Montgomery County Circuit Court jury heard testimony yesterday alleging that Paul A. Toneman pedled an empty dream to gullible investors who dumped thousands of dollars into an Ocean City new town that never built.

A Columbi psychiatrist testified that Toneman, a 60-year-old Silver Spring public relation's man - who had no recognizable wealth or line of credit - persuaded him and his friends to join a "billion dollar scheme" that required only a "small" investment - from $2,500 to $32,500.

Toneman is charged under a "false pretense" statue. Prosecutors say he "unlawfully and knowingly" obtained a total of $72,500 from four doctors, a dentist and a retired businessman, to whom he had sold franchises to operate in the supposed new town - which was never built.

In touching his get-rich scheme, Toneman reportedly said he was backed by Arabs who had put up $800 million for the development of a new town on the Eastern Shore called Patone Village.

Patone, to be located in rural Worcester County, was to become one of the largest cities in Marylan, second only to Baltimore, according to yesterday's testimony. It was to include 60,000 prefabricated homes, the world's largest shopping center, a medical center and cable television station.

In the second day of trial, Dr. Glodys St. Phard, the psychiatrist, said he invested $7,500 in Patone after he became "excited" about the prespect of designing its medical center.

St. Phard explained that he asked no questions about the Arab financing scheme or about details such as the development of housing or the shopping center in the project. He said he didn't ask many questions "till questions began arising everywhere."

The Columbia psychiatrist said his $7,500 investment, which came from fces he charged for psychiatric services he provided for Toneman's daughter was completely lost.

According to the indietment, Toneman also allegedly defrauded Dr. John F. philips, of Fairfax, a dentist, of $32,500; Frederick P. Babcock, a retired Silver Spring executive of $25,000; Dr, Joseph T. Inglefield of Falls Church, Dr. Frank A. Champ, and Dr. Atnhony Jean-Jacques of Columbia out of $7,500 each, between April 27 and Sept. 15, 1976.

A 17-page summary of evidence filed by the prosecution in this case outlines a 'list of promises and assurances Toneman made to guillible investors who in some cases invested their savings or quit their jobs.

"He peddled the blue sky with a rope holding up his pants," said one former friend shortly before. Toneman's indictment.

Toneman allegedly kept the "big idea" afloat for five months by repeatedly telling investors that he encountered one unexpected delay after another , but constantly promising that the project would soon be completed.

St. Phard testified that Toneman first said the Arab investors were going to open a bank in New York before going ahead with the project, then later said that the bank opening was delayed because the specially-ordered door to the bank was defective .

The psychiatrist then listed other delays such as Arab investors returning to their countries and "the bad political climate" in the United States when the French prime minister came to visit the President.

According to St. Phard, he did not ask questions. "I'm not terribly suspicious . . ." he said.

In his opening argument Thursday Toneman's attorney Theodore Wiseman said the evidence will show "a very tragic case. Mr. Toneman had an idea. He worked like a devil on this thing. Here's a guy with this crazy dream."

It was during the first day of trial that Inglefield explained how he invested $7,500 hoping to develop the medical center in Patone.

In Yesterday's testimony, St. Phard said he was told that the Patone project was going to be financed by an $800 million contribution by eight Arab nations who were going to contribute $1 million apiece. He said Toneman told him that the project required only $350 million, but that he was forced to take the entire $800 million because each Arab country insisted on contributing an equal amount.

According to the psychiatrist, he saw documents and news reports backing up Toneman's claims.

If convicted, Toneman can receive as much as 10 years in jail for each of the six counts of false pretense against him, a county state's attorney spokesman said.