Bhatti, now 25, sat front and center at the King of Pop's memorial earlier this month, and is currently staying at the Jackson family home in Encino, Calif.
A Norwegian performer, Bhatti was a fixture at Jackson's Neverland ranch after the two met in Europe in the mid-1990s, when Bhatti was around 11, according to several sources.
'Little Monkey'"Everyone knew him as 'Little Michael,' and Michael referred to him as 'Little Monkey,' " remembers Ricky Harlow, a rocker in the band Harlow, who was signed to Jackson's MJJ Records in 1996 – and enjoyed an open invitation to Neverland.
Harlow, then about 15, spent many weeks at Jackson's ranch and remembers Bhatti and Jackson as being very close, but says media reports hinting that Bhatti is the pop star's son make little sense.
"They had a father-and-son type of connection," Harlow says, "but I never thought he was his biological father. They met when Little Michael did a contest impersonating Michael Jackson in Europe in the mid-1990s, and Michael saw it and was blown away and got in contact with the family."
Life at NeverlandThe Jackson family recognizes the close bond and has taken in Bhatti, a source tells PEOPLE. "They definitely embrace him," says the source. "He lived with Michael like a son. After Michael died, he came to the Jackson family home in Encino. He came along with Michael's kids."
Soon after meeting Jackson, Bhatti and his mother Pia and father Riz were invited to live at Neverland, with all its perks.
"Michael cherished him," says Harlow. "He was always like, 'Please be careful with Little Monkey. When you ride on the four wheelers, PLEASE be careful because Little Michael lives with me.' I'm a crazy driver. I actually wrecked a bunch of the four wheelers with Little Michael with me. He was having so much fun."
Michael's IdolAs for Bhatti, he more than lived up to his nickname – dressing and moving just like Michael.
"I could tell little Michael idolized him," says Harlow. "[Omer] would say things like, 'I'm going to be a millionaire by the time I'm 20.' He was super ambitious; I remember he was very talented, and Michael would always say that."
Though many viewed Jackson's close relationship with children as inappropriate – he was tried on molestation charges, and acquitted, in 2005 – Harlow says Neverland holds only good memories for him.
"I would hang out at his place all the time, and we'd be dancing in front of the mirror together," Harlow, now 26, remembers. "One day and he turned to me and said, 'You've got a lot of nerve.' To him that meant I'm a bold person. I'm going to keep that in my heart."
With reporting by CHAMP CLARK