Lindsay Lohan Will Be Charged with Felony

Sources connected with the case says the L.A. County District Attorney will file the case as early as Monday.

Lindsay is accused of stealing a $2,500 necklace (pictured above) from a Venice, CA jewelry store on January 22.  Surveillance video from the store shows Lindsay with the necklace in question and there are photos of her wearing what appears to be the same necklace a week later.

If convicted ...  Lindsay faces a maximum of three years in state prison.

Sources say Lindsay says she'll fight the charge and she's sticking with her story that she took the jewelry on loan.

The case could also have a dramatic impact on her ongoing DUI case in Beverly Hills since she is currently on probation.

You can't just walk in and "borrow" jewelry from Kamofie & Company -- the place Lindsay claims loaned her the allegedly stolen necklace -- because we're told, there's TONS of red tape to get through first.

The jewelry store owner Sofia says, "When we loan out jewelry, we have a whole procedure that needs to be done.  There is paperwork that needs to be filled out and there needs to be insurance information given or credit card information in case something happens with the jewelry."

We're told the paperwork entails an itemized list of what the customer is borrowing, a signed contract claiming responsibility for the item while it's out of the store, and credit card and insurance information in case anything goes wrong.

According to Sofia, the store RARELY deals directly with celebs -- "The stylist will come in and ask to borrow the jewelry for a shoot or an event."

Sofia wouldn't comment on the Lindsay situation -- but the surveillance tape could be the smoking gun here if it shows Lindsay signing any paperwork ... or not.

UPDATE:  The D.A.'s office just issued a statement to an L.A. wire service that no decision has been made.  Toscantainment reiterates  -- Lindsay Lohan will be charged with felony grand theft.

OMG!....someone pls call 911