Larry Jones was watching a Monday night football game when the gunman came into his basement apartment at 1349 Euclid St. NW to rob the proceeds of the "Mexican mud" heroin that allegedly was sold there. He was not much worried, Jones testified in federal court yesterday, until the gunman threatened "to shoot some of you M.F.s"

"I was laying on the bed," Jones said. "When I heard that . . ."

Jones said the gunman was angry because the apartment had just run out of heroin. One of the men involved had taken all the money on hand and gone to get a new supply, Jones said.

"He said, 'I don't want your money. I want Sykes's money.' Then he left," Jones said.

He said Sykes was really Calvin Agurs, 28, the man on trial charged with conspiracy, possession of narcotics with the intent to distribute them and unlawful distribution of a controled substance (heroin).

Agurs and 17 other persons were indicted last January on charges of distributing heroin, and on related charges. Police and prosecutors have said that theirs was the heroin that caused four persons to die of overdoses last November and 33 others to be hospitalized.

Agurs is on trial alone in U.S. District Court, Seven of his codefendants pleaded guilty in the past week and eight others have been granted separate trials. Charges against two defendants have been dropped.

Larry Jones, who was granted immunity from prosecution for his testimony in the case and who is in the protective custody of U.S. marshals, said the gunman had been a bodyguard of Agurs until he began robbing apartments involved in by Augurs' alleged narcotics network.

The first time he did it, Jones said, he took $3,500 and also kidnaped Joseph H. King Jr., who pleaded guilty last week of conspiracy to violate the narcotics laws.

The night he was watching the football game, Jones said, King had gone to get a new supply or heroin. When King got back to the Euclid Street apartment and found out what had happened, he ran, Jones said.

"All of them knew (the gunman)," said Jones, 29, himself an addict since 1969. "Everybody was scared of him."

It was after that incident, Jones testified, that "Sykes" began offering $500 for a picture of the gunman and "$5,000 for anyone who wanted to take a contract on him." Jones testified that it was understood that the contract was to kill the robber. There was no testimony that this had been done.

Much of Jones's testimony concerned the economics and vocabulary of the narcotics trade. He said the ring that he worked for dealt mostly in "quarters" - two teaspoons of heroin - or "halves - one teaspoon of heroin.

Formerly "quarters" cost $100, but competition had forced the price down to between $80 and $90, he said. The price of a "half" dropped from $50 to $45 for the same reason.

He said distribution was made from apartments that were supplied by "The Man" and were operated by two or more "inside men" who supplied "runners." The "runners" paid a discount price for the stuff, the witness said, and then sell it to their customers.

Jones said it was not unusual to see 50 or more addicts outside a building that was known to be a distribution point. All the places he worked were in the area of the 14th Street "strip" around 14th and U Streets NW.

Under cross examination by Kenneth Robinson, a former prosecutor who is Agurs's defense attorney, Jones said he had run his own "shooting gallery" at 1424 W St. NW, where he worked as a building custodian.

He said "many knew of my establishment' and that they would go there to "shoot up." He said the custom was to pay him by sharing a "quarter" with him, or paying him $3.

The crucial question that Assistant U.S. Attorney Roger Adelman had for Jones was whether he had ever seen Agurs distribute narcotics. Jones said he had seen him on several occasions.

Robinson challenged this in his cross examination. He said in his opening statement last week that there were numerous narcotics distributors in Northwest Washington who went by the name of "Sykes."

Yesterday's other witnesses were William Arthur Graham, 30, and Patricia Williams, 30, Jones's sister, both of whom have been granted immunity for their testimony. The trial is expected to continue until next week.

Graham said he had seen Agurs four times during his time as a heroin addict, which he said was now past. Williams said she had never seen him although narcotics had been sold from her apartment for one day last fall.

She said she never had been paid for letting the dealers use the place.