Sen. Mike Duffy says a senior Conservative colleague told him to file expense claims indicating he lived primarily in Prince Edward Island in order to insulate himself from criticism he wasn't qualified to represent the province.

Where Duffy lived while he was senator is one of the central issues of his fraud, breach of trust and bribery trial. He is accused of defrauding the public purse when he filed expense and travel claims on the premise that his cottage in P.E.I. was his primary residence.

On his second day of testimony, Duffy recounted a Senate orientation session for new Conservative senators in early 2009. At the time, Duffy was "shaken" because a professor in P.E.I. had questioned in the media whether the former broadcaster was qualified to sit in the Senate. Since the 1970s, Duffy had lived in Ottawa.

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Duffy said Conservative Sen. David Tkachuk, then the deputy chairman of the powerful internal economy committee, told him not to worry.

"You've got two houses, so the housing allowance is to defray part of the cost of your second home, there's no reason for you to be penalized...," Duffy said Tkachuk told him.

"It's very important that you claim all of the claims and allowances because if you don't, if you create any light ... the professor will say, 'He's different, he's not from here."'

Tkachuk told an Ottawa Citizen reporter in 2012 that Duffy's expenses were entirely within the rules, and that many senators spent the winter in Ottawa and summer in their home province.

Tkachuk said Wednesday he never told Duffy to make expense claims to legitimize his hold on his Senate seat.

"Everyone in authority who knows what they're talking about, who knows the rules, knows I followed the rules," Duffy said.

Duffy added later that he and his wife discussed selling their home in Ottawa and living in a hotel like other senators do — a move that would have cost the Senate $200 per night rather than the $30 allotted for private residences.

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The court also heard the minute details of how Duffy renovated his cottage in Cavendish, P.E.I., to make it suitable for year-round use.

By the end of the project, Duffy had spent $98,500 upgrading the structure inside and out, which Bayne pointed out was $20,000 more than the housing allowance he claimed over four years for the home in Ottawa.

"You come out on this 'fraudulent deception' at best breaking even, if you survive a couple more years in the Senate, or behind the eight ball," said Bayne.

"Outrageous, isn't it," Duffy said dryly.

Bayne is also attempting to tear down the Crown's case that Duffy had a motive for fraud — a cash shortfall and a lot of debt. A forensic accountant who testified earlier in the trial pointed to unexplained cash deposits, and someone who was spending more than he was taking in.

But Bayne went over four different non-taxable inheritances Duffy and his wife Heather received during that time period, totalling $200,000 more than the accountant had questioned. He also emphasized that the Duffys had hundreds of thousands in real estate equity and earnings.

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"I have never broken the rules, let alone the law," Duffy said. "I never received a penny from anyone, ever."