EXCLUSIVE: As is normally the case when Michael Lohan is involved, the series of events leading to his arrest Monday on domestic violence charges are hazy at best. But the picture is starting to get clearer, with a friend of Kate Major's revealing to me that the whole "ugly" episode revolved around money and, more to the point, Michael's lack of it.

Florida native Kate was in Los Angeles because Michael "begged" her to be taped on 'Celebrity Rehab' with him and she agreed.

"While she was there they had a huge argument over the money he owed her and it got really ugly," the family friend says. "Mike doesn't have a job and lives hand to mouth. He had been angry all day that a check he had couldn't be cashed. Kate was so worried she left a message for a friend that said, 'I'm nervous, he has that look in his eyes.'"