Two people who couldn't be in court figured importantly in J. Gary Sheets' testimony Wednesday - his late wife and late business partner, both murdered four years ago by bomber Mark Hofmann.
But the diary of Kathleen Sheets and memos by Steven Christensen appear crucial in Sheets' trial on 34 counts of fraud and theft.A tearful Sheets explained the diary's shocked reactions to financial problems by saying he told Kathleen Sheets "most always good news. She never heard bad news . . . until the last year."
In February 1985, financing fell through on a building, 30 percent of which was owned by Sheets and another 30 percent by Sheets Investment Co. He told his wife about it.
"So I was concerned, knew we would have to dramatically cut down our own income," he said.
That scared her, he said.
In Tuesday's testimony, Sheets attempted to show that Christensen ran the show, while Sheets spent much of his time on the road selling.
"I left all the details of how to create it (J. Gary Sheets & Associates) to Steve, and Steve took care of all the details," he said.
JGSA became the syndication arm of the parent company, CFS, he said. It had a contract with CFS in which it would earn 1 percent of all money it raised. "It was to be a great source of our revenue," he said.
Sheets acknowledged he was president of the company, but said, "My main role was being out in the field dealing with clients."
When defense lawyer Peter Stirba asked him who managed JGSA on a day-to-day basis, he said, "Steve did. Steve Christensen."
JGSA was losing money and found itself $500,000 in debt, he said. But that didn't concern the partners much because they expected that after gearing up, it would begin making a great deal of money.
He and Christensen borrowed money everywhere they could to finance it, he said.
According to Sheets, the purpose of the "debt offerings" investments called Working Fund and Working Fund II was to raise $2.5 million to pay off debts and pay operating costs.
The Working Funds, the cause of many of the indictment's charges, were Christensen's idea, he said. He resisted at first, but Christensen talked him into it by telling him of "the pressure we were under."
Investments in the working funds were backed by Sheets' and Christensen's personal notes, he said, as well as by 50 percent of the stock in CFS. He believed these were adequate to cover the investments.
For investors to lose, he said, "CFS would have to go down the drain, and Steve Christensen and myself would go down the drain."