Milken Judge Will Hear Evidence on Other Allegations : Fraud: The sentencing of the former Drexel Burnham junk bond czar is delayed so that prosecutors can try to prove that he led a life of crime. His lawyers protest.

A federal judge indefinitely postponed the sentencing of Michael Milken and said Thursday that she will allow witnesses to testify on whether the former junk bond king was a habitual criminal.

The ruling made clear that in deciding on a sentence, U.S. District Judge Kimba M. Wood is prepared to consider evidence of additional crimes beyond the six felonies Milken pleaded guilty to in April. Prosecutors have asked her to do so. Defense lawyers strongly opposed it as unfair.

Milken was to be sentenced Monday in federal court in New York. He faces up to 28 years in prison.

Judge Wood said that federal law permits judges to take into account additional wrongdoing when deciding a sentence but that hearings must be held to ensure fairness and determine whether there really is evidence of the crimes.

The judge, however, narrowed the scope of the hearings tightly so that they wouldn’t turn into something resembling a full-blown trial. She said she will limit the hearings to about two weeks. And she told prosecutors that the point of the testimony won’t be to prove each additional crime they claim Milken committed. Instead, she said, the purpose will simply be to determine whether the six crimes he pleaded guilty to were an aberration by a basically law-abiding individual or instead were part of a long pattern of lawlessness.

The judge said she wants the hearings to start in early October.

Lawyers on both sides said they would attempt to work out an agreement by Tuesday on Milken’s character and additional crimes that he allegedly committed, and thus make the hearings unnecessary. But sources close to the case said there appears to be little chance of an agreement.

The decision to hold hearings, a surprise to many lawyers involved in the case, raises the possibility that witnesses such as former stock speculator Ivan F. Boesky will appear publicly for the first time to testify against Milken. Boesky, an admitted inside trader who was sentenced to three years in prison, was one of the prosecutors’ main informants in the Milken case.

Arthur L. Liman, Milken’s lead defense lawyer, said in court that he opposed the hearings because the delay in sentencing will “prolong the extraordinary anguish for my client and his family almost indefinitely.”

Lawyers who have followed the case closely, however, said the judge’s decision isn’t necessarily a clear victory for the government or a setback for Milken. Prosecutors for the first time will get to present evidence publicly of what they have long claimed: that the Beverly Hills-based junk bond department of Drexel Burnham Lambert was fundamentally a criminal enterprise with Milken as the ringleader.

But several lawyers who are involved only tangentially in the case have said off the record that allegations of additional crimes contained in a prosecution presentencing memo released Wednesday were surprisingly weak.

In particular, they said evidence of insider trading by Milken appeared to be slim and circumstantial. They also note that the allegations involve only a handful of incidents, including only one in which Milken is said to have personally profited. None of the counts that Milken pleaded guilty to involve insider trading, and his lawyers continue to strongly deny that he ever did such trading.

In addition, Liman will be able to call defense witnesses who would testify that the vast majority of transactions in the junk bond department were entirely proper and that Milken’s innovative use of high-yield bonds helped finance the growth of American industry. Liman would also have the chance for the first time to cross-examine prosecution witnesses such as Boesky.

“If Boesky is a dud, or the evidence doesn’t come out as strongly as (the government) has claimed, then Milken comes out ahead,” one lawyer said.

Liman and the prosecutors declined to comment after Thursday’s court appearance.

Judge Wood made clear Thursday for the first time that she won’t accept a government proposal to give Milken a particularly long prison sentence in an attempt to pressure him to fully carry out his agreement to cooperate after sentencing. Prosecutors had suggested that Milken’s sentence could later be reduced if he cooperates fully. The judge said, however, that in deciding the sentence she also won’t give Milken any credit for his promise to cooperate.