Lee Alexander, former Democratic mayor of Syracuse, N.Y., was indicted yesterday on charges that he turned the mayor's office into a center of "racketeering activity" and extorted more than $1.4 million in bribes during his tenure of 16 years.

Alexander, a nationally known urban advocate who once served as president of the U.S. Conference of Mayors, was named in a 41-count federal indictment.

He was charged with extorting and receiving more than $1.4 million in cash, bonds, gold coins and political contributions between 1970 and 1985, when he entered private law practice.

U.S. Attorney Frederick J. Scullin Jr. in Syracuse said yesterday that the probe took "a key turn" when an architect with city contracts "got into a squeeze" with the Internal Revenue Service.

Sources said the IRS had questioned the architect's attempt to claim payments to Alexander as a business deduction.

A federal grand jury in Syracuse charged Alexander with extortion, bribery, racketeering, obstruction of justice and income tax evasion. Alexander, who faces up to 710 years in prison and $5 million in fines, pleaded not guilty yesterday and was released on $200,000 bail by U.S. District Court Judge Thomas McAvoy.

"The government has put together quite a volume of fiction," Alexander, 60, said in a telephone interview. "I'm confident, because of what I know, that I will be vindicated.

"In over 20 years, I've never run away from a fight on behalf of the people of Syracuse," he said. "Now I have to fight for myself and my family."

Asked whether any of the allegations were true, Alexander said: "Some people may have been doing some things that I didn't know."

The charges followed a year-long probe by Scullin's office, the IRS and the Federal Bureau of Investigation. Rumors of possible indictments circulated for months as Scullin examined allegations that Alexander collected as much as $8 million in kickbacks on city contracts awarded to a tight circle of his friends.

Scullin said there was "much more money" involved than the $1.4 million in alleged kickbacks and bribes cited in the indictment. "That was what we had concrete evidence of," he said. "But we have reason to believe there was a great deal more."

The alleged payoffs came from "architects, engineers, insurance people, lawyers who had professional service contracts from the city that were awarded without bids," Scullin said.

Kenyon Bajus, a former bank president and Alexander associate, was charged with obstruction of justice for allegedly trying to convert incriminating municipal bonds to cash and urging others to lie to investigators in an effort to protect Alexander. Bajus also pleaded not guilty.

Investigators said the probe had been hampered by difficulties in tracking down money allegedly paid to Alexander.

They said they believe that up to $8 million has been hidden in foreign bank accounts, possibly in Panama, but Alexander's attorneys blocked their efforts to seize foreign bank records.

Alexander, known for his fondness for flashy jewelry, limousines and frequent travel, has been credited with bringing new schools, housing and other public works projects to New York's fifth-largest city, which has 175,000 people. He ran unsuccessfully for the U.S. Senate in 1974 and was a six-term president of National Conference of Democratic Mayors.

Timothy Carroll, spokesman for Syracuse Mayor Thomas G. Young (D), said Alexander is viewed as having done "a lot of positive things" for Syracuse.

But, he added, "in political circles there were suspicions that only a select few architects and lawyers had an opportunity to do city business."