A special Virginia grand jury has recommended indicting William E. Embrey, former bank president, Democratic Party Chairman and town treasurer of Remington, Va., on a charge of misappropriating $36,001.35 in public funds.

The fauquier County prosecutor's office promptly pledged to seek the indictment against Embrey, 36, who rose to prominence in Remington, a town of 350 persons 50 miles west of Washington.

If indicted on the charge and later convicted. Embrey could be sentenced to up to 10 years in prison.

The FBI is still conducting a federal investigation into the disappearance of $360,000 from the State Bank of Remington, which Embrey formerly headed. Embrey has acknowledged he "improperly removed" the funds as part of a real estate venture. Bank officials have said they believe Embrey has repaid the money.

Assistant Commonwealth's Attorney Roger Inger said that since Embrey had acknowledged wrongdoing both to town officials and reporters for The Washington Post last November, a prime reason for the special grand jury probe was "to determine whether others were involved, whether more money was taken, and whether there was any malfeasance on the part of town officials."

None was uncoverd, Inger said. But the prosecutor noted that although "the town charter explicity states that there is to be an independent audit every year." no audit was conducted for 14 years.

If audits had been conducted, he said, "this whole thing could have been caught immediately." He added that town officials have now been ordered to conduct regular audits.

Embrey had no comment yesterday on the jury's recommendation. Special grand juries in Virginia conduct investigations and may recommend indictments, but have no power to indict suspects; indictments are obtained from regular grand juries.