Nine years ago, Daniel Seth Grossman, 34, bought a small unimposing foreign language school that was on the brink of bankruptcy. He not only rescued the school but has built a $12 million business empire that includes nine other enterprises.

The flagship of Grossman's fleet - which is composed of five schools, an office supply store and a janitorial supply outlet - is the troubled Lacaze-Gardener School of Business, metropolitan Washington's largest privately owned vocational school.

But in recent months, both Lacaze-Gardner, at 710 4th St. NW, and Grossman have had a series of problems, including fires, an abrupt closing of the school, a freeze placed on its federal funds and a subpoena of student financial aid records.

According to an FBI spokesman, Grossman is the main focus of a federal investigation into how Lacaze-Gardner handled millions of dollars in student financial aid. Authorities have alleged that the aid was awarded fraudulently to some students ineligible to receive it.

But the times have not always been as troubled for Dan Grossman, described by some former associates and an older brother as a financial wizard driven by an intense desire to be a force in the business world.

A very private and complex man with few close friends, Grossman has impressed people around him as a brilliant young businessman, able to wheel and deal his way around most obstacles.

Grossman, whose personal net worth is about $4 million, enjoys and often flaunts the fruits of his wealth, according to many who know him. He lives in a lavishly furnished six-room, penthouse apartment at the Watergate Hotel and drives a Rolls-Royce, which he once bragged to a friend, cost $25,000.

Others who know Grossman are preplexed by his mundane interests such as his love for country and western music and his occasional outing at fast-food restaurants.

Two years ago, Grossman promised a nephew a red fire engine for the child's fourth birthday. When the birthday arrived, Grossman presented the child a full-sized, red antique fire truck, according to a family member.

Grossman, second oldest of three sons, also has been described as a man who flaunts his wealth by carrying huge amounts of cash and flashing it in front of less well-to-do friends.

"Somebody asked my general manager one day, 'What kind of guy is Dan Grossman?'" said Richard DeFranco, who shared ownership of a janitorial supply firm with Grossman until 1976 when DeFranco bought Grossman's interest.

"He (the general manager) said - and this is the best description of Grossman I've ever heard - 'Grossman has a computer for a brain and a cash register for a heart,'" DeFranco said.

Grossman was born in New York City and came to the Washington area with his family when he was 4 years old. Most of his growth years were spent in Arlington.

With a remarkably high aptitude for mathmatics since his childhood. Grossman earned an undergraduate degree in economics with outstanding grades at Miami University in Ohio. In 1966, he graduated from Columbia University with a graduate degree in finance.

But his Skyrocketing rise to success from ownership of one small school with only four employes in 1969 to a bouquet of thriving businesses and 240 employes this year isouquet of thriving business and 240 employes this year is not exactly a Horatio Alger story.

Grossman's path into the business-school business was paved by his parents, Jonathan and Rita Grossman, who for 18 years owned and operated Temple Business Schools, which had six outlets in the Washington-Baltimore area.

The sale of the Temple schools in the late 1960s to International Telephone & Telegraph left the Grossman family with two decades of business school experience and the financial resources to launch Lacaze-Gardner School.

Daniel Grossman's father, Jonathan, 61, is a U.S. Labor Department historian. His mother, Rita, died in January 1976 of cancer.

"My brother is an interesting person," said Jeremy Grossman, 36, oldest of the three Grossman sons, who is employed as a typing teacher by the U.S. Department of Agriculture graduate school. "He has certain attitudes and values that are a lot different from most people."

Jeremy Grossman, who owns Quickhand Shorthand, Inc., a firm that prepares instructional material for business skills courses, is not affiliated with the Lacaze-Gardner School.

DeFranco, who owns Capitol Chemical Industries, Inc. in Northeast Washington, said he first met Grossman in 1972 when Grossman was a customer at DeFranco's janitorial supply firm.

"One day in 1973, I walked into Grossman's office," said DeFranco, who lives in Crystal City. "He said, "You look upset about something." I said, 'Yeah, Do you have $100,000?Would you like to buy a janitor supply business?'"

To his surprise, DeFranco said Grossman readily agreed to help pull the company out of financial trouble. Grossman paid $27,000 for a 52 percent controlling interest in the firm.

In March 1976, DeFranco said he decided to end his relationship with Grossman and bought Grossman's share of the company back for $174,000.

"We had gone through bad financial times," DeFranco said. "Our employes had been three years without a raise."

"When we started making money. Grossman wanted to open more retail stores and not give our people any raises." DeFranco continued. "I had promised them raises, a profit sharing plan and paid medical benefits. I didn't want to go back on my word to the people who had kept me in business."

A source, who has seen personal finanical statements submitted by Daniel Grossman to the U.S. Department of Health. Education and Welfare each year since 1974, said Grossman's net worth has increased in the last four years from about $1 million in 1974 to more than $4 million this year.

Most of that incrase, according to the source took place among Grossman's collection of "closely held corporations" including the Lacaze-Gardner School. Grossman had said that Lacaze grossed about $7 million last year, at least $2.1 million of which came from federal student financial aid funds.

Grossman's financial statement, dated Feb. 20, 1976, lists his total assets as $4,048,300, with liabilities amounting to only $412,800. Grossman's net worth in 1976 was $3,635,500, according to the statement.

According to the 1976 statement, obtained by The Washington Post, Grossman owned $153,000 in common stocks, including 3,501 shares of International Telephone & Telegraph and 8,187 shares of Financial Mortgage and General.

Among his portfolio of bonds, valued at $376,400, Grossman owned 115,000 shares of New England Power Company, 95,000 shares of the Rockland Light and Power Company and 5,000 shares of the Washington Suburban Sanitary Commission.

In a March 2, 1976 letter to H. Jeffrey Raffensperger in the program operations branch of HEW, Grossman said that his school was in a "Catch-22" situation.

"Neither Congress nor HEW has come out clearly or firmly as to whether the FISL (Federally Insured Student Loan) program should be primarily based on student need or on banking logic," Grossman wrote.

"We . . . have not abandoned the District of Columbia for the better students of the suburbs," he said. "It is no trick of either genius or educational powess to take a successful white upper middle class high school graduate from suburban Washington and train him or her for a job earning $130 or $140 a week. We do it all the time . . ."

"It is a fare more difficult job, and one which we would contend is socially much more valuable, to take a lower class black from an inner city D.C. school and train him or her for a job at any salary. That our success rate is higher in the suburbs than in Washington is to be expected."

In an interview with The Washington Post last Aug. 31, Grossman described his accomplishments in the business world a "not all that impressive." He outlined goals he has set for the Lacaze Gardner.

"Our concern is that the school really must be able to successfully train students to meet the objectives we set . . . Then we've done our job." Grossman said. If the students are not able to meet the school's objectives, "then we haven't done our job," he concluded.

Grossman said the school's educational objectives and some of its students' expectations often do not match.

"One of the very common things (asked by students) is 'why do I have to take so many English courses"? Grossman said. "Someone will say, "I came to learn to be a typist, why do I have to take a reading course'?"

"We have to concentrate on the basic skills along with the (job) skill subjects," Grossman said. "It does no good for student to be able to type 40 words a minute or 50 words a minute if they can't spell and can't construct a sentence and punctuate and so forth . . . This is a tremendous problem we have."

Grossman said that he is optimistic about the long-range outlook of operating a business in Washington. "Washington has a number of advantages over suburban areas," he said. "Washington still has the highest concentration of people centrally incated."