Mitchell Kapor, inventor of Lotus 1-2-3, the world's most popular financial software package, yesterday announced the formation of a new foundation to fight for civil liberties for computer users, but he stopped short of agreeing to fund the legal defense of computer "hackers" who are the targets of a massive federal probe.

In May, Kapor and John Barlow, a lyricist for the Grateful Dead band, said they were on the verge of creating a legal defense fund to benefit individuals who were the targets of Operation Sun Devil, a Secret Service probe. Kapor had said the investigation of computer hackers who allegedly gained unauthorized access to company computer systems, including one at American Telephone & Telegraph Co., was misdirected and a "witch hunt."

But since that time, Kapor has been criticized by industry colleagues, who argued that the federal investigation had some merit. And yesterday, Kapor, while not abandoning all of his efforts to help the targets of the probe, seemed to agree with his critics, at least in part.

"Unauthorized entry into computer systems is an improper act that ought to be illegal," Kapor said. "We support penalties for that. Our mission is not to defend unauthorized entry."

When Kapor and Barlow first criticized the Secret Service for being overzealous, Barlow said, "These hackers are explorers, not criminals." Yesterday, he said, "Some of these kids have done some things that are illegal and they probably should get busted. But the over-reactive level of law enforcement is out of scale with the crimes that have actually been committed."

Kapor said his new organization will be called the Electronic Frontier Foundation and will get involved in some of the cases arising from Operation Sun Devil.

However, rather than funding the legal defense of individuals, the foundation intends to pressure the government for full disclosure on some of its investigative methods and plans to file legal briefs in key cases where important First Amendment issues are involved.

Part of the reason for establishing the foundation is the concern of Kapor and Barlow that Operation Sun Devil and other Secret Service computer fraud investigations are threatening electronic bulletin boards, through which computer enthusiasts exchange information and conduct dialogue. Kapor has said this could hurt innovation.

But Secret Service officials said they would not pull back.

"This will have zero impact on our operations," said Dale Boll, assistant special agent in charge of the Secret Service's fraud division.

"These people are free to do whatever they want. But it won't impact us unless they somehow lobby Congress to change the {computer fraud} laws."

The foundation will be funded by what Kapor called "six-figure grants" from himself, Steve Wozniak, co-founder of Apple Computer Inc., and another individual whom Kapor said wishes to remain anonymous. The Computer Professionals for Social Responsibility was granted $285,000 of those funds to expand the scope of its research and public education activities. The foundation's mission is to "civilize the electronic frontier," Kapor said.

"We are living in an age of computer and technological anxiety," he continued. "Most people, including me, can't even set the clock on their VCR. We have to do something about this anxiety.

"If most technology comes in a form that alienates people, we won't make any progress in making their communications network both open and secure. ... Technology is out on the frontier, where most people are scared to go. The foundation is designed to help them get there."