Intensive Talks Under Way on Milken Plea Deal : Wall Street: Lawyers conducted negotiations in Washington over the weekend, and an expanded indictment appears to be on hold.

Lawyers for Michael Milken have resumed intensive negotiations with the government, raising expectations that the former Drexel Burnham Lambert junk bond chief may agree to plead guilty to several charges rather than face an expanded indictment.

Sources cautioned that no agreement had been reached and that talks could still collapse. Prosecutors last month had promised a federal judge that the end of this week would be the final deadline for bringing a new indictment. It would add to the 98 counts already pending against Milken and would name additional defendants.

But the sources said there were clear indications that the government wasn’t moving to bring the new indictment on Thursday, normally the last day this week for a meeting of the grand jury that would hand up the charges.

In addition, one source said Milken’s lawyers had been in Washington over the weekend and held extensive meetings with officials of the Securities and Exchange Commission, including William McLucas, the SEC enforcement director. It is expected that any settlement of criminal charges would also involve a settlement of the separate SEC civil charges pending against Milken.

McLucas on Tuesday refused to comment.

A spokesman for Milken also declined to comment. The spokesman said that it has been the Milken defense’s policy not to comment on “rumors and speculation.”

It wasn’t clear what offer is on the table or whether either side’s position had moved substantially since negotiations began in January. Milken reportedly has been offered the chance to plead guilty to five or six felony counts and to pay financial penalties totaling several hundred million dollars.

Milken, his brother Lowell and former Drexel trader Bruce L. Newberg were indicted more than a year ago on racketeering charges stemming from alleged insider trading, stock market manipulation and falsification of records. All three have denied the charges. The new, superseding indictment originally had been promised by prosecutors for last fall. Criminal defense lawyers have said that the long delay in bringing the new charges, without any signs of active investigation by prosecutors, is highly unusual.

Sources said that the settlement discussions with Milken’s lawyers were initiated by the U.S. Attorney’s office in New York and that the prosecutors there for a variety of reasons are extremely reluctant to go forward with charges that would lead to a long and difficult trial. The prosecutors themselves have consistently refused to discuss the case.

One indication that an indictment isn’t likely on Thursday is that lawyers for several of the individuals who would be named as defendants in the new indictment haven’t yet been called in to discuss last-minute details, such as the bail the government would ask for, details of forfeiture under the racketeering law and whether the individuals would be allowed to surrender voluntarily rather than be arrested. Legal sources said that normally such matters would be taken care of several days before an indictment.