Undisclosed Surcharge Mr. Milken is charged with masterminding an elaborate scheme in which he provided a $1.6 million illegal tax write-off for a big client of Mr. Milken's junk bond department at Drexel and a conspiracy to defraud bond purchasers by applying an unlawful and undisclosed surcharge on a number of transactions.

The state's auditor, Julia Hughes Jones, opposed two state pension fund investments that Stephens Inc. arranged in 1987 and 1988, noting that Stephens had represented both the bond issuers and the bond purchasers.

A local industrial development agency serves as the conduit for the loans, which can be made at below-market interest because bond purchasers receive interest income that is free of Federal, state and local taxes.

As S.E.C. chairman, his son has repeatedly invoked his parents' memory, citing their experiences as municipal bond purchasers.

Mr. Milken, testifying in Mrs. Ostrander's defense, acknowledged that only his most faithful bond purchasers were invited to invest, but insisted there was no quid pro quo.

The "heart and soul" of the case, Mr. Hodgman said, is that the bond purchasers "did not get the truth," and that Mr. Keating "is the man most responsible for those bond purchasers in Southern California not getting the truth."

Those millions of dollars were used to repay the bond purchasers, like Mrs. Kane, who have received about 74 cents for each dollar of principal they invested.

Interest income earned by the bond purchaser is exempt from state and local taxes, which allows the lender to pass savings to the borrower in the form of lower interest rates.

Evoking a lifelong devotion to Israel's economic growth and development, this gracious, warm-hearted lady was in the highest echelon of individual bond purchasers.