NEW YORK, OCT. 7 -- A federal prosecutor told a jury today that the criminal case against Charles A. Atkins, who became the boy wizard of tax shelters, focused on "two things: greed and lies, and it's about both of those things on a massive scale."

The characterization of one of the largest tax-fraud conspiracy cases in history was made in the opening statement of Stuart E. Abrams, chief of the major crimes unit in the U.S. attorney's office.

Atkins, 33, and two other men were named during March in a 31-count indictment charging them with taking part in a tax-fraud scheme that generated fictitious losses exceeding $1.3 billion between 1978 and 1982.

The losses enabled investors -- including show-business celebrities, partners in leading Wall Street investment banking firms and other wealthy persons -- to claim more than $350 million in false deductions on their tax returns, according to the indictment.

The evidence will show, Abrams said, that the losses amounted to "nothing more than $1.3 billion worth of lies."

The evidence will also show that the transactions that gave rise to the deductions were "false, fraudulent and totally rigged, without any economic substance," the prosecutor said.

Abrams said that, for every $1 in cash, investors would have $4 in tax deductions at years's end.

Defense lawyers denied any wrongdoing by their clients.

Attorney James A. Moss said Atkins was only 24 when the enterprise was founded, and had no experience in running a day-to-day investment banking firm.

Moss also said his client had sought counsel from his lawyer father, Orin E. Atkins, the retired head of Ashland Oil Co., and from Washington and Louisville lawyer Bernard H. Barnett, and had persons experienced in the securities markets among his 150 employes.

Abrams said Atkins' initial partner was Edward A. Markowitz, a Washington tax shelter promoter who pleaded guilty in April 1985 to selling more than $445 million in phony tax writeoffs, mostly to celebrities. Markowitz, who is awaiting sentencing, will testify for the government, possibly Thursday.

"Their plan was to set up a company to provide tax losses to wealthy people who wanted to pay less taxes," Abrams said. But by early 1979, the partners had a falling out, and thereafter "defendant Charles Atkins was the man in charge by himself."

Abrams said the scheme initially involved The Securities Group (TSG), and then related so-called limited partnerships known collectively as The Securities Groups (TSGs). He said they engaged in phony and bogus transactions in Treasury bills and other government securities.

The co-defendants are William S. Hack, 62, an attorney and tax shelter promoter, and Ernest M. Grunebaum, 52, who headed an operation that TSGs acquired in April 1981.

The indictment said Hack was the principal in a company that entered into $24 billion in fraudulent transactions with TSGs in 1981-1982, while Grunebaum used a family-owned shell corporation to enter into $3 billion in bogus transactions with TSGs.

U.S. District Judge Edward Weinfeld is presiding over the trial, which is expected to last six to eight weeks.

Atkins was a research fellow at the Brookings Institution in Washington in 1977-1978 after receiving a master's degree from the London School of Economics. Atkins claimed a net worth of $66 million in March 1983. He filed for bankruptcy 14 months later.

Washington Post staff writer Morton Mintz contributed to this story.