Multiple sources familiar with the probation report tell TMZ ... the report -- drafted after Lindsay allegedly took the necklace in January -- contains something "shocking" and "devastating" against Lindsay. The info has never been made public and our sources would not divulge specifics -- only to say any judge who uses it to determine sentencing would probably throw the book at Lindsay.
The stakes are high if Lindsay doesn't accept Judge Keith Schwartz' proposed sentence -- which we're told is 3 months in jail. If Lindsay decides to fight the charge, Judge Stephanie Sautner would use the report to determine sentencing if she decides Lindsay violated her probation. Lindsay faces more than a year in jail for the probation violation.
And even worse for Lindsay ... if Lindsay is convicted of felony grand theft, the judge in that case would also consider the scathing probation report. The maximum sentence Lindsay would get for felony grand theft is 1 year in state prison.
Mind you Judge Schwartz' job is to try and settle cases, which is why he's willing to go pretty easy on Lindsay.
Short story -- Lindsay is crazy not to accept Judge Schwartz' offer.
Lindsay's lawyer, Shawn Holley, tells TMZ, "Judge Schwartz made it abundantly clear Thursday, on the record, that the probation violation, if proven, would be based on the theft allegation and nothing more. If there was such 'devastating' information in the Probation Report, wouldn't the allegations be based on that?"