City Attorney Rocky Delgadillo's troubles mounted again Friday when state tax officials disclosed they suspended the license for his wife's consulting business and have no record that she paid taxes on it.

The disclosures prompted Michelle Delgadillo to write a check for an undisclosed sum to the city for failing to pay back taxes, saving her husband the embarrassment of having to pass the prosecution of her case over to the District Attorney's Office.

City Ethics Commission records show Michelle Delgadillo earned between $10,000 and $100,000 a year from her home business from 2002 to 2006.

The California Franchise Tax Board said it had no tax records for her business and suspended the license for her corporation, CRD Inc., in February 2005.

In a statement, Delgadillo's office said Michelle Delgadillo, 36, "reported and paid income taxes" on all of her home-based business income. The city attorney was not available to comment directly and the nature of her clientele was not disclosed.

California Franchise Tax Board spokeswoman Theresa Gray said the business is breaking the law if it is continuing to operate.

"They can't legally do business in the state of California. They need to file forms and come back into compliance," she said.

Delgadillo's office refused Friday to answer questions about the tax board's findings.

The office released a four-sentence statement late Friday:

"CRD was set up by Michelle for her own personal business.

"Michelle reported and paid income taxes on all CRD income, and the income was reported on the City Attorney's Form 700. CRD never worked on any City Attorney contract.

"If there are any issues with CRD, Michelle takes full responsibility and intends to resolve them."

Michelle Delgadillo, who has said she's a stay-at-home mom, is listed as the chief executive officer and chief financial officer of CRD Inc.

The company is described as a consulting and business development corporation, according to state records. Her brother, Michael Namen, is listed as the secretary.

CRD is registered with the city of Los Angeles. Department of Finance Assistant Pamela Mooney said confidentiality rules prevented the office from saying whether the company had paid its city business taxes, but the City Attorney's Office said required fees were late until Michelle Delgadillo paid them Friday.

Ironically, as deputy mayor for economic development for former Mayor Richard Riordan, Rocky Delgadillo led the effort to lower the city's business tax and go after scofflaws who weren't paying their taxes.

Now as city attorney, he is responsible for prosecuting delinquent business taxes. But Delgadillo's aides said Friday that the Department of Finance hadn't referred his wife's business to the office for enforcement.

And if they had, Delgadillo would have passed the case to the District Attorney's Office because of the conflict of interest.

The late city fees and prospect of unpaid state taxes comes after the city attorney has fessed up to a number of embarrassing ethical breaches in recent weeks, including misusing his city car and having staffers baby-sit his children and run personal errands.

The California State Bar has launched an investigation in response to a complaint, and the city's Ethics Commission is expected to investigate as well.

Negative reaction to the disclosures has been heightened because of the tough stance the city attorney took in publicly pursuing a jail sentence for celebrity heiress Paris Hilton after she violated her probation for a DUI by driving with a suspended license.

Shortly afterward, it was revealed that Michelle Delgadillo had driven with a suspended license and without insurance.

She also had a nine-year-old outstanding warrant stemming from 1998 vehicle citations and had damaged her husband's city-owned SUV. The vehicle was later repaired at taxpayer expense.

Delgadillo paid the city $1,222 this week to reimburse for those repairs, and after more than a week of ducking questions about the SUV incident admitted what had happened and that he also had unknowingly driven without motor vehicle insurance for a year.

As the city's top prosecutor and legal adviser, Delgadillo makes $205,000 a year and has a city car and security detail.

In recent days, he has also come under fire for having secretaries and administrative assistants baby-sit his children at the couple's million-dollar Midcity home.

Sources also have said he used aides to run personal errands, including setting up a trampoline at the Delgadillos' home.

Delgadillo has said the employees were longtime friends of the family who did the work on their personal time and were offered pay by the Delgadillos.