TIM DONAGHY'S lawyer lashed out yesterday at federal prosecutors in New York in a 36-page sentencing memorandum designed to keep the disgraced NBA referee out of jail.

Attorney John F. Lauro ripped into the feds for giving Donaghy's gambling associates a slap on the wrist, while Donaghy - who ratted them out - is facing a heftier sentence.

Lauro also said Donaghy provided investigators with information about another NBA referee who secretly passed confidential information to a coach, and about other circumstances that affected the outcome of games and "prevented games from being played on a level playing field.''

That triggered a blistering response last night from a top NBA official, who called Donaghy's claim "a desperate act of a convicted felon.''

Yesterday's sentencing memorandum, filed in Brooklyn federal court, provides a detailed account of Donaghy's "tragic fall from grace'' and explains how his gambling addiction - his "psychological demon'' - took root years ago when he started betting on professional sports games with a Delaware County insurance salesman and a local bookie.

Donaghy, 41, who has admitted to betting on basketball games he officiated and providing inside "picks'' to two buddies from Cardinal O'Hara High School, is facing up to 25 years in prison and up to a $500,000 fine at his July 14 sentencing on wire-fraud and interstate gambling charges.

The former referee, who resigned last summer after working 13 seasons, likely will receive a lighter sentence in exchange for his cooperation and guilty plea. But Donaghy's lawyer argued yesterday that he shouldn't serve any jail time.

Lauro lambasted the government for offering generous plea deals "that can only be described as aberrant and counter-intuitive'' to Donaghy's high school pals, James "Baba'' Battista and Thomas Martino, while it was Donaghy who gave prosecutors the ammunition they needed to score the convictions.

"For reasons known only to the government, other individuals involved in this matter - who did not cooperate and provide substantial assistance - are subject to sentences far less severe than that faced by Tim,'' Lauro wrote to U.S. District Judge Carol Amon, referring to Martino and Battista.

The U.S. Attorney's Office, he said, "is taking a unique approach - punish an early and truthful cooperator more severely than other defendants who acted contrary to the interests of the government.''

Battista, 43, of Phoenixville, is facing 10 to 16 months imprisonment for illegal gambling, while Martino, 42, of Marcus Hook, is facing 12 to 18 months in jail for conspiring to commit wire-fraud. They both pleaded guilty last month and are scheduled to be sentenced July 11.

Lauro declined to comment yesterday, as did Assistant U.S. Attorney Jeffrey Goldberg, who is prosecuting the cases.

Yesterday's filing was in response to a letter Goldberg filed Friday, claiming that the referee cost the NBA nearly $305,000 by depriving it of his honest services.

For the three seasons between 2003 and 2006, Goldberg said that Donaghy provided picks for 30 to 40 of the games he officiated each season and that he provided 14 picks for games he worked during the 2006-2007 season.

The government's loss calculation is based on Donaghy's annual salary, which fluctuated from $172,000 to $243,000 between 2003 and 2007, including pay for playoff games.

Lauro countered yesterday that the total loss to the league is only $46,240 and that restitution has already been paid because the NBA withheld about $49,000 of Donaghy's salary.

In arguing for a probationary sentence, Lauro sought to play down Donaghy's involvement in the ill-fated gambling scheme and pointed the finger at Battista, a professional gambler also known as "Sheep.''

Lauro said Battista called Donaghy in 1994 during his first year as an NBA referee and asked whether he was going to be "up and up,'' which Donaghy interpreted to mean whether he would use his position to help Battista gamble. Donaghy, according to his attorney, rejected the offer and said he would contact the authorities if Battista called again.

But a few years ago, Donaghy began betting heavily on professional sports with Norwood insurance salesman Jack Concannon through local bookie Pete Ruggieri, Lauro wrote.

Eventually, they began gambling on games that Donaghy officiated. Concannon, a Monsignor Bonner basketball star and former coach of the Friars, was interviewed by the FBI last year, but he will not be charged, his attorney, Joseph Fioravanti, said yesterday.

Ruggieri's attorney could not be reached yesterday.

According to the account Lauro provided, Battista muscled his way into the action in late 2006 by threatening to report Donaghy to the NBA if the referee did not help him select bets.

"Battista also threatened Tim's family, stating that Tim would not want people from New York [Mafia figures] visiting his wife and kids,'' Lauro wrote.

Battista's attorney, Jack McMahon Jr., yesterday dismissed that as "ridiculous.''

"That Battista threatened Donaghy and his family in any way is all fantasy land. He didn't have to threaten Donaghy to gamble,'' McMahon said. "Donaghy was ready, willing and able to gamble. He's a gambling addict. He said so himself. He's been running around with this 'poor me' attitude, while all it was was greed, greed, greed.''

Martino's attorney, Vicki Herr, who has described her client as a "minimal participant'' in the scheme, said "there was never any threat made by Battista'' when the three men met in December 2006 at the Philadelphia International Airport's Marriott Hotel to work out the details of the scheme.

"Timmy's been doing this for 3 years before these guys get involved,'' Herr said. "I don't think you can minimize Timmy's role in this even if he cooperated.''

Lauro estimated that Battista "profited by possibly more than hundreds of thousands of dollars in winnings'' by using Donaghy's inside information. Prosecutors say the referee's picks were based on his knowledge of which officiating crews were assigned to upcoming games, how they interacted with certain players and the physical condition of the players.

Donaghy's sentencing memorandum also claims that the referee gave authorities information on other "NBA-related matters that were of interest to law-enforcement officials.''

"Tim described the gambling activities of NBA officials, which were contrary to league rules,'' Lauro wrote. "He also furnished information concerning circumstances that favored certain players or teams over others. In one instance, for example, confidential information was secretly passed from another referee to a coach.''

Lauro said the league "allowed an environment to exist that made inside information, including knowledge of the particular officials who would work a game, valuable in connection with predicting the outcome of games. For example, particular relationships between officials and coaches or players affected the outcome of games, and other practices prevented games from being played on a level playing field.''

Joel Litvin, the NBA's president of league and basketball operations, said in a statement last night that yesterday's court filing "contains an assortment of lies, unfounded allegations, and facts that have been previously acknowledged, such as the fact that certain NBA referees engaged in casino gambling in violation of NBA rules.

"The letter is the desperate act of a convicted felon who is hoping to avoid prison time and the only thing it proves is that Mr. Donaghy is no more trustworthy today than he was when he was breaking the law by betting on NBA games.'' *

Daily News sports writers Phil Jasner and Joseph Santoliquito contributed to this story.