition to possible leniency at his sentencing, Allen has millions of dollars riding on his cooperation.

Under the terms of a $380 million sale last year of VECO, the buyer was allowed to withhold $70 million until able to determine whether Allen's cooperation helps deflect criminal charges against the company itself.

Jurors on Monday heard conversations — secretly recorded by Allen — where Stevens proclaimed his innocence while advising Allen to keep a low profile during the FBI investigation.

"I don't think we've done anything wrong, Bill," Stevens said on the tape. "I tell you right now, I've told my lawyer I can't think of a thing we've done that's wrong."

In the tapes of Allen and Persons, Allen warns in another conversation about Stevens' cabin that they "need to be real careful."

"Absolutely," Persons responds. "They're raking him over the coals about anything they can."

Persons also brings up a horse racing partnership involving the three men, saying he's worried Stevens will balk at paying his share.

"As Catherine says," Persons says, referring to Stevens' wife, "Ted gets hysterical when he has to spend his own money."

It's mentioned that one of the horse's names was Cloak and Dagger.

U.S. District Judge Emmet G. Sullivan said he would hold a hearing Wednesday on repeated defense claims that prosecutors intentionally withheld evidence favorable to their client.

In a late Monday night filing, prosecutors said they had done nothing wrong and called the defense claims "the latest salvo in their effort to derail the trial."

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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