The administrative assistant in J. Gary Sheets' investment firm testified Wednesday that money raised in an investment offering was actually used to pay off loans taken out to invest in a previous failed venture.

Scott Leishman, who was an administrative assistant for J. Gary Sheets and Associates, also said he sometimes notarized signatures, affirming the signer had appeared before him personally, when he actually did not see the documents signed.He said money from the Working Fund Investment was used to pay off loans taken out by investors in a different project called Montana Minerals. A doctor in Nevada was one investor mentioned in this category.

"Under the direction of Gary, we paid off the letters of credit (loans) on various clients for Montana Minerals," Leishman said.

Assistant U.S. Attorney Tina Campbell asked, "Why were you directing checks to be sent to pay off the letters of credit?"

"Gary had decided these clients were upset. Their letters of credit were being called," Leishman said.

He said that if Sheets had not paid off the loans, the clients would have had to come up with cash themselves.

Montana Minerals had been intended to make enough money that the investors' loans would be paid from that. "To the best of my knowledge the partnership wasn't able to pay them," he said.

Campbell had Leishman look through three of Sheets' personal financial statements from 1984 and 1985. He said "contingent liabilities" listed amounted to more than $19 million.

"A contingent liability would be a liability that you may have that is not directly related to you. For example, if you co-sign on a loan, but the loan is not in your name, that would be a contingent liability," he said.

From 1983 or 1984 to 1987, Leishman was a notary public, becoming one at the request of Sheets' partner, Steve Christensen. He said he was among about five or six notaries at the firm. He said he notarized some documents that said the signer personally appeared before him when the signer did not.

He said Sheets instructed him to do that and "represented to me that it was his (the signer's) signature, and I believed that it was." When Campbell pressed him to say why he believed it was, he said because Sheets had so represented it and "because of my faith and trust in Gary."

Sheets' trial on fraud and securities charges is expected to last at least another month before U.S. District Judge David Sam.