J. Gary Sheets, whose investments empire collapsed shortly after bomber/forger Mark W. Hofmann murdered Sheets' wife, was indicted Wednesday on 34 felony counts.

Maximum possible penalty upon conviction would be five years in prison on each count, except those charging interstate transportation of funds obtained by fraud, each of which has a 10-year maximum.On Oct. 15, 1985, Hofmann planted pipe bombs that claimed the lives of Sheets' wife, Kathleen, and Sheets' former business partner, Steven F. Christensen. Hofmann is serving a life term in Utah State Prison for the murders and his infamous forgeries.

The Hofmann crimes tie in with the new indictment, but apparently indirectly. Hofmann tried to disguise the murders as the work of a disgruntled investor in the companies once operated by Sheets and Christensen. Sometime before the killings, their partnership was dissolved.

Wednesday afternoon, the federal grand jury in Salt Lake City charged Sheets with mail fraud, interstate transportation of money obtained by fraud, embezzlement from pension plans, and securities fraud.

U.S. Attorney Brent D. Ward said Sheets is accused of cheating 75 investors in Utah, Nevada, Idaho and Montana of $1.8 million.

Asked why the case has dragged along so long before the indictment, Ward said, "It's a complicated investigation. It involved the interviewing of hundreds of witnesses," and studying thousands of documents.

Sheets is to be arraigned before a U.S. magistrate within the next two weeks. A copy of the indictment was given to his Salt Lake lawyer, Peter Stirba,and Sheets will appear without an arrest warrant,Ward said.

He said Sheets had known for some time that he was a target of an investigation.

"The indictment focuses on Mr. Sheets' handling of money he personally raised from investors in three separate partnerships," Ward said.

In some cases, he said, Sheets promised 17 percent return on the investment.

Among the claimed victims are employee benefit plans whose trustees were members of the famous Osmond family. The benefit plans lost a total of $210,000, according to the indictments.

Sheets once lived in Salt Lake City but is now a California resident, Ward told reporters at a press conference in his office.

Sheets was the principal stockholder and chairman of the board of CFS Financial Corp., and investments company, the indictment says. It adds that he was president and director of J. Gary Sheets and Associates Inc., a Utah corporation established in 1981 to recruit sales representatives for CFS and its subsidiaries, and provide services for clients and affiliates of CFS.

Ward said 64 people lost money by investing in limited partnerships called Working Fund I, to the tune of $1.5 million. He said 11 more lost a total of $264,000 through Working Fund II.

Sheets and Christensen guaranteed the investments in the Working Fund companies, the indictment says.

However, Christensen "would not have been indicted," if he had lived, said Ward. "There's no indication he was involved with any misrepresentations."

The chief federal prosecutor said he is not aware of any direct connection between this case and Hofmann or the Granada investigation by the state attorney general's office.

"Almost all of the investors in Working Funds I and II lost all the money they had invested," the indictment says.

A third investment partnership is involved, according to prosecutors: Arrowhead Village General Partnership, formed by Sheets and Associates to buy apartments in Georgia. Arrowhead is considered a security under the law, it says.

From 1984 until 1987, Sheets used fraudulent pretenses to get money and property by selling interests in Working Funds I and II, charges the indictment. At times he didn't give investors copies of a prospectus; when he did give copies, sometimes it wasn't in time to read before investing, it says.

According to the indictment, Sheets falsely represented that investments wererisk-free and investors could safely invest their pension and retirement money.

"J. Gary Sheets did not diclose to investors the CFS ans its entities were infinancial trouble," it says. "Sheets falsely represented that CFS and its entities were financially sound."

As part of a scheme to defraud, Sheets had some documents falsely notarized, it says. He also allegedly "had clients" money withdrawn from bank accounts and placed in Working Fund I or Working Fund II without the consent, knowledge, or authorization of the client."