DURHAM, N.C. — A former nanny from Germany testified Tuesday that in 1985 she rushed over to neighbor Michael Peterson's house after finding the body of her employer, Elizabeth Ratliff, dead at the bottom of stairs.

Ratliff's head wounds and her demise in a stairwell 18 years ago were similar to the death 18 months ago of Peterson's second wife, Kathleen Peterson, prosecutors say. They are presenting evidence about Ratliff's death to bolster their contention that Michael Peterson could have staged his wife's murder to look like a fall down stairs. They have suggested both that Peterson was responsible for Ratliff's death and that he merely witnessed her death but used it as a model for his wife's murder.

"Liz was lying in a pool of blood ... It was just everywhere," said Malagnino, who was 24 years old in 1985. "She felt warm."  

Malagnino recalled that most of the lights were on inside Ratliff's home when she used her key to enter the dwelling at about 7:15 a.m. on Nov. 25, 1985. The second thing she noticed was the body lying at the bottom of the stairs.

Malagnino said she did not realize at first that the body was Ratliff's, so she yelled out Ratliff's name and ran up the stairs looking for her. When she returned, she recognized Ratliff's body, noted that she was wearing snow boots and then ran down the street to summon Peterson.  

Returning to Ratliff's home with Peterson, Malagnino, said she felt sick to her stomach. Peterson told her to get a sheet to cover the body, she testified, but Malagnino pointed out that the body was still warm to the touch.  

"'She's not warm, Barbara. She's dead,'" Malagnino quoted Peterson as saying. "'The warmth comes from the floor heating.'"  

Although there has been evidence presented that Ratliff's home was heated by hot water circulated in tubes beneath the floor, prosecutors may argue later that Peterson did not need to examine the body to know his friend was dead because he already knew.

The defense has yet to cross-examine Malagnino, but Peterson's lawyers complained during a hearing that prosecutors had done little to discourage — and may have actually encouraged — the witnesses from Germany discussing their recollections. Judge Orlando Hudson Jr. found no violation that would compromise Peterson's rights.

The hearing on the issue did bring out curious testimony, outside the jury's presence, that may or may not find its way into evidence. Ratliff's friend Amy Beth Berner told the court that Peterson claimed he had connections and could have a woman involved in litigation with Berner's husband killed if Bern wanted.

Amy Beth Berner made strange allegations about Michael Peterson's past during a hearing Tuesday.

She also made another claim that could prove explosive, if jurors ever hear it: "Michael told me he was in the CIA at some point and had point-blank murdered someone while in Vietnam," Berner said. "That concerned me."  

Hudson stopped the testimony, saying it was clearly not relevant to the issue of witness sequestration and concerned other potential crimes.  

"Hold on," Hudson said. "This is all very interesting but I'm not sure what this all has to do with the hearing."

The statement about Peterson's possible CIA ties was just one of several bizarre things to happen Tuesday that jurors have no knowledge of yet. The day started, for example, with prosecutors announcing their decision not to introduce a witness statement they worked so hard to get admitted Monday.

In the statement, written in German and translated into English, a neighbor of Elizabeth Ratliff's claimed she saw Michael Peterson leaving Ratliff's home in a rush the night before Ratliff's body was found.  The neighbor could not travel from Germany to be in court for medical reasons.

Prosecutors explained that the court official who translated the statement was no longer available and it would be too difficult to get the statement translated again in time to be useful for their purposes.  

One strange trial development jurors did hear about was the testimony of a prosecution witness who contradicted other witnesses.  

The testimony of the witness, former Army investigator Steve Lyons, seemed to benefit the defense more than the prosecution. But prosecutor Jim Hardin Jr. may have decided to call Lyons to testify before defense lawyers got a chance to call Lyons themselves.  

Steve Lyons testified about a neighbor's death in 1985.

Lyons said he had accepted the conclusion of German police that Ratliff died after suffering a brain hemorrhage and falling down the stairs. He said many people, including a male neighbor whose name he does not recall, supplied information, including how Ratliff spent her last night and the fact that she was having headaches during the weeks leading up to her death.  

Hardin told the judge he intends to argue later that the helpful neighbor was Michael Peterson, even though Lyons testified he could not say one way or another whether the defendant supplied the information.  

A previous witness testified that Peterson, who has raised Ratliff's daughters since her death, told her that he walked Ratliff home after she had dinner with his family, helped put the children to bed and took out the trash. She was wearing snow boots when her body was found the following morning, which witnesses said was unusual because Ratliff normally would not wear boots or shoes in the house.  

Lyons testified that he arrived at Ratliff's home at about noon on Nov. 25, 1985, to find a lot of people milling about. He said Ratliff was lying on a landing with one of her feet on a step above her body, which was partially covered with a garment.  

Lyons testified that he didn't remove the garment to observe the body, but did notice a pool of blood near her head. He said he did not observe blood on the stairs themselves or on the wall adjacent to the stairs.  

The testimony differed from that of Ratliff's friends, Cheryl and Tom Appel-Schumacher, who said in court Friday that they cleaned up a lot of blood.  

Defense lawyer Thomas Maher asked Lyons only a few questions on cross-examination, apparently content that his direct testimony hadn't inflicted damage.

 The trial resumes at 9:30 a.m. Wednesday and is being broadcast by Court TV.