James Gary Sheets tricked singer Marie Osmond into signing away all $30,000 in her pension plan and placed it in a doomed investment scheme two weeks after he had taken the cash.
That was the gist of her testimony Friday afternoon in U.S. District Court. The entertainer, who was sworn in under the name Marie Osmond Blosil and is expecting a child, drew a fascinated crowd to the Sheets trial.Sheets is being tried on 34 counts of fraud, embezzlement and transporting money taken by fraud.
Marie Osmond, a Provo resident, said Sheets gave the Osmond family the impression that he was "doing very well" in investments for other people.
He introduced them to officers of the Pension Co. downstairs in his CFS Building in Salt Lake City, she said.
"He said that these were great people, that he would put his money with them and that he had nothing to do with that company," she said.
Acting U.S. Attorney Stewart Walz said in his opening arguments that Sheets was actually a part owner of the Pension Co.
She signed blank withdrawal slips so the Pension Co. could get money to cover administrative expenses for managing her pension, she said. She put $30,000 into her pension plan, thinking it was safe.
She described a meeting with Sheets in the Osmonds' building in Lindon, in which he promised to help her get back on her feet "after my divorce and that he would set up a budget and living expenses and take care of me, and everything would be fine."
The withdrawal slips did not have dates and amounts filled in, she said. She joked later that from now on she'll date everything she signs.
On June 19, 1985, $30,000 was taken from the Marie Inc. pension plan and invested in Working Fund II, but she did not know it at the time, she said. Prosecutors claim Working Fund II was a fraudulent operation by which Sheets bilked investors.
"Did you authorize anyone to take that out of your account as of June 19, 1985?" Walz asked.
"No I did not."
Two weeks later, when she was performing in Bloomington, Minn., Sheets called her at least twice. He said he was sending papers to her and she should "sign them and not date them and to send them back," she said.
They arrived that day and she signed them and sent them back. They were signature pages without other pages now attached to the documents, she said.
Marie Osmond identified a government exhibit as one of papers she signed at the time. It purported to be signed in Orem.
She said she was not there at the time. "I know I was on the road."
She didn't know what Working Fund II was as of July 5, 1985, she said.
Reading a paper she signed in Bloomington, Minn., that says "Working Fund II, $30,000," she said that writing was not on the paper when she signed.
Also not present was a disclaimer, now a part of the document, saying the partnership is speculative with a "high degree of risk" of a complete loss of the investment.
"Did you understand that you were placing $30,000 into a partnership with a high degree of risk?" Walz asked.
Walz had her read a document called an entity purchaser questionnaire, a checklist required by the Securities and Exchange Commission to assure that an investor knows what he's doing. It was dated June 18, 1985, and signed by Sheets.
She denied seeing it on June 18 or giving information for it. In fact, she said, some of the entries _ such as a statement that she had two years of college _ were wildly wrong.
One question asked about the frequency of her investments in marketable securities, with the answer "occasionally."
"What's a marketable security?" Walz asked.
"You tell me," she said.
Merrill Davis Osmond, Draper, her brother, said Sheets was a good friend after they met in 1983. But when Osmond was checked into Utah Valley Hospital in May 1985 suffering from stress, Sheets got him to sign a paper that turned out to be an agreement to invest in Working Fund II.
Osmond lost $50,000 of the $58,000 cash in his pension plan. The plan was worth more than $300,000 because of other assets.
Sheets was a "father image. He was a bishop, and he gave some real good direction in my life," he said.
Osmond said that while he was in the hospital, the doctor gave him a sedative. It reacted powerfully because of a blood chemistry deficiency, he said. "It does nothing but knock me out."
Sheets visited him in the hospital and talked about personal matters for 20 or 30 minutes. Then "Gary pulled these two documents out of his briefcase."
Sheets told him he had never taken a penny from him, and if he did it would be only for the most secure investment, he said. Sheets gave him a half-inch-thick prospectus for Working Fund II.
"I wasn't in a state of mind . . . to go through any kind of a rigorous education on a business plan," he said.
Walz asked him if he ever got his $50,000 back.
"No sir," Osmond said.
Later, he added, "If the Osmonds have a flaw, it's that we're too trusting."