The former sales director of an investment management firm testified yesterday that the company's president refused to tell anyone where clients' funds were invested.

William Harlan was the lead witness for the prosecution at the trial of Joyce Gowie Gamble, who is charged with 11 counts of fraud. Gamble, president of National Investment & Retirement Accounts Inc. (NIRA), allegedly took $250,000 from 55 investors between November 1984 and July 1985. Instead of investing the funds, she spent them on operations expenses and herself, according to Assistant U.S. Attorney Rhonda Fields.

The government must prove beyond a reasonable doubt that Gamble, 37, a resident of Northern Virginia, intended to defraud customers from the outset. In his opening statement, defense attorney John Mercer denied that his client ever intended to defraud anyone. He claimed that she had suffered from "catastrophic events" and had received bad business advice from consultants and lawyers that led to the "predicament she's now in."

From its office at 1511 K St. NW, NIRA tried to attract investors with promises of a guaranteed return of 15 percent or more on their money at a time when banks and money market funds were offering 11 or 12 percent. NIRA advertised two types of accounts: an insured fixed-income account like a certificate of deposit with a maturity of up to 24 months, and a fund of indefinite term that allowed investors to withdraw their money on five days' notice. The company sought to attract individual retirement accounts and pension accounts as well as general investors.

Harlan testified that Gamble told him that 80 percent of the clients' money would be invested in five areas: business loans, joint ventures, limited partnerships, mortgage securities and accounts receivable. The other one-fifth would be held in reserve at a bank.

The bulk of the money was to go into accounts receivable, he said he was told. That meant that NIRA would make short-term loans at interest rates above 20 percent to contractors doing business with the government to finance them until they were paid. Harlan testified that, when pressed for details by clients, he asked Gamble to identify the contractors. "She never even told me which agency," he said. The prosecution contends no investments ever were made.

Harlan also said that he never knew that clients' funds could be lent to NIRA itself. In addition to financing NIRA's daily operations, Gamble used this money to make a deposit on a house in Virginia, according to the indictment. Fields said the prosecution intended to present as evidence of the scheme an October 1984 document from the board of directors authorizing NIRA to buy a house for its president to rent. The document was signed only by Gamble and another employe who was also a friend, Fields said.

On cross-examination, Mercer questioned Harlan about a power of attorney that all clients had to sign enabling NIRA to invest their funds as it wished. He wanted to know if it contained limitations on types of investments. Harlan replied he thought they were limited to the five areas cited, but not real estate.

Harlan also testified that Gamble had told him the company was bonded against fraud, but that she refused to tell him the amount of bonding. Few NIRA customers have been able to recover any of their money, although Mercer insisted that the firm is still in business. Gamble "is trying to restructure and capitalize," he said.