A federal appeals court in New York yesterday upheld the Abscam convictions of four former congressmen and three other people, finding that there was nothing in the way the government conceived or executed its "sting" operation that violated the defendants' constitutional rights.

"The four congressmen were caught on videotape in the very act of committing federal crimes," Judge Jon O. Newman wrote for a three-judge panel of the 2nd U.S. Circuit Court of Appeals.

"The conduct of the investigation, though subject to some criticism, affords no basis for rejecting the convictions."

The panel affirmed the convictions of former Democratic representatives Frank Thompson Jr. of New Jersey, John M. Murphy of New York and Raymond F. Lederer and Michael (Ozzie) Myers, both of Pennsylvania.

They had been convicted of conspiracy, accepting illegal gratuities and other charges; their appeals had been consolidated from three federal jury trials.

The panel did reverse one conflict-of-interest charge against Murphy, based on a technical finding that the trial judge had erred in instructing the jury.

Murphy's conviction on charges of conspiracy and receipt of an unlawful gratuity were affirmed, however. They arose out of his acceptance of $50,000, which he subsequently shared with Thompson, in return for his promise to help an FBI agent posing as an Arab sheik with an immigration problem.

The panel ruled that Murphy, who had been sentenced to three years in jail and a $20,000 fine, should have his fine reduced to $10,000. It also stated that the government may prosecute the conflict-of-interest charge again, if it wishes.

The bulk of the court's 80-page opinion dealt with the core question that has plagued the Abscam operation since it was first publicized: did the government infringe on the due process rights of the defendants by, in effect, creating crimes?

The court summarized the defendants' due process arguments as follows.

* That the "elaborate contrivance of Abscam" took the government beyond the legitimate role of investigating a crime into the forbidden area of instigating a crime.

* That the inducements offered the congressmen were so excessive as to exceed limits that are set by the due process clause.

* That government agents coached defendants into committing the crimes by telling them what to say in their meetings with the phony sheiks.

The court found that while "the 'sting' was surely elaborate, its essential characteristic was the creation of an opportunity for the commission of a crime by those willing to do so."

"The government produced people with fictitious identities ready to pay bribes to congressmen. Word of the availability of bribe money was made known. From that point on, the essential conduct of the agents and their paid informant was to see who showed up to take the bribes, and videotape them in the act of doing do. Whatever may be the due process limit of government participation in crime, it was not reached here."

The decision marks the second time that a federal appeals panel has upheld the constitutionality of the methods used in Abscam. The 3rd U.S. Circuit Court of Appeals reached the same finding in a case against two former Philadelphia city councilmen, George X. Schwartz and Harry Jannotti, who had been videotaped taking cash from undercover FBI agents.

However, many legal scholars say they believe the issues arising out of Abscam will not be fully resolved until the Supreme Court renders a judgment. This summer, in its first opportunity -- though doubtless not its last -- to tackle Abscam issues, the high court declined without comment to hear the appeals of the two Philadelphians.

Murphy's lawyer, Michael Tigar, said yesterday that he will file for a rehearing before making a decision on a Supreme Court appeal.

Yesterday's ruling is directly at odds with a judge's finding last spring in another Abscam case, reflecting the divergence of views the cases have provoked within the judicial community.

In that case, U.S. District Court Judge William B. Bryant threw out the Abscam conviction of former representative Richard Kelly (R-Fla.) on grounds that "law enforcement exceeds its bounds when it manufactures crimes and creates criminals." The Justice Department is appealing that ruling.

Meanwhile, as the appeals continue, Congress is conducting its own investigation of the methods the FBI used in Abscam.

The other defendants involved in yesterday's ruling are Angelo J. Errichetti, former mayor of Camden, N.J.; Louis Johanson, former Philadelphia councilman, and Howard L. Criden, a law partner of Johanson.