NEW YORK -- His harshest critics say Michael Milken presided over an orgy of financial excess in the 1980s that has crippled the U.S. economy -- but that isn't what he'll be punished for.

Instead, at the end of this week or early next week, U.S. District Judge Kimba Wood will sentence Milken only for the six stock-market crimes that Milken admits having committed several years ago when he was the world's most powerful financier.

Nevertheless, Milken's punishment inevitably will be remembered as a judgment on much more than the individual instances of securities fraud and tax and regulatory offenses for which he faces up to 28 years in jail. The severity of the sentence will color the legacy of the man who is destined to go into the books as the "junk bond king" for creating, virtually single-handedly, a $200 billion market for the lucrative but risky securities.

Wood's decision will be an early milestone in the nation's ongoing appraisal of an entire era, for Milken was at the cutting edge of both the glories and debacles of one of the most vibrant periods in American financial history. And while Wood will sentence Milken as an individual rather than as a symbol of 1980s' greed, her judgment will be scrutinized as a fresh signal of how the United States views "crime in the suites."

Harry First, a New York University law professor and author of a book on business crime, said Milken has drawn so much publicity that an extreme sentence -- whether harsh or lenient -- would have "a flashbulb effect" in focusing attention on the courts' handling of financial crime.

"Suppose he got community service. This would go down as a case of, 'See, that's how they treat white-collar criminals, but the poor kids go to jail,' " First said. "On the other hand, if he got 15 years, I think people would say, 'Well, we've gone a little off the deep end on this.' "

Donald P. Jacobs, dean of the J.L. Kellogg Graduate School of Management at Northwestern University, said he felt that Milken deserved prison time for the damage that he had caused society, even though he hadn't done anyone any physical harm.

"If you start to look at what happened, socially, probably he was a very destructive human being," said Jacobs. "He developed a market that created some good, but mostly bad. The legacy that he's going to leave us is a lot of companies that are heavily in debt. Some will survive, but many won't."

Dauntingly Complex

Judge Wood, 46, who is making a historic judicial decision after less than 2 1/2 years on the federal bench, is pondering an unusually daunting case.

First, it involves unprecedented sums of money that must be weighed, somehow, in any reckoning of the good and bad for which Milken is responsible.

Milken, 44, is estimated to have donated about $350 million of his personal fortune to charity over the years, and the defense has argued that his philanthropy should help win him a lenient sentence. On the other hand, Milken agreed at the time of his plea bargain to pay $600 million -- a $200 million fine and $400 million to repay victims of his swindles -- in what is a record legal penalty for an individual. Wood has said she will not view the payment as an indication of the financial damage done by the crimes, but some experts say the penalty's size could influence her judgment.

In addition, while a judge cannot consider how much money Milken has left, the public certainly will look to see whether, in the end, "crime paid." Even after paying his legal penalty, Milken is estimated to have about $700 million left, according to last month's annual ranking of the nation's rich by Forbes magazine. On the other hand, some experts say that Milken's remaining fortune could be wiped out in the future by civil suits to be brought by people who lost money because of his illegal activities.

Second, Wood has never heard a word of testimony about the six felonies to which Milken confessed last April and for which she must sentence Milken. There was no trial on those charges because Milken agreed to plead guilty, under heavy pressure from the government, after months of intense bargaining.

The testimony that she did hear, in an unusual sentencing hearing last month, came from witnesses who discussed in detail a bundle of crimes that the prosecution claims Milken had committed in addition to the ones that he has admitted. It may seem unfair to the layman to present evidence against Milken on charges that the government had agreed to drop when Milken copped a plea, and, indeed, the practice is controversial even within the legal community. But it is perfectly appropriate under the law for the government to try to persuade the judge that Milken deserves a heavy sentence -- within the 28-year maximum -- because he was suspected of having done far worse than he had admitted.

A third element adding to the complexity of the case is an ironic twist: Many observers believe that the sentencing hearing last month may have helped the defense more than the prosecution.

In the proceedings, the government presented its evidence that Milken had engaged in much more serious and venal crimes -- insider trading, bribery, stock price manipulation and obstruction of justice -- than the ones that he had admitted. But several lawyers and law professors said that the evidence seemed too shaky to justify the government's sweeping claim that Milken was the worst white-collar criminal of the 1980s.

For instance, in trying to prove that Milken had engaged in insider trading in the stock of Caesars World Inc. in 1983, the prosecution produced little beyond the evidence that already had been judged insufficient to warrant action by the Securities and Exchange Commission in a previous inquiry in 1985.

In another transaction, involving a manipulation of Wickes Cos. stock, there was substantial circumstantial evidence of Milken's involvement. But the prosecution's principal witness -- who was granted immunity despite having confessed that he had lied under oath many times in the past -- had a suspiciously hazy memory about everything except damaging details of Milken's behavior that the prosecution wanted to elicit.

"The government scored some points, but came across as having overstated what it was actually able to prove," said lawyer Jed S. Rakoff, who has worked on both sides of securities fraud cases, once as a prosecutor and now as a defense attorney in New York.

On the other hand, Milken may have suffered at the hearing from testimony that certain kinds of securities crimes were routine at Milken's command post in the Beverly Hills, Calif., trading room of Drexel Burnham Lambert Inc. Witnesses indicated that "parking" of securities, or the concealing of ownership, and manipulation of records to conceal illicit payments were standard practice in the go-go atmosphere at Drexel, which collapsed in February under the burden of junk bond losses.

Tarnished Image

Moreover, Milken's image certainly was tarnished by accounts at last month's hearings of his suspicious behavior in November 1986, immediately after he learned that the nation's most influential stock speculator, Ivan F. Boesky, was cooperating with a federal investigation into wrongdoing on Wall Street.

Clearly panicked by the prospect that Boesky would finger him -- as Boesky indeed did -- Milken spoke to a colleague in the men's room at the Beverly Hills office with the faucets running to stymie any government listening devices, the Drexel colleague testified. Another co-worker testified that Milken scribbled notes on a legal pad for another colleague rather than risk being overheard by bugs.

"The common sense approach is that people who think they are doing things that are lawful don't behave this way," law professor First said.

Milken's defenders argue that federal prosecutors in the mid-1980s changed the ground rules for white-collar crimes without giving fair warning. In this view, Milken was prosecuted for activities that, while unquestionably illegal, had come to be rather common practices on Wall Street. If caught, one could have expected at the time at most a fine or loss of one's securities trading license -- but certainly never a jail sentence.

These Milken supporters argue that former U.S. District Attorney Rudolph Giuliani, who launched the investigation that ultimately targeted Milken, went after tycoon crimes because he thirsted for publicity to mount what became a losing campaign to be elected mayor of New York.

"I'm not sure it was necessarily fair to single out Drexel. A lot of things that came out in the {Milken case} hearings were occurring throughout the Street, not just at Drexel," said C. Keith Hartley, who worked for 17 years at Drexel and was a managing director in corporate finance when he resigned in June 1989.

But other experts contend that Drexel relied on illicit dealing far more than other securities firms and that the junk bond market was built in part on crooked activities. Management school dean Jacobs said that junk bonds clearly had a role to play in the financial markets, but that Milken used artificial methods to build the market to where it was "substantially larger" -- and therefore riskier -- than it should have been.

"Excesses were created because he found purchasers who really shouldn't have been purchasers, like the savings and loans, who were playing games with the government's money. ... These were gimmicks," Jacobs said.

Even Milken's former Drexel colleague Hartley said the firm got involved in excessively risky deals because Milken was obsessed with dominating the junk bond market he had created. "I think Mike just didn't want somebody else to gain a foothold in his marketplace," he said.

Interestingly, if Milken had committed his crimes just a few years later, Wood would have much less flexibility in fixing the sentence. Under federal sentencing guidelines that have been phased in gradually since 1987, she would have been limited to setting a prison sentence in a range of 2 to 4 1/2 years, with a maximum of 15 percent off for good behavior, according to lawyers familiar with the case.